For the following changes in business environment explain briefly its impact on the performance of business and industry: 1 Increased - Business Studies - Business Environment

Question

For the following changes in business environment explain
briefly its impact on the performance of business and industry:
1 Increased taxes by the government
2 Increased competition in the market
3 Political uncertainty
4 Changes in fashion and tastes of consumers
5 Technologica limprovememts and innovations

Richa Gupta · Accepted Answer

For the given changes in business environment, following will be
the impact on the performance of business and industry
i) Increased taxes by the government
If the government increases the taxes then this will have a
negative impact on the performance of the business This is because
the taxes will decrease the profits to the business and
industries
ii) Increased Competition in the market
Increased Competition can have both negative and positive impact
on the performance of a business It will have a negative impact if
the business organisation is not well acquainted with the business
environment This is because with increased competition, he will
loose out his share in the market or will face a decrease in the
price of the product
Whereas on the other hand, increased competition may give out a
positive impact on the performance if in case the business
organisation is well acquainted with the business environment This
is because if he knows how the market and competition works, then
he'll take the required measures before hand These measures may be
in the form of upgrading the technology, improving the quality of
the product, etc
iii) Political Uncertainty
Political uncertainty may have a negative impact on the business
performance This is because for long term investment in the growth
projects, the business people require political stability (as it
builds up their confidence) But, in case of political uncertainty,
this confidence gets shaken up Due to which, they may decide not to
invest in the projects
iv) Changes in fashion and tastes of consumers
The change in the fashion and tastes of the consumers may have
positive as well as negative impact on the performance of a
business In case the taste of the consumers has changed favourably
(i e in favour of the company's product), then it will contribute
to the business performance positively Whereas, in case the taste
of the consumers has changed unfavourably (i e against the
company's product), then it will have a negative impact on business
performance
v) Technological Improvements and Innovations
Technological improvements and innovations can have both
positive and negative impact on the business performance If in case
the business people are able to acquire the new technology and
innovations, then it will positively contribute to the business
performance But, if in case the business people are not able to
adapt to the new innovations, then it may lead to a negative impact
on the performance of the business as their product may loose out
to the new and sophisticated products of the competitors