Question

Rajat was carrying on a business of manufacturing plastic disposables like plastic plates, plastic cups and plastic straws. He heard about the upcoming ban on single use plastics. He was able to identify this external environmental trend which could hinder his firm’s performance. So he took action and shifted to manufacturing the plates, cups and straws from bamboo and palm leaves. As a result, his business not only survived but was able to generate profit.
The point of importance of Business Environment highlighted above is :

• A. It enables the firm to identify opportunities and getting the first mover advantage.
• B. It helps the firm to identify threats and early warning signals.
• C. It helps in tapping useful resources.
• D. It helps in assisting in planning and policy formulation.

Hint:

Business Environment gives firms a chance to anticipate threats and take action early. That’s how smart businesses survive disruptions.

Answer 1

The Correct Option is B

The case describes how Rajat, a businessman, became aware of an impending external change — a ban on single-use plastics. This is a classic example of how the business environment provides early signals or warnings about threats.
Being able to foresee a threat (such as a regulatory ban) allows a business to adapt, pivot, or strategize to minimize negative impact. In this scenario, Rajat shifted to using biodegradable materials, which not only helped him avoid the loss but turned the situation into a profitable one.
This illustrates how understanding and reacting to the business environment helps firms to prepare in advance for challenges, minimizing losses and even gaining a competitive edge.
Final Answer: (B)