External environment refers to those factors outside the business These factors by and large are beyond the control of  a business and hence uncontrollable.
e.g economic, political and socio-cultural factors.

V- Volatility ,     U-Uncertainly
C-Complexity,  A - Ambiguity

1. GST is the indirect tax levied on goods and services across the country.
2. It is a comprehensive, multi-stage, destination based tax that is levied on every value addition.

According to Bayard O Wheeler Business environment is "the total of all things external to firms and industries which affect their organisation and operations".

There are 3 taxes applicable under this system.
(i) CGST : Collected by the Central Government on an intra-state sale (Eg : transaction happening in TamilNadu)
(ii) SGST Collected by the State Government on an intra-state sale (Eg : transaction happening within TamilNadu)
(iii) IGST : Collected by the Central Government for inter-state sale (Eg : Punjab to Tamil Nadu)

The development in the IT and tele communications has created a global market. Technology is widely used in conducting market research for understanding the special needs of the customer. Data-mining and data analytics are used to know the customer better. Technology is used in managing inventory, storing goods in warehouses, in distributing goods and in receiving payment. This dynamic environnment includes the following;
(i) The level of technology available within the country
(ii) The rate of change in technology
(iii) Technology adopted by competitors
(iv) Technological obsolescence

The Goods and Services Tax Council shall make recommendations to the Union and the States on
(i) The rates including floor rates with bands of goods and services tax.
(ii) Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster.
(iii) The goods and services that may be subjected to, or exempted from the goods and services tax.

(i) Values system:
The values ofthefounder/ owner of the business . percolates down to the cutire organisation and has a profound eflect on the organisation. The success of an organisation depends uponthe sharing of value system by all members.
(ii)Vision and objectives :
The vision and objectives of a business guides its operations and strategic decisions. Exanple :Amul the taste of India' Gujarat Co-operative Milk Marketing Federation (GCMMF).
(ii) Company image :
The image of an organisation plays an important role in introducing new products, selecting agents, and dealers for distribution forging allances with suppliers, expanding and entering new markets both domestic and international and raising finance, etc.

(i) A business in order to remain successful and competitive has to adapt to the constantly changing environment.
(ii) The formulation of strategic decisions, policies and programs requires an understanding of the environmental factors impacting the business.
(iii) Therefore scanning of the environment for identifying threats and opportunities is essential for any business.

Micro environment rcfers to th0se factors which are in the imncdiate environment of businessaffecting itsperformance. "These includes the following:
(i) Suppliers:In any organisation the suppliers ofraw materials and other inputs play a very vital rolc. Timely procurement of materiáls from suppliers enables continuity in production and reduces the cost ofmaintaining stock/ inventory.
(ii) Customers : The aim of any business is to satisfy the needs of its customers. The customer is the king and the fulcrum around which thebusiness revolves.
(iii) Competitors:All organisationsface competition at all levels such as local, national and global. Itis important for a business to understand its competitors and modify their business strategies in the face of competition.
(iv) Financiers :The financiers of a business which includes the debenture holders and financial institutions play a significant part in the running of a business. Their financial capability, policies strategies, attitude towards risk and ability to give non-financial assistance are all important to a business.
(v)Marketing Channel members:The marketing inter-mediaries serve as a connecting link between the business and its customers. The middlemen like dealers, wholesalers and retailers ensure transfer of product to customers. Insurance firm is another marketing intermediary which provides coverage for risk in business.
(vi) Public: This refers to any group like media group, citizen action group and local public which has an impact on the business. Many companies had to face closure due to actions by local public.

.The macro environment factors are as follows:
(1) Economic environment: The business is an integral part of the econonnic systenn prevalent in a nation. The nmultiple variables in the macro environnnent system include:
(a) he nature of economy baned on the stage of development.
(b) lhe nature ofcconomie system.
(c) he economic pollckes of he natlon.
(d) he cconomtic indlces.
(e) Developmentof financial market.
(f) he economicstructure.
(ii) Socio-Cultural environment: Social environment refers to the sunm total of factors of the society inwhich the business is located. It is dynamic and includes the behaviour of individuals, the role and inmportance of family, customs, traditions, beliefs and values, religion and languages, thc ethical values.
(iii) Political and Legal environment : The framework for running a business is given by the political and legal environment. The success of a business lies in its ability to adapt and sustain to political and legal changes.
(iv) Geo-physical environment : Thenatural, geographical and ecological factors have a bearing onthe business. These are as follows :
(a) the availability of natural resources
(b) the weather and climatic conditions
(c) topographical factors
(d) ecological factors
(e) location of certain industries
(f) availability of natural harbours.
(v) Technological environment:  The development in the IT and telecommunications has created a global market. Technology is widely used in conducting market research for understanding the special needs ofthe customer..

(a) Both (A) and (R) are true and (R) is the correct explanation of (A).

b) Both (A) and (R) are true and (R) is not the correct answer.