The case describes how Rajat anticipated a threat to his plastic products business due to an upcoming ban on single-use plastics. His ability to foresee this threat early allowed him to pivot toward eco-friendly alternatives (bamboo, palm leaves), thereby saving and even growing his business.
This exemplifies the importance of business environment in providing early warning signals about possible threats so that firms can adapt their strategies in advance.
Final Answer: (B) It helps the firm to identify threats and early warning signals.