SAHAY INSTITUTE

Chapter 3

Business Environment

Multiple Choice Questions

1. The term ........ means the totality of all individuals, institutions and other
forces that are outside a business.

(a) Internal environment

(b) (b) Social environment
(c) Business environment
(d) None of the above

2. Business environment is the sum total of all the factors and forces ......... to a
business.

(b) Specific
(a) Internal
(c) External
(d) All of these

3. Which of the following is the feature of business environment?

(a) It is a relative concept since it differs from country to country and even
region to region
(b) It enables the firm to identify opportunities and getting the first mover
advantage
(c) It helps in tapping useful resources
(d) All of the above

4. The term business environment means the sum total of

(a) All individuals
(b) Institutions
(c) Other forces that are outside the control of a business enterprise
(d) All of the above

5. The trend of Yoga as a result of COVID-19 relates to ………… and environment

of business.

(a) Social
(b) Political
(c) Technological
(d) Legal

6. Investors, customers, competitors and suppliers come under ......... forces.

(a) General
(b) Specific
(c) General and Specific
(d) None of the above

7. Which of the following does not characterise the business environment?

(a) Uncertainty
(b) Employees
(c) Relativity
(d) Complexity

8. Specific attitudes that elected government representatives hold towards

business is called ...... environment.
(a) Legal
(b) Social
(c) Technological
(d) Political

9. Which of the following best indicates the importance of business

environment?
(a) Identification
(b) Improvement in performance
(c) Coping with rapid changes
(d) All of the above

10. Even though the political conditions vary from country to country, they
impact the sentiment of an investor in the business, if the instability of the
political conditions cause uncertainty and make difficult for him to predict
the future.
Which feature of the Business Environment is being highlighted in the above
statement?

(a) Specific and general forces

(b) Dynamic nature
(c) Relativity
(d) All of the above

11. "The increase in the demand for many Ayurvedic medicines, Health products
and services in the past few months, is related to the need for building
immunity and an increased awareness for healthcare due to the spread of
Corona virus."
Identify the feature of business environment being described above.

(a) Specific and general forces

(b) Inter-relatedness
(c) Relativity
(d) None of the above

12. ...... is considered as the major element of political environment.

(a) The extent of government intervention in business

(b) Planned outlay in public and private sectors
(c) Expectation from the workforce
(d) Administrative order issued by government authorities

13. As a foreign tourist visited India, he noticed that Indian markets, tastes,
trends and regulations were different from that of his country. Which feature
of business environment is reflected here?
(a) Uncertainty
(b) Dynamic
(c) Relative concept
(d) All of the above

14. Non-discriminatory employment practices is the part of which dimension

of business environment?

(a) Economic
(b) Social
(c) Legal
(d) Political

15. ........ consists of various macro-level factors related to the means of

production and distribution of wealth which have an impact on business and
industry.

(a) Economic environment

(b) Political environment
(c) Social environment
(d) Legal environment

16. Foreign Investment Promotion Board (FIPB) was setup to promote and
channelise ........ investment in India.

(a) Domestic
(b) Foreign
(c) Both (a) and (b)
(d) None of these

17. ‘Threats to law and order' is an example of ...... environment of business.

(a) economic
(b) political
(c) social
(d) legal
18. Which of the following is not included in the Micro Environment (Operating
Environment)?

(a) Suppliers
(b) Competitor
(c) Customer
(d) Government

19. Since more number of people have become more beauty and health
conscious, our economy has witnessed an unprecedented surge in the number
of health and beauty spas and wellness clinics.

Related feature of business environment being described in the above lines is

(a) Totality of external forces

(b) Dynamic nature
(c) Inter-relatedness
(d) Relativity

20. ........ is considered a major element of the economic environment

(a) Public debt

(b) The nature of relationship of our country with foreign countries
(c) Birth and death rate
(d) Literacy rates

21. Yo Tummy` began its business by offering the classic combo of hamburgers
and fries. But over time, their customers wanted healthier foods, so Yo Tummy'
responded and began offering healthy alternatives such as salads, fruits, wraps
and oat meal. If Yo Tummy` hadn't responded, they may have lost customers
that wanted to eat healthier foods. The above case highlights one of the points
related to the importance of business environment and its understanding by
managers. Identify it.

(a) It helps in coping with rapid changes

(b) It helps in improving performance.
(c) It helps the firm to identify threats and early warning signals
(d) It enables the firm to identify opportunities and getting the first mover
advantage.

22. Earlier firms used to follow production orientation concept and now they
study and analyse the market first and then produce the goods

(a) True
(b) False
(c) Can't say
(d) Partially true

23. With the introduction of mineral water bottle in India, Aqua was able to
capture the big market share in India.
Which importance of business environment is highlight in the above case.

(a) Helps in tapping resources

(b) Help in policy-making
(c) Improve performance
(d) Help to identify opportunity and getting first mover advantage

24. Which one is a specific force for a garment manufacturing industry?

(a) Change in law

(b) Change in government
(c) Change in fashion
(d) Change in technology

25. By developing new ways of doing things, the firm can cope up with changing
technological environment.

(a) True
(b) False
(c) Can't say
(d) Partially true

26. The cost of production increased due to increase in minimum wage rate by
government is an economic dimension.
(a) True
(b) False
(c) Can't say
(d) Partially true

27. Threats refer to the internal environment trends and changes that will
hinder a firm's performance

(a) True
(b) False
(c) Can't say
(d) Partially false

28. Telecom sector was opened up to private sector as a reform under

Economic Policy, 1991. Nokia became the first cellular company to operate in
1994 and dominated the market. Later, it lost its market share and was
absorbed by Microsoft. The management of Microsoft examined the
environment and made suitable changes.

Identify the point of importance of business environment with appropriate

actions reflected in the above case

(a) It helps in identifying opportunities and getting first mover advantage

(b) It helps in identifying threats and early warning signals
(c) It helps in improving performance
(d) It helps in tapping useful resources

29. Which of the following is not an element of social environment?

(a) Birth and death rate

(b) Constitution of the country
(c) Population shifts
(d) Life expentancy

33. Which of the following is a component of economic environment?

(a) Concern with quality of life

(b) Rates of saving and investment
(c) Extent of government intervention in business
(d) Birth and death rate

34. "Even after opening up of the Indian economy in 1991, foreign companies
found it extremely difficult to cut through the bureaucratic red tape to get
permits for doing business in India, which created a negative impact on
business."

Identify the dimension of the business environment which led to creation of the
negative impact on business

(a) Social Environment

(b) Technological Environment
(c) Political Environment
(d) Legal Environment

35. Black economy works as parallel economy to the main economy of a

country.

(a) True
(b) False
(c) Can't say
(d) Partially true

36. Match the following

Column I Column II
A. Suppliers and creditors (i) Opportunities
B. Social and political environment (ii) Specific Forces
C. Gaining the profits for being a (iii) General Forces
pioneer
D. Positive external trends (iv) First mover advantage

Find the correct option.

A B C D A B C D
(a) (i) (ii) (iii) (iv) (b) (ii) (iii) (iv) (i)
(c) (iii) (iv) (i) (ii) (d) (iv) (I) (ii) (iii)
37. The Rajasthan government has developed surveillance network using latest
satellite technology. Under this system, the state's mining department would be
in a position to check illegal mining activities across the state. The state
government is also considering the use of drones in its proposed campaign
against illegal mining. Identify the related dimensions of business environment.

(a) Economic dimension and Legal dimension

(b) Social dimension and Economic dimension
(c) Political dimension and Economic dimension
(d) Technological dimension and Political dimension

38. Which of the following dimensions of business environment includes

legislations passed by the Government administrative orders issued by
government authorities.

(a) Technological environment

(b) Social environment
(c) Legal environment
(d) Economic environment

39. Match the following

Column I
A. Lifestyle and values
B. Payment through e-wallets
C. Rise in inflation
D. Attitude of government towards
business
E. Statutory warning on advertisement
Column II
(i) Economics environment
(ii) Political environment
(iii) Legal environment
(iv) Technological environment
(v) Social environment

Find the correct option.

A B C D E A B C D E
(a) (i) (ii) (iii) (iv) (v) (b) (ii) (v) (iv) (iii) (i)
(c) (v) (iv) (i) (ii) (iii) (d) (iv) (i) (ii) (iii) (v)

40. Match the statements with their respective features.

Statements Features
A. Dynamic (i) Easier to understand in parts but
difficult to grasp in totality
B. Uncertainty (ii) Different political conditions in
different nations
C. Complexity (iii) Difficult to predict the future
events
D. Relativity (iv) Technological improvements

Find the correct option

A B C D
(a) (iv) (iii) (i) (ii)
(b) (iv) (iii) (ii) (i)
(c) (iii) (iv) (i) (ii)
(d) (i) (ii) (iii) (iv)

41. Which of the following statements is true with respect to political

environment?

(a) It include the social forces like customs and traditions, values, social trends,
society's expectations from business, etc.
(b) It includes forces relating to scientific improvements and innovations.
(c) It includes political conditions such as general stability and peace in the
country.
(d) None of the above

42. match the features of business environment with their respective features.

Statements Features
A. Economic (i) Use of machine learning in banks
B. Political (ii) Provision of long term loan to the
builders at low rate of interest
C. Legal (iii) Individual freedom, social justice,
equality of opportunity
D. Technological (iv) Technological environment
E. Social (v) Donald trump withdraws
membership from WHO
Find the correct option.
A B C D E A B C D E
(a) (iv) (iii) (i) (ii) (v) (b) (ii) (v) (iv) (i) (iii)
(c) (iii) (iv) (v) (i) (ii) (d) (ii) (v) (i) (iii) (iv)

43. Match the following

Column I Column II
A. More demanding customers (i) Free flow of goods and services
between different countries
B. Entry of foreign bank in India (ii) Impact NEP
C. Globalisation (iii) Impact of liberation

Find the correct option.

A B C A B C
(a) (i) (ii) (iii) (b) (ii) (iii) (i)
(c) (i) (iii) (ii) (d) (iii) (i) (ii)

44. Match the following

Column I
A. Stock market indices
B. Custom and traditions
C. New techniques of operating
business
D. General stability and peace in the
country
Column II
(i) Political environment
(ii) Social environment
(iii) Technological environment
(iv) Economic environment

Find the correct options.

A B C D A B C D
(a) (iv) (iii) (i) (ii) (b) (ii) (iii) (iv) (v)
(c) (iii) (iv) (ii) (i) (d) (iv) (ii) (iii) (i)

45. Match the following

Column I Column II
A. Life expectancy (i) Economic environment
B. Relationship of two countries (ii) Social environment
C. Planned outlay in public and private (iii) Political environment
sectors
D. The companies act, 2013 (iv) Legal environment

Find the correct options.

A B C D A B C D
(a) (iv) (iii) (i) (ii) (b) (ii) (iii) (i) (iv)
(c) (iii) (iv) (ii) (i) (d) (iv) (ii) (iii) (i)

46. Which of the following is an example of social environment?

(a) Money supply in the economy

(b) Consumer Protection Act
(c) The Constitution of the Country
(d) Composition of family

47. In accordance with the economic planning, the government of India gave a
lead role to the public sectors for infrastructure industries whereas the private
sectors was broadly given the responsibility of developing consumer goods
industry. At the same time, the government imposed several restrictions,
requisitions and controls on the working of private sector enterprises.

Identify the dimension(s) of business environment highlighted above

(a) Economic environment

(b) Legal environment
(c) Political environment
(d) All of the above

48. Express Tours Ltd.' is a travel agency which books air tickets on commission
basis. It takes two days for Express Tours to get the tickets from airport
reservation counter and deliver the same to customers. During the last one
year, there has been drastic decrease in its business as most of the customers
have shifted to another travel agency, "Shiva Tours and Travels, which provides
tickets within half-an-hour through Internet. Identify the dimension of business
environment that is being overlooked by Express Tours Ltd.

(a) Technological environment (b) Legal environment

(c) Political environment (d) Economic environment
49. It is heartening that the implementation of compliance requirements of the
Companies Act, 2013 has progressed substantially with NIFTY 500 companies.
Data shows a significant increase in women's participation in the top
management of Indian Companies from 5% few years ago to 13% now. Even
companies which are not in NIFTY 500 have undertaken drives to increase
women's participation across different areas of work. The government had also
announced that it would support such companies. Identify the dimension of
business environment discussed above which brought about the change.

(a) Technological environment

(b) Legal environment
(c) Social environment
(d) Economic environment

50. Which component of general environment of business prohibits the

advertisement of alcoholic beverages?

(a) Economic environment

(b) Political environment
(c) Social environment
(d) Legal environment

51. "Trends refer to changes and inclination towards new products and
services". This statement describes significant effect of which environment on
business?

(a) Economic environment

(b) Social environment
(c) Political environment
(d) None of the above

52. What is included in legal environment of business?

(a) Several acts passed by the government

(b) Court judgements
(c) Statutory warning prescribed under law
(d) All of the above
53. "The celebration of Diwali, Eid, Christmas and Guru Parv in India provides
significant financial opportunities for greeting cards companies, sweets or
confectionery manufacturers, tailoring outlets and many other related business.
Name the dimension of the business environment highlighted by this statement

(a) Technological environment

(b) Legal environment
(c) Political environment
(d) Social environment

54. ‘Soft and Silk Crafts (India) Limited' has been manufacturing ready-made
textiles, maintains high reputation in the international market and has been
dumping its untreated poisonous chemicals and wastes in the river ‘Yamuna'
which has polluted the river and created many health problems for Delhiites.
Identify the related environmental dimension.

(a) Political environment

(b) Social environment
(c) Legal environment
(d) Economic environment

55. The government of India proposed to encourage e-transactions by

encouraging the use of plastic money (through debit, credit and gift cards) or
net-banking by allowing deductions in usage charges, fees and income tax
exemptions. Which component of business environment does it represent?

(a) Political environment

(b) Social environment
(c) Legal environment
(d) Economic environment

56. Which component of business environment is related to the innovation of

the world's cheapest Lakhtakia car known as ‘Nano'?

(a) Technological environment

(b) Social environment
(c) Legal environment
(d) Economic environment
57. The government has directed all the leading companies to voluntarily
participate in the Clean India Mission and asked them to make toilets in cities
and villages. Which dimension of environment is affected due to such direction?

(a) Technological environment

(b) Social environment
(c) Legal environment
(d) Economic environment

58. India opened up its economy to the outside world in 1991 to encourage
foreign capital in the Indian Industry through LPG. To promote the initiative the
Prime Minister Narendra Modi attracted various foreign investing partners to
produce and sell the goods in India under its ‘Make in India’ initiative. The
foreign companies like ‘I-phone' installed manufacturing unit in India

Identify the dimension of business environment associated in the above case.

(a) Technological environment

(b) Social environment
(c) Legal environment
(d) Economic environment

59. The government of India started many initiatives under the guidance of the
Prime Minister. Among Such initiative is Make in India', the objective of which is
to attract foreign investors to manufacture and sell in India. Identify the
dimension of business environment affected due to this initiative

(a) Technological environment

(b) Political environment
(c) Legal environment
(d) Economic environment

60. Many state governments of India banned the sale of Maggie Noodles' on the
allegations of high levels of lead found in this popular snack. As the controversy
escalated, shares of the company saw the steepest decline Identify the
dimensions of business environment highlighted above with -reasons.

(a) Technological and political

(b) Political and legal

(c) Legal and economic

(d) Economic and political

61. "There is a great demand for reservation in jobs for economically weaker
sections of the society". Identify the type of dimension of business environment
mentioned

(a) Technological environment

(b) Political environment
(c) Legal environment
(d) Social environment
62. Beni, after completing her MBA, took up a job a multi-national company
named 'Fortio', The company was paying good salary and perks to its
employees. The wages were within the paying capacity of the company that
provided the employees a reasonable standard of living. The company also had
a good work culture and the behaviours of superiors were very good towards
their subordinates. Beni was very happy in this organisation, but due to long
working hours she did not have time to cook her meals. She had to depend on
outside found, which was deteriorating her health

She observed that this problem was faced by many of her colleagues, not only in
her company but also in many other companies. This was because of increase in
the number of working women and non-availability of hygienic home-cooked
food. She identified this as a great opportunity and decided to give up her job to
supply packaged home-cooked food to office goers at a reasonable price. At the
end of the day she also distributes the left-over food in the nearby night
shelters.

Identify the dimension of business environment being discussed above.

(a) Political
(b) Social
(c) Legal
(d) Economic
63. In order to solve economic problems of our country, the government took
several steps including control by the state of certain industries, central
planning and reduced importance of the private sector. Which dimension of
business environment discussed above?

(a) Economic
(b) Political
(c) Both (a) and (b)
(d) None of the above

64. 'The business environment consist of numerous inter-related and dynamic

forces. Because of this it may be difficult to know the extent of the relative
impact of social, economic political, technological or legal factors on change in
the demand of a product in the market. 'The feature of business environment
being discussed in the above para is

(a) Totality of external forces

(b) Relativity noe
(c) Inter-relatedness
(d) Complexity

65. Philips, a company manufacturing light bulbs incurred heavy expenditure on

scientific Research and Development and discovered a technology that made it
possible to produce an energy efficient light bulb that lasts atleast twenty times
as long as a standard bulb. It resulted in growth and profitability of the
company.
Identify the dimension of business environment mentioned above.

(a) Political
(b) Social
(c) Legal
(d) Technological