This page contains the entrepreneurship class 11 cbse book chapter/unit Concept of Market Analyzing the Market Environment notes where in the questions/answers/solutions for this chapter/unit 5 (B) are covered.
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Very Short Answers
Question Q.1.(i)
Q.1.(i) What is Micro Environment?
Answer Q.1.(i)
Micro environment means the internal environment, that is, forces close to the organisation affecting customers directly.
Question Q.1.(ii)
Q.1.(ii) Give one point of difference between the Primary forces and secondary forces.
Answer Q.1.(ii)
Primary forces belong to the micro/internal environment, while secondary forces belong to the macro/external environment.
Question Q.1.(iii)
Q.1.(iii) Who is a producer?
Answer Q.1.(iii)
A producer is a person or firm that creates or supplies goods and services for the market.
Question Q.1.(iv)
Q.1.(iv) What is meant by the term Demographic Forces.
Answer Q.1.(iv)
Demographic forces mean population-related factors like age, sex, education, occupation, income, and family size.
Short Answers
Question Q.2.(i)
Q.2.(i) Define ‘Market Environment’.
Answer Q.2.(i)
Market environment refers to the factors and forces that affect a firm’s ability to build and maintain successful relationships with customers. It includes all those conditions and influences in the market that shape the working of business and affect how well an enterprise can serve its customers.
Question Q.2.(ii)
Q.2.(ii) Define ‘Macro Environment’?
Answer Q.2.(ii)
Macro environment means the external or secondary forces that are part of the larger society and are generally uncontrollable by the company. These include demographic, economic, technological, political, natural, and cultural forces. Businesses cannot control them directly, so they must adapt their strategies according to these changes.
Question Q.2.(iii)
Q.2.(iii) Define customers.
Answer Q.2.(iii)
Customers are the actual or potential buyers who share a particular need or want and are willing and able to engage in exchange to satisfy that need. In simple words, customers are the people for whom the business produces or supplies goods and services in the market.
Long Answers
Question Q.3.(i)
Q.3.(i) “Performing Sellers” sustain and succeed in the market. How?
Answer Q.3.(i)
“Performing sellers” sustain and succeed in the market because they remain aware of market needs and trends and provide solutions for the unmet needs of society. They also identify opportunities and threats in the environment and perform their social responsibility properly. Ethics, values, principles, creativity, and innovativeness of the seller help in setting market trends. Therefore, capable and alert sellers are able to rule and succeed in the market.
Very Long Answers
Question Q.4.(i)
Q.4.(i) Differentiate between competitors and suppliers as primary forces of market.
Answer Q.4.(i)
Basis
Competitors
Suppliers
Meaning
Competitors are other sellers or firms in the market offering similar products or services. They compete for the same customers.
Suppliers are those who provide the inputs, raw materials, goods, or services needed by the producer/seller.
Role in market
They create competition in the market and influence price, quality, variety, and selling strategies. A seller must stay alert to succeed against them.
They support production and business continuity by ensuring the availability of required materials or services. Without proper suppliers, business operations suffer.
Effect on business
Competitors challenge the seller and force the business to improve efficiency, quality, and customer satisfaction.
Suppliers affect cost, quality, and timely availability of goods, which directly influence production and market performance.
Nature of relationship
The relationship is mainly competitive.
The relationship is mainly supportive and business-oriented.
Thus, both competitors and suppliers are primary forces of the market, but competitors challenge the seller, while suppliers support the seller.
Question Q.4.(ii)
Q.4.(ii) ‘Customer is the King’. Do you agree? Justify your answer.
Answer Q.4.(ii)
Yes, I agree that customer is the king. To know accurately the customer’s needs, wants, nature of demand, likes, dislikes, and all other related aspects of movement of products from production to consumption is very important. A properly designed market survey helps the entrepreneur understand all this and gives an edge over competitors.
A business exists mainly to satisfy customers. If the entrepreneur does not understand customer preference, buying behaviour, or acceptance of the product, the business cannot survive for long. Market survey also helps in forecasting, decision-making, pricing studies, packaging research, and distribution strategy, all of which are centred on customer needs.
So, the customer is called king because the success of the enterprise depends on how well it understands and satisfies the customer. A seller who ignores the customer cannot rule the market, but a seller who serves the customer well can sustain and succeed.
Very Long Answer Questions
Question Q.5.(i)
Q.5.(i) Discuss the primary forces that comprise the internal environment of the market.
Answer Q.5.(i)
The primary forces are the forces that form the micro or internal environment of the market. These are the forces that are close to the organisation and directly affect its ability to serve customers. The internal environment comprises key institutions that interact in the market.
The important primary forces are:
1.
Producer / Seller– The goals, objectives, policies, strategies, ethics, creativity, and innovativeness of the producer strongly influence the market. Performing sellers succeed because they understand market needs and provide solutions for unmet needs.
2.
Customers– Customers are the most influential force in the market.Consumer satisfaction is the foundation stone of a successful business. A business must understand customer wants, needs, and preferences.
3.
Competitors– Competitors create challenge in the market. A greater number of producers leads to harder and healthier competition, which forces sellers to improve quality, price, and service.
4.
Suppliers– Suppliers provide raw materials, machines, labour, and funds. Without proper suppliers, the market for a product may suffer or even collapse.
5.
Marketing Intermediaries– These include wholesalers, retailers, agents, brokers, transporters, warehouses, banks, and promoting agencies. They help in the smooth flow of goods and services between the company and the final market.
Thus, these primary forces together form the internal environment of the market.
Question Q.5.(ii)
Q.5.(ii) Explain the term Secondary Forces. What all external environment comprise of? Explain with suitable examples.
Answer Q.5.(ii)
Secondary forces are the forces of the macro or external environment. These are part of the larger society and are generally uncontrollable by the company. Businesses cannot change these forces directly, so they must adapt themselves according to them. These secondary factors also have a strong bearing on the market.
The external environment comprises the following forces:
1.
Demographic Forces– These refer to population factors such as size, density, location, age, gender, race, and occupation. These help divide people into market segments and target markets. For example, baby boomers, Generation X, and Generation Y have different characteristics and preferences.
2.
Economic Factors– These relate to the purchasing power of people and the way they spend money. In times of economic growth, buying behaviour changes compared to periods of depression or inflation.
There other macro forces such as technological, political, natural, and cultural forces as part of the external environment. These influence business conditions, customer behaviour, and market opportunities. For example, a new technology may create a new market, while government policy changes may affect prices or production.
So, secondary forces are larger outside forces that shape the market environment and require businesses to adjust their strategies.
Question Q.5.(iii)
Q.5.(iii) Differentiate between the Micro and Macro environment.
Answer Q.5.(iii)
Basis
Micro Environment
Macro Environment
Meaning
It refers to the internal environment, that is, forces close to or within the organisation.
It refers to the external environment, that is, forces which are part of the larger society.
Nature
These are primary forces.
These are secondary forces.
Control
These forces are closer to the business and can be influenced more directly.
These forces are generally uncontrollable, and the company must adapt to them.
Main Components
Producer/seller, customers, competitors, suppliers, and marketing intermediaries.
Demographic, economic, technological, political, natural, and cultural forces.
Effect on business
They directly affect the firm’s ability to serve customers.
They affect the market indirectly by shaping the overall business environment.
Thus, the micro environment consists of immediate market forces, while the macro environment consists of larger outside forces that influence the market as a whole.