Class 12 Business Studies Chapter 3 Notes
In Class 12, the Business Studies subject is an integral part of the commerce curriculum. This curriculum is designed to teach you about business administration and management. The 3rd chapter of the Business Studies syllabus for Class 12 is about Business Environment. The Business Studies Class 12 Chapter 3 Notes are written in such a way that students will be able to get hold of topics quickly and discover how the law protects consumers. In an attempt to help students, our team of Extramarks experts have created these notes to be easy to study and understand. Chapter 3 Business Studies Class 12 Notes is written in simple language with point-by-point explanations.
Business Studies Class 12 Notes Chapter 3- Business Environment will help the students prepare for the forthcoming board examinations. Students can access a variety of additional study tools on the Extramarks website in addition to the Class 12 Business Studies Chapter 12 Notes. Students get access to all materials, including NCERT books, CBSE revision notes, CBSE sample papers, CBSE previous year question papers, and so on.
Key Topics Covered in Class 12 Business Studies Chapter 3 Notes
The key topics covered in Extramarks class 12 Business Studies chapter 3 notes include
1. Business Environment
The term “business environment” refers to the totality of all individuals, institutions, and other forces that operate outside of a business enterprise but have the potential to influence its performance. Class 12 Business Studies Chapter 3 Notes provide an in-depth explanation of the chapter.
- Economic, social, political, technological, and other forces that operate outside of a business enterprise are also included in the business environment.
- The organisation must be mindful of external forces and institutions and active enough to adjust to changing external conditions.
- Based on the changing external business environment, the organisation must create goals and develop strategies and processes.
Features of Business Environment
Class 12 Business Studies chapter 3 Notes by Extramarks provides a deep insight into the features of the Business environment:
- Dynamic: The business environment is dynamic, constantly changing in response to technological advancements, shifts in customer tastes, and other factors.
- Inter-relatedness: The many aspects or pieces of a business environment are inextricably linked. Increased health-care knowledge, for example, has increased the demand for healthy oil-free foods and a healthy lifestyle.
- The totality of external forces: The total of all external forces and influences affecting a company enterprise is referred to as the business environment.
- Specific and general forces: Both specific and general influences influence the business environment. Specific forces such as investors, rivals, and consumers directly affect a business firm. In contrast, broader forces such as social, political, economic, legal, and technical conditions indirectly impact a business entity.
- Relativity: The influence of the business climate varies from nation to country, area to region, and company to company.
- Complexity: The business environment is a complicated phenomenon that is easy to comprehend in parts but harder to understand in its whole. It’s tough to identify the contents of a specific business environment since it’s made up of so many interconnected and dynamic variables.
- Uncertainty: The business climate is generally unclear, as it is difficult to anticipate what will happen in the future. For example, there are constant environmental changes in the sphere of technology and the fashion sector.
Importance of Business Environment
Class 12 Business Studies Chapter 3 Notes is a crucial study material that helps understand the importance of the Business Environment:
- Identifying Opportunities: It lets the company spot possibilities and gain a competitive edge by being the first to market. External developments that are good create opportunities for a firm to improve its performance.
- Identifying the threat: It assists the company in identifying dangers and sending out early warning signals. Changes in external circumstances function as ‘threats’ to the firm, causing performance to suffer. Early danger detection aids managers in devising methods to turn risks into opportunities.
- Tapping the valuable resources: Business uses external resources as inputs, such as finance, labour, and so on, and then returns its output to the environment in the form of goods and services, taxes, and so on.
- Coping with rapid changes: Because the corporate environment is so dynamic, managers must devise strategies that allow them to cope with the changes and use them to grow their market share.
- Planning and policy formulation: A clear awareness and analysis of the business environment aid firms in developing future plans and strategies to deal with any external developments.
- Improves performance: Continuous monitoring of the business environment and shifting business practices away from traditional approaches aid businesses in enhancing their current performance and long-term market position.
Dimensions in The Business Environment
Extramarks Class 12 Business Studies Chapter 3 Notes are vital to understanding the dimensions in the Business Environment. They are explained briefly below.
- Economic Environment: It has a direct and immediate influence on a company. Interest rates, changes in people’s disposable income, inflation rates, monetary policy, stock market indices, and other economic factors can all have an impact on businesses.
Economic elements that increase or diminish result in possibilities or limits for a company enterprise.
- Social Environment: Various social elements, such as conventions, beliefs, literacy rate, educational levels, lifestyle, values, and so on, have a role in the business environment. Business enterprises face a variety of possibilities and risks as a result of social developments.
For example, Diwali, Eid, and Christmas give financial possibilities for candy producers, garment manufacturers, and many other associated enterprises in India.
- Technological Environment: It encompasses forces related to scientific advancements and inventions, which give new methods and techniques for creating products and services and new business methods and processes. A business person must keep a careful eye on technical advancements in the sector since it aids in overcoming the competition and enhancing product quality.
For example, demand for LED smart HD televisions rather than LCD televisions and the use of artificial intelligence in numerous businesses.
- Political Environment: It includes political factors such as the country’s overall stability and peace and the elected government officials’ attitudes toward enterprises. Political stability instills trust in the business community, but political instability and a poor law and order environment might cause economic activity to be uncertain.
Example- Because of the favourable political conditions offered by the state government to the IT sector, Bangalore is known as India’s Silicon Valley.
- Legal Environment: It covers numerous laws and regulations enacted by the government, as well as administrative orders, court judgments, and decisions of various commissions and agencies at all levels of the federal, state, and municipal governments. Businesspeople must behave in accordance with a variety of laws, and their expertise is essential.
Advertisement of alcoholic beverages, for example, is forbidden.
2. Economic Environment In India
According to the government’s economic plans, the public sector would be in charge of infrastructure development, while the private sector would be in charge of consumer products development. Simultaneously, the government put a slew of limitations, rules, and controls on private-sector operations. India’s economic planning experience has yielded mixed results. Despite bountiful crops, the economy suffered a significant foreign exchange crisis, a massive government deficit, and a growing price trend in 1991.
The Government of India unveiled the New Economic Policy in July 1991 as part of economic reforms to move the country out of poverty and promote growth. Extramarks has curated Class 12 Business Studies Chapter 3 notes that provide students with precise details on the topic.
The features of Economic policy 1991
Class 12 Business Studies Chapter 3 Notes presents the features of Economic policy 1991 as follows:
- Under the obligatory licencing programme, the number of industries has been reduced to six.
- The public sector’s engagement was restricted to four strategic industries.
- Disinvestment was carried out in several government-owned businesses.
- The foreign capital policy was liberalised, and 100 per cent direct foreign investment was permitted in numerous areas.
- Signing technological deals with foreign firms were granted automatic approval.
- The Foreign Investment Promotion Board (FIPB) was formed to encourage and channelise foreign investment in India.
Branches Of New Economic Policy
1. Liberalisation
Economic reforms were implemented with the goal of freeing Indian business and industry from all superfluous constraints and limitations. It loosened the restrictions and regulations that stifled the private sector’s expansion and allowed the private sector to participate in economic activities formerly designated for the government sector. The details about the Liberalisation can be found in Extramarks Class 12 Business Studies Chapter 3 Notes.
The Indian industry has been liberalised in the following areas:
- Except for a small number of industries, licencing requirements are being phased out.
- There are no limits on expanding or contracting company operations because of the freedom to decide the extent of business activity.
- Removing barriers to the free flow of goods and services.
- The ability to set pricing for products and services is unrestricted.
- Reduced tax rates and the removal of unnecessary economic regulations.
- Import and export processes are being simplified.
- Making it easy for India to attract international investment and technology.
2. Privatisation
The new set of economic reforms aims to give the private sector a more significant role in the nation-building process while reducing the part of the state sector. The government implemented a divestment and transfer of ownership strategy.
- In order to achieve privatisation in India, the government remodified the role of the public sector in the new industrial policy of 1991, adopted a policy of planned public sector disinvestments, and decided to refer loss-making and sick enterprises to the Board of Industrial and Financial Reconstruction.
- The term “divestment” refers to the sale of a public company to a private company.
- If the government’s shareholding shrinks to less than 51 per cent, the enterprise’s ownership and management will be transferred to the private sector.
Get on board with Extramarks and get access to class 12 Business Studies chapter 3 notes, which will come in handy during your upcoming examination preparation.
3. Globalisation
Integration of the world’s many economies led to establishing a unified global economy. Simply said, globalisation refers to a country’s engagement and interdependence with other nations’ economies to promote the free movement of services, products, capital, and technology across international borders. Until 1991, India’s government maintained a strong policy restricting imports in both value and volume terms. These limits applied to (a) import licencing, (b) tariff restrictions, and (c) quantitative constraints.
A truly global economy means a world without boundaries, in which:
- Free movement of commodities and services between countries;
- Unrestricted cross-national capital flow;
- Unrestricted access to information and technology;
- Unrestricted cross-border movement of individuals;
- A global governance viewpoint;
- A shared accepted framework for resolving conflicts.
Students can register at Extramarks to access various other study materials in addition to class 12 Business Studies chapter 3 notes.
4. Demonitsation
Extramarks Class 12 Business Studies Chapter 3 Notes presents a pointwise explanation of the topic of Demonetisation. On November 8, 2016, the Indian government issued a statement with far-reaching repercussions for the Indian economy. The two highest denomination notes, the ‘500’ and ‘1,000,’ were ‘demonetised’ with immediate effect, meaning they were no longer legal money save for a few limited uses like paying utility bills. As a result, 86% of the money in circulation was deemed invalid. The Indian people were forced to deposit their invalid money in banks, which came with limits on cash withdrawals. In other words, the convertibility of domestic money and bank savings was restricted. The primary goal was to combat corruption, criminal acts, and black money.
Features of Demonetisation:
- Demonetisation is seen as a tax-related action. Cash accumulated due to stated income was quickly deposited in banks and exchanged for fresh bills. On the other hand, those holding black money were required to report unexplained income and pay a tax penalty.
- Demonetisation has also been regarded as a government change signalling that tax avoidance would no longer be condoned or supported.
- Tax administration also channeled funds into the legitimate banking system as a result of demonetisation.
- Another aspect of demonetisation is the creation of a less-cash or cash-lite economy, in which more savings are channeled into the official financial system and tax compliance is improved.
Get on board with Extramarks and get access to class 12 Business Studies chapter 3 notes, which will come in handy during your upcoming examination preparation.
Impact of Government Policy Changes On Business & Industry
- Increasing Competition: Changes in industrial licensing requirements and foreign firms’ entry into the Indian market have intensified market competitiveness in India.
- More Demanding Customers: Customers who are well-informed are more demanding. Increased market competition provides customers with a more extensive selection of high-quality items at competitive prices.
- Rapidly Changing Technological Environment: Increased competition compels businesses to devise new strategies for surviving and growing in the marketplace.
- A necessity for Change: The market dynamics have gotten more volatile since 1991, requiring businesses to alter their operations constantly.
- Need for Developing Human Resources: The changing market realities of today necessitate workers with increased skill and dedication, necessitating the development of human resources.
- Market Orientation: Previously, businesses pursued production-oriented marketing strategies. Today’s enterprises generate goods and services that meet the needs of their clients.
- Loss of Budgetary Support to the Public Sector: The central government’s fiscal assistance for the public sector has significantly decreased. As a result, the public sector must become more efficient in generating resources and earnings to exist.
Students may register to Extramarks and get access to class 12 Business Studies chapter 3 notes.
Class 12 Business Studies Chapter 3 Notes: Exercises and Answer Solutions
Class 12 Business Studies Chapter 3 Notes are available at the Extramarks website, wherein subject experts have prepared these notes as per the CBSE syllabus. Register online with Extramarks to clear all the doubts and get access to all exercises and answer solutions.
A list of detailed solutions for all the questions are listed below:
- Very Short Answer type Questions and Solution- 5 Questions
- Short Answer type Questions and Solution- 5 Questions
- Long Answer Type Questions and Solutions- 6 Questions
Students may register at Extramarks to get access to Class 12 Business Studies Chapter 3 Notes and all the exclusive news about the upcoming board examinations. In addition, students may also get access to the following.
- CBSE revision notes
- CBSE sample papers
- CBSE previous year question papers
- CBSE extra questions
NCERT Exemplar Class 12 Business Studies
Students can use the answers to the NCERT Exemplar Class 12 Business Studies questions to help them prepare for their final examinations. These sample questions are a little more complex, and they cover a wide variety of topics covered in each chapter of class 12’s Business Studies course. We offer Exemplar questions, problems, and solutions for class 12 Business Studies at Extramarks.
Students will thoroughly learn the ideas discussed in each chapter by practising this NCERT Exemplar for Business Studies class 12 problem. Each of the questions in these resources is relevant to the CSBE Class 12 curriculum. Our professionals offer the most effective solutions to the problems that students face. All the notes are based on the NCERT question pattern.