School of Management and Commerce

S. No. Questions CO1

Q1 Enumerate the influences of Macro Environment on business decisions. CO1
Ans. The influences of Macro Environment on business decisions include
political factors, economic conditions, socio-cultural factors,
technological changes, environmental factors, and legal factors.
Q2 What is environmental analysis? CO1
Environmental analysis refers to the process of identifying
and examining all potential environment variables that can
either directly or indirectly affect the performance and
profitability of a business organization
Q3 List out any three external environments of business. CO1
Three external environments of business could be the
economic environment, the technological environment, and
the political environment
Q4 Write the full form of “PESTEL”. CO1
PESTEL stands for Political, Economic, Social, Technological,
Environmental, and Legal factors
Q5 What is the significance of business environment? CO1
The significance of the business environment lies in its
ability to help businesses identify potential influences that
may provide either an opportunity or threat for them. This
helps them prepare for changes in their environment
Q6 “SWOT” stands for…………. CO1
SWOT stands for Strengths, Weaknesses, Opportunities, and
Threats
Q7 “ETOP” stands for ………. CO1
ETOP stands for Environmental Threat and Opportunity
Profile
Q8 Why is it said that business environment is uncertain? CO1
The business environment is said to be uncertain because it
is difficult to predict future happenings, especially when
environmental changes are taking place too frequently
Q9 Why business environment is called dynamic? CO1
The business environment is called dynamic because it
keeps on changing due to various factors such as
technological advances, changes in consumer preferences,
political changes, etc.
Q10 What is meant by ‘threats? CO1
In business, ‘threats’ refer to anything that could cause
damage to your organization, venture, or product
Q11 What do you mean by first mover advantage? CO1
First mover advantage refers to the competitive advantage
gained by a company that first introduces a product or
 service to the market

Q12 What is meant by opportunities? CO1

In business, ‘opportunities’ refer to favorable conditions or
situations in the environment that could produce rewards
for the organization if acted upon properly.

Q13 List any 4 features of business environment? CO1

Four features of the business environment could be

complexity, dynamism, multiplicity of influences, and far-
reaching impact
Q14 Explain the role and importance of business CO1
The role and importance of business lie in its ability to
create value, generate employment, contribute to the
national income, adapt to change, and serve as a conduit
for innovation and development

Q15 Name any four methods of forecasting. CO1

Four methods of forecasting could be trend analysis,
econometric modeling, qualitative forecasting, and
quantitative forecasting.

Q16 What is qualitative forecasting? CO1

Qualitative forecasting involves the use of expert judgment,
rather than numerical analysis, to predict outcomes.

Q17 What is econometric modeling? CO1

Econometric modeling is a type of forecasting that uses
statistical methods to analyze economic relationships
Q18 What is quantitative forecasting? CO1
Q19 Name any three dimensions of business environment CO1
Three dimensions of the business environment could be the
internal environment, the operating environment, and the
macro environment
Q20 State two important concerns of business environment. CO1
Two important concerns of the business environment could
be the rapid pace of change and the increasing complexity
of environmental factors.

Level B. Intermediate Questions (5 marks each)

Q21 Discuss in detail the factors of business environment. CO1
Factors of Business Environment: The business environment
is influenced by a multitude of factors, both internal and
external. Internal factors include the company’s resources,
culture, structure, and management practices 1. External factors
can be categorized into economic factors such as the state of the
economy, technological advancements, and market size 2, and
non-economic factors like social, political, legal, and
 environmental influences
Q22 How is business affected by its micro and macro environment? CO1
1. Micro and Macro Environment: The micro
environment refers to the immediate and specific
factors directly impacting a business, such as
customers, suppliers, competitors, and employees 45.
2. The macro environment encompasses the broader
external factors that affect an entire industry or
market, including economic, technological, social,
political, and environmental influences45.

Q23 What is business environment? Can any business house control the same? If CO1
yes, to what extent?
1. Control over Business Environment: A business
has control over its internal environment to some
extent67. However, the external environment is largely
beyond a company’s control67. Businesses can adapt
and respond to changes in the external environment,
but they cannot control or predict these changes 67.

Q24 “Business environment is dynamic and multi-faceted”. Discuss. CO1

1. Dynamic and Multi-faceted Nature of Business
Environment: The business environment is dynamic
and constantly changing due to various factors like
technological advancements, economic fluctuations,
and socio-cultural shifts8. It’s also multi-faceted,
encompassing a wide range of elements that interact
and influence each other8.

Q25 Outline the various techniques for scanning the business environment. CO1
Elaborate with suitable illustrations.
1. Techniques for Scanning the Business
Environment: Techniques include SWOT analysis
(Strengths, Weaknesses, Opportunities, Threats),
PESTEL Analysis (Political, Economic, Socio-cultural,
Technological, Environmental, Legal), and scenario
planning910.

Q26 What constitute internal environment of a firm? How is the environment CO1
affected by non-economic factors?
1. Internal Environment of a Firm: The internal
environment of a firm includes its resources, culture,
structure, and management practices111213. Non-
economic factors such as the company’s culture,
organizational structure, and human resources can
significantly impact the internal environment 3.

Q27 Why are Environmental Analysis and appraisal necessary? CO1

1. Environmental Analysis and Appraisal:
Environmental analysis, also known as environmental
scanning, is a process used to identify and analyze
 the internal and external factors that may affect an
organization’s performance1415. It helps in identifying
opportunities and threats, understanding
environmental changes, providing inputs for decision
making, and formulating appropriate strategies16.

Q28 Give examples of ‘threats’ and ‘opportunities’ of a business firm. CO1

1. Examples of Threats and Opportunities: Threats
could include new competitors, regulatory changes, or
economic downturns. Opportunities might include a
growing demand for your product or service, a new
market segment or niche, or a new technology that
automates routine tasks17.

Q29 Describe the process of environmental scanning. CO1

1. Process of Environmental Scanning: The process
involves examining and identifying environmental
factors, gathering information, evaluating
competitors, forecasting the impact, and assessing
strategies16918.

Q30 Discuss the various methods used for environmental forecasting. CO1
1. Methods for Environmental Forecasting: Methods
include trend analysis, scenario planning, and Delphi
technique. These methods help businesses anticipate
future trends and prepare for potential opportunities
and challenges.

Level C. Difficult Questions (10 marks each)

Q31 Highlight the need and importance of scanning business environment. Describe important CO1
components of business environment which a manager must consider in its decision-
making process.
Need and Importance of Scanning Business Environment:
Environmental scanning is crucial for a business as it helps in
understanding the external factors that might affect the
organization12. It aids in strategic planning, helps to cope with rapid
changes, assists in identifying opportunities and threats, and supports
decision making12. It also allows businesses to test different pricing
strategies, enhancing the sales of a product or service 2.

Important Components of Business Environment: The business

environment is broadly divided into two components:

 Internal Environment: It includes all the factors within an

organization that affect its performance and decision-making,
such as organizational culture, leadership style, organizational
structure, etc1.
 External Environment: It includes the factors outside the
organization that can affect its performance. It’s further divided
into micro and macro environment. The micro environment
includes customers, competitors, suppliers, etc., while the macro
environment includes political, economic, social, technological,
legal, and environmental factors1.

A manager must consider all these components in the decision-making

 process. The type of decision-making environment (certainty,
uncertainty, or risk) also plays a key role in the process. In a certain
environment, the manager has all the information needed to make an
informed decision. In an uncertain environment, the information
available is incomplete and often unreliable. In a risky environment,
there is the possibility of more than one event taking place.

Q32 How do the following factors of environment affect the pricing of product of CO1
business firm (1) technology (2) increase in sales tax (3) inflation in the economy
1. Technology: Technological advancements can lead to more efficient
production processes, reducing the cost of production and thus affecting
the pricing of a product12. For example, technology can improve the
manufacturing process, inventory control, and automation1. By
considering the savings and costs of these technological advances,
companies can determine an appropriate price for the product based on
the actual manufactured cost1.
2. Increase in Sales Tax: An increase in sales tax increases the cost of a
product, which is often passed on to the customers in the form of
increased prices34. As sales tax causes the supply curve to shift inward,
it has a secondary effect on the equilibrium price for a
product3. Equilibrium price is the price at which the producer’s supply
matches consumer demand at a stable price3. Since sales tax increases
the price of goods, it causes the equilibrium price to fall 3.
3. Inflation: Inflation leads to a general rise in prices. As the cost of inputs
increases, companies often pass on the increased costs to customers by
raising the prices of their products567. When inflation occurs, companies
typically pay more for input materials6. One way for companies to offset
losses and maintain gross margins is by raising prices for
consumers6. However, if price increases are not executed thoughtfully,
companies can damage customer relationships, depress sales, and hurt
margins6.

Q33 Enumerate the influences of Macro Environment on business decisions. CO1

The macro environment comprises a range of external factors that can
significantly influence business decisions. Here are some key influences:
1. Political Factors: These include government policies, regulations,
political stability, and foreign trade policies. They can affect regulations
businesses have to follow, which can impact their operations and
profitability1.
2. Economic Factors: These include inflation, fiscal policy, monetary
policy, consumer spending, GDP, and employment rates2. They can
affect the purchasing power of consumers and cost of capital, thereby
influencing business strategies2.
3. Socio-cultural Factors: These involve the shared beliefs, attitudes,
and behaviours of a population. They can affect consumer needs and
the size of potential markets1.
4. Technological Factors: Technological advancements can create new
opportunities for businesses and can make certain products or services
obsolete1.
5. Environmental Factors: These involve ecological and environmental
aspects such as weather, climate, and climate change. Changes in these
factors can affect industries such as tourism, farming, and insurance 1.
6. Legal Factors: These are related to the legal environment in which
firms operate. Legal changes can affect a firm’s costs and demand 1.

Q34 What is environmental analysis? CO1

Environmental analysis, also known as environmental scanning, is a strategic
tool used to identify and analyze the internal and external factors that may
affect an organization’s performance12.
The internal components indicate the business’s strengths and weaknesses,
while the external components indicate the opportunities and threats outside
the organization12. An environment analysis considers trends and high-level
factors, such as interest rates, and how they might change a company’s
business12.
The environmental analysis process consists of the following steps 12:
 1. Identify environmental factors: This involves selecting
environmental factors to evaluate depending on the type of industry 12.
2. Gather information: Once the factors to be evaluated are decided,
information related to these selected environmental factors is
collected12.
3. Evaluate your competitors: This involves assessing the strategies
and performance of competitors12.
4. Forecast the impact: This involves predicting how the identified
environmental factors might impact the business12.
5. Assess your strategies: This involves evaluating the effectiveness of
current business strategies in the context of the identified
environmental factors12.

These reviews can help companies assess market attractiveness and create
better strategies for the future12. Environmental analyses help businesses
identify potential influences that may provide either an opportunity or threat for
them. This helps them prepare for changes in their environment12. Some
benefits of using an environmental analysis include forecasting the future,
identifying threats and allowing them to develop a strategy for response,
helping achieve business objectives, forming effective strategies and marketing
programs for a business, and improving organizational performance

Level D. Case Study (20 marks each)

Q35 Case study: CO1
The Kerala state industrial development corporation (KSIDC) has mooted
an amalgamation arrangement of a number of troubled seafood processing
units to form a single entity in a bid to help them to overcome their present
financial crises. There are around 90 sick seafood units in India against
many of whom the debt recovery tribunal has initiated proceedings.
Collectively these units owe around Rs.260 crore to various banks and
financial institutions. More than half of this amount is accumulated as
interest on loans, KSIDC which has around 20 units, conducted a study on
the sea food industry before coming up with the proposal for amalgamation,
an official said. The seafood exporters association of India (SEAI) and the
forum of revival and reconstruction of seafood exports industries in India
are now supporting the proposal which suggests that 10 or more units be
amalgamated in to one company so that it will have a stronger financial
base and better economies of scale. As a first step towards this plan, six
units in Kerala have come together to be amalgamated into a single firm.
However, this unit now requires approvals of their tenders to go ahead with
the scheme for amalgamation which is an optional scheme for the forum.
According to SEAI, the seafood unit started incurring losses and eventually
turned sick because of reasons that were beyond their control. Incidents
such as blacklisting of cooked shrimp by the US and ban on Indian seafood
announced by the European Economic Community (EEC) are factors that
contributed to the weakening of the industry. On the other hand, processing
units had to invest in modernizing their facilities to remain competitive in
the global markets, but they are facing financial problems. There is not
sufficient raw material available and competition in the sector is unhealthy
too. The SEAI and the forum are now seeking the help of the Indian bank’s
association and the finance ministry to settle their dues to the banks.
According to SEAI, a similar model of amalgamation was tried out
successfully in Iceland 20 years ago. About 100 traditional seafood units in
 the country were amalgamated into ten units to achieve a turnaround.
Question:
What are the reasons of sickness of seafood units? Do you support the
strategy of SEAI for revival and reconstruction?
Ans.
The sickness of the seafood units, can be attributed to
several factors:

1. International Restrictions: Incidents such as the

blacklisting of cooked shrimp by the US and a ban on
Indian seafood announced by the European Economic
Community (EEC) have weakened the industry.
2. Modernization Costs: The processing units had to
invest in modernizing their facilities to remain
competitive in the global markets, which led to
financial problems.
3. Insufficient Raw Material: There is not enough raw
material available for the seafood units.
4. Unhealthy Competition: The competition in the
sector is unhealthy.

As for the strategy of the Seafood Exporters Association of

India (SEAI) for revival and reconstruction, it’s important to
note that. However, based on the information provided, the
strategy of amalgamating multiple units into one company
could potentially provide a stronger financial base and
better economies of scale. This approach has been
successful in Iceland, where about 100 traditional seafood
units were amalgamated into ten units to achieve a
turnaround. Therefore, it seems like a viable strategy that
could help the troubled seafood units overcome their
financial crises. However, the success of this strategy would
depend on various factors, including the execution of the
plan and the market conditions. It’s also crucial that the
amalgamated units receive the necessary approvals and
support from relevant stakeholders, including the Indian
Bank’s Association and the Finance Ministry.

** Note: Students to be instructed to draw well labeled diagrams wherever necessary, to support their
answers (especially in level B and C questions)
 School of Management and Commerce
Question Bank - Unit no: 2
Program: MBA
Course Name: Business Environment Course Code: 23MBA103
Academic year: 2023-25 Sem/Year: 1st/1st
Level A. Easy Questions (2 marks each)
S. No. Questions CO2
Q1 Distinguish between the characteristics of socialism and capitalism. CO2
Q2 What are the factors influencing the Economic System of country? CO2
Economic systems are influenced by various internal and external
factors such as production, distribution, and consumption of
goods. Additionally, human motivations, culture, politics,
institutions, ethics, and history also play a role
Q3 What are the economic systems prevailing in the world? CO2
The world’s major economic systems fall into two broad
categories: free market or capitalism, and planned economies,
which include communism and socialism. However, many
countries use a mixed market system that incorporates elements
from more than one economic system
Q4 ‘Business is an economic system’ – Discuss. CO2
A business operates within an economic system and contributes
to it by providing goods and services desired by its
customers. Businesses meet the needs of consumers and other
organizations, thus playing a key role in the economy
Q5 What is Mixed economy? CO2
A mixed economy is a system that combines aspects of both
capitalism and socialism. It allows for economic freedom in the
use of capital, but also allows for governments to interfere in
economic activities to achieve social aims
Q6 What is meant by welfare-state? CO2
A welfare state is a type of government responsible for its
citizens’ basic social and economic security. Common welfare
activities undertaken by the state include free health care and
education, pensions, welfare payments, etc
Q7 What is fiscal policy? CO2
Fiscal policy: Fiscal policy is the use of government revenue
collection (taxes or tax cuts) and expenditure to influence a
country’s economy
Q8 What is privatization? CO2
1. Privatization: Privatization refers to the process of
transferring ownership, management, and control of
public sector enterprises to the private sector.

Q9 Examine new industrial policy. CO2

The new industrial policy aims to focus on One Nation-
One Standard, promote startups in every district, create
startup innovation zones at the level of urban local
bodies, and incentivise Indian speciality products by
 creating premium international brands8.

Q10 Comment on the role of Commercial Banks in Industrial Financing. CO2

Commercial banks play a key role in financing the industrial
sector by offering short-term and medium-term finance. They
also help in developing the capital market which is
underdeveloped in some countries
Q11 What is meaning of disinvestment? CO2
1. Disinvestment means the sale or liquidation of assets
by the government, usually Central and state public
sector enterprises, projects, or other fixed assets.

Q12 SLR stands for…………………? CO2

Statutory Liquidity Ratio
Q13 What is the contribution of Public sector in the GDP of India? CO2
The contribution of the Public sector in the GDP of India is
significant. The public sector contributes only 20 per cent to the
national income, but accounts for nearly 40 per cent of the total
wages
Q14 What does domestication refers to? CO2
1. Domestication refers to the process of bringing
animals or plants under human control in order to
provide food, power, or company45.

Q15 Define cheap monetary policy. CO2

1. A cheap monetary policy refers to a monetary
policy by the central bank where the central bank sets
low interest rates so that credit is easily available to
the general public in order to bring efficiency in trade
and commerce in an economy67.

Q16 Why industrial policy is needed? CO2

1. An industrial policy is needed to augment the
industrial production and thereby enhance the
industrial growth which leads to economic growth by
optimum utilization of resources; modernization;
balanced industrial development; balanced regional
development; balanced development of basic and
consumer industry; coordinated development of large
as well as small, medium and cottage enterprises;
determination of area of operation under private and
public sector; enhance cordial relations between
workers and management and proper utilization of
the domestic / foreign capital8.

Q17 Write the meaning of export import policy. CO2

The Export Import policy, also known as the Foreign Trade
Policy (FTP), contains guidelines governing the imports and
exports of products and services in and out of India 9
Q18 What is meaning of money inflation? CO2
Money inflation is a sustained increase in the money supply of
a country (or currency area). It is often associated with an
 abnormal increase in the quantity of money resulting in an
abnormal rise in prices
Q19 Name any three pillars of economic environment. CO2
The three pillars of the economic environment are often
referred to as the economic, social, and environmental
pillars. These pillars provide a framework to evaluate
sustainability for organizations, products, services, and
technologies
Q20 What is Cash Reserve Ratio? CO2
1. The Cash Reserve Ratio (CRR) is the minimum
amount as specified by the Central Bank, to be
maintained by the Commercial banks of the public
deposits with the Central Bank14.

Level B. Intermediate Questions (5 marks each)

Q21 What are the objectives of monetary policy? CO2
monetary policy is a significant economic policy that manages the size
and growth rate of the money supply in an economy. It is a powerful
tool to regulate macroeconomic variables such as inflation and
unemployment1. The primary objectives of monetary policies are:
1. Inflation Management: Monetary policies can target inflation
levels. A low level of inflation is considered to be healthy for the
economy1.
2. Unemployment Management: Monetary policies can influence
the level of unemployment in the economy. For example, an
expansionary monetary policy generally decreases
unemployment because the higher money supply stimulates
business activities that lead to the expansion of the job market 1.
3. Currency Exchange Rates Maintenance: Using its fiscal
authority, a central bank can regulate the exchange rates
between domestic and foreign currencies1.
4. Neutrality of Money: This objective aims to ensure that
changes in the money supply do not affect real variables like
output and employment2.
5. Economic Growth: Monetary policy can be a powerful tool of
economic transformation, creating suitable conditions for
economic progress2.
6. Equilibrium in the Balance of Payments: This involves
managing the country’s imports and exports to maintain a
balance

Q22 Critically examine the salient features of India’s Industrial Policy, with CO2
suitable illustrations.
1948: Introduced the concept of a Mixed Economy and restricted foreign
investments.

1956: Established the basic framework of Industrial Policy, classified industries

into public, mixed, and private sectors.

1977: Focused on employment, wealth distribution, and decentralization. It

prioritized small scale Industries and imposed restrictions on MNCs.

1980: Promoted competition, modernization, selective liberalization, and

technological up-gradation.

1991: Redefined the role of the public sector, welcomed private sector and
foreign investment, ended industrial licensing, and abolished the MRTP Act .
Q23 Differentiate between economic growth and economic development. What are the main CO2
indicators of economic growth in India?
Economic Growth refers to an increase in the production of goods and services
within an economy, typically measured by the Gross Domestic Product
(GDP). It’s a quantitative concept that reflects the potential increase in the
number of business transactions1.
Economic Development, on the other hand, goes beyond the quantitative
aspect of growth and encompasses improvements in various social and
economic factors. It refers to the overall development of the quality of life in a
nation, which includes economic growth1.

The main indicators of economic growth in India include:

 Gross Domestic Product (GDP): Measures the total value of goods

and services produced within a country2.
 Private Consumption: Reflects the spending by households in the
economy3.
 Government Consumption: Represents government spending3.
 Investment: Indicates the amount of capital formation3.
 Exports and Imports of Goods and Services: Show the value of
goods and services sold to and bought from other countries 3.
 Balance of Goods: The difference between a country’s exports and
imports3.

Q24 “How EXIM policy motivates economic development of a country”. Explain. CO2
The Export-Import (EXIM) policy of a country can significantly motivate its
economic development. Here’s how:

1. Stimulates Growth: By increasing exports and imports, the EXIM

policy can stimulate economic growth12.
2. Access to Essential Resources: It provides access to essential raw
materials, intermediates, components, consumables, and capital goods,
which are crucial for production and services2.
3. Encourages Foreign Investment: The policy can attract foreign
investors, leading to an increase in investment and economic
development2.
4. Promotes Specialization: Countries can focus on producing
commodities where they have a comparative advantage, leading to
efficient use of resources2.
5. Price Stability: By managing imports and exports, the policy can help
stabilize prices of goods and services2.

Q25 Explain the concept mixed economy? Do you think our country has benefited by following CO2
the mixed economic system? Support your answers with suitable examples.
A Mixed Economy is an economic system that combines aspects of both
capitalism and socialism1. It typically maintains private ownership of most
means of production, with the government intervening through regulations 1.
India is widely recognized as a prime example of a mixed economy 2. It has
benefited from this system in several ways:

1. Controlled But Free Economic Development: The government

encourages free economic activities while implementing necessary
controls3.
2. Prioritization of Citizen Welfare: India’s mixed economy emphasizes
economic welfare3.
3. Economic Planning: The government undertakes economic planning
and implements measures and policies3.
4. Co-existence of Private and Public Sectors: Both private and public
sectors exist and contribute to the economy3.

These features have played a significant role in India’s economic development,

increasing the pace of economic growth, reducing disparities of income and
wealth, and developing infrastructure4.
Q26 Enumerate the impacts of Globalization on Indian Economy. CO2
Globalization has had several impacts on the Indian
economy:

1. Increased Foreign Direct Investment (FDI): Globalization

has attracted significant FDI inflows into India, leading to
economic growth and job creation12.
2. Expanded Market Access: Indian businesses have gained
more access to global markets1.
3. Economic Growth: The globalization led India to increase its
economic growth rate up to 7-8% in the late ’90s2.
4. Boost to Indian Software Industry: The software industry in
India got a significant boost due to globalization 2.
5. Increased Exports: Globalization connected India to the world,
increasing the export of Indian products

Q27 "Liberalization of Business is an important pre-condition to Globalization". CO2

Explain why.
Liberalization of business is crucial for globalization because:

1. Removes Barriers: It eliminates restrictions on cross-border

movement of capital, goods, and people1.
2. Stimulates Growth: Liberalization can lead to higher GDP growth rates
and investment-to-GDP rates2.
3. Facilitates Foreign Direct Investment (FDI): It encourages FDI,
forcing public sector companies to restructure for efficiency 3.
4. Promotes Exports and Imports: It motivates export and allows more
imports of capital goods and technology3.
5. Encourages Competition: By opening up domestic markets to foreign
businesses, it fosters competition and efficiency.

Thus, liberalization is a key step towards integrating an economy with

the global market45.

Q28 Explain various factors leading to the changing dynamics in Banks. CO2
Several factors are leading to the changing dynamics in banks:

1. Customer Expectations: With the rise of digital technology,

customers expect seamless, round-the-clock banking services 1.
2. Technology Advancements: The adoption of new-age
technologies like AI, machine learning, and blockchain is
transforming banking operations1.
3. Regulatory Changes: More assertive regulations are reshaping
the banking industry2.
4. Globalization: Banks are expanding their services globally,
leading to increased competition3.
5. Economic Factors: Changes in interest rates and money supply
also impact banking dynamics2.

Q29 "Major Economic policy decisions are often political decisions". Explain CO2
how
Major economic policy decisions are often political because:

1. Political Ideology: Economic policies can reflect the

political beliefs of those in power1.
2. Election Considerations: Politicians may make
 economic decisions based on what will appeal to
voters2.
3. Influence of Political Parties: The economic policy
often changes when political parties come to and
leave power3.
4. National Interests: Decisions may be influenced by
the desire to protect national industries or jobs 1.
5. International Relations: Economic policies can be
used as tools in international diplomacy 2.

Q30 "Government plays an important role in development of business in every national CO2
economy". Explain the above statement with a suitable example.
The government plays a crucial role in business development in several
ways:

1. Regulatory Role: The government formulates and implements

various measures to monitor and regulate economic activities 1.
2. Promotional Role: The government implements policies for the
progress of development infrastructure, such as providing
financing, offering incentives, and building infrastructure for
industrial expansion2.
3. Planning Role: The government identifies objectives and the
sectoral distribution of resources in plans like the Five Year
Plans2

For example, in India, the government has designated some

backward regions as ‘No Industry Districts’ and grants subsidies
and tax holidays to encourage investment in these
underdeveloped regions2. This helps in achieving balanced
development and reducing regional imbalances
Level C. Difficult Questions (10 marks each)
Q31 What do you mean by economic environment? Explain its importance and CO2
also explain various economic factors which are the basis of deciding
business strategies.
The economic environment refers to all the external economic factors that
influence commercial and consumer behavior1. These factors can affect a
business’s operations and its potential for success 1. It includes both
microeconomic factors (individual or company level) and macroeconomic factors
(broader economy level) such as tax rates, inflation, labor supply, exchange
rates, recession, government policies, changes in law, etc 1.
The economic environment is important because it influences how consumers
and businesses behave, which affects company performance 1. Understanding
these variables, alongside consumer habits, empowers companies to strategize
marketing and spending efforts better2. This knowledge can lead to a more
substantial return on investment as companies can set prices and advertise to
target groups based on customer needs and economic status 2.

Various economic factors form the basis of deciding business strategies:

1. Demand/Supply: An increase or decrease in the supply and demand of

goods can cause inflation or depression, influencing consumer habits
and business performance3.
2. Exchange Rate: The exchange rate influences the sales of goods on
the global level3.
3. Interest Rate: Interest rates can affect borrowing costs, dictating
business opportunities to finance projects3.
4. Tax Rate: The tax rate affects the price of goods, which determines
who is willing to buy a product given its price point 3.
 5. Wages: Demand, supply, and unemployment rates can affect
wages. An increase in wages can boost purchasing power; a decrease
can lower overall spending .
3

Q32 Suggest precautionary measures to protect the Indian Economy from CO2
negative effects of Globalization.
To protect the Indian economy from the negative effects of
globalization, the following precautionary measures can be
taken:

1. Implement Labour Laws: Ensure that labour laws

are properly implemented and workers get their
rights1.
2. Support Small Producers: Assist small producers to
improve their performance1.
3. Use Trade and Investment Barriers: If necessary,
use trade and investment barriers1.
4. Negotiate at the WTO: Advocate for ‘fairer rules’ at
the World Trade Organization1.
5. Develop Mechanisms for Associated Risks:
Develop mechanisms to deal with the risks associated
with globalization2.
6. Increase Equity Limit of Foreign Investment:
Increase the equity limit of foreign investment 3.
7. Encourage Foreign Investment and Technology
Agreement: Encourage foreign investment and
technology agreement4.

Q33 “The economy of India had undergone significant policy shifts in the CO2
beginning of the 1990s. This new model of economic reforms is commonly
known as LPG model”. Explain the above statement.
The LPG model refers to the economic reforms of
Liberalization, Privatization, and Globalization that India
underwent in 199112345.
Liberalization involved reducing government regulations
and restrictions on business operations1. It aimed to
promote economic growth by allowing private businesses to
operate more freely1.
Privatization referred to the transfer of ownership of
businesses from the public sector to the private
sector1. This was done to increase efficiency and
competitiveness1.
Globalization meant integrating the Indian economy with
the global economy1. It involved increasing foreign trade
and investment, thereby making India a part of the global
economic system1.
These reforms were a part of India’s New Economic Policy,
which aimed to uplift the country economically 4. The LPG
reforms contributed greatly to making India a globally
integrated economy4.
Q34 “All creative human activities relating to the production of goods and services for CO2
satisfying human wants are known as business. It is also a gainful procedure through
which individuals and groups exchange goods and services”. Explain how.
A business is an organized economic activity where goods and services
are produced or procured with the aim of selling them for profit12. It
involves the exchange of these goods and services between individuals
or groups2. This exchange is typically motivated by the desire to satisfy
human wants2.
For example, a clothing company manufactures clothes (goods) and
sells them to customers. The customers exchange money for the
clothes, satisfying their want for clothing. The company makes a profit
from this exchange, which is then reinvested into the business to
produce more clothes or introduce new products2. This cycle of
production, exchange, and profit is the essence of business 2.
Businesses can be of different types and sizes, ranging from small
family-owned restaurants to large corporations like
Amazon1. Regardless of their size or industry, all businesses aim to
satisfy human wants through the production and exchange of goods and
services12.

Level D. Case Study (20 marks each)

Q35 Case study:

India’s problem is not lack of resources; it is the inability and unwillingness CO2
to mobilize resources into the public sector. The Indian economy is not
facing a resources crisis; it is confronting a fiscal crisis. The reasons for this
are the steady decline over the years in the share of direct taxes in spite of
the fact that both incomes and savings of the top 10 percent of the
households in the country have been steadily increasing. The government
does not appear committed to placing greater reliance on direct taxes to
mobilize resources. It is unwilling to tax the rich and therefore has no
option except to fall back on indirect taxes and rely more than ever on
borrowing from those who expect interest and tax concessions from
temporarily parting with their resources to enable the government to
continue its ‘development program’. Grave inter-sectoral imbalances also
exist in India’s tax structure because agricultural incomes are virtually tax
free. The Raj committee has recommended the introduction of an
agricultural tax to remove this inequity, built the state government did
nothing to implement the recommendation. The long-term fiscal policy also
did nothing to eliminate this inter-sectoral inequity. Public sector
enterprises failed to generate the contemplated re-investable surplus and the
small surplus that becomes available from these enterprises was not
attributable to improved efficiency. The fiscal deficit reflects the total
resource gap, which equals the excess of total government expenditure over
total government revenue and grants. The fiscal deficit thus fully indicates
the indebtedness of the government.
Suggest some remedies for the new fiscal policy to combat fiscal crisis.
Ans.
Based on the case study, here are some potential remedies
for the new fiscal policy to combat the fiscal crisis:
1. Broadening the Tax Base: The government could
consider broadening the tax base by including sectors
that are currently untaxed or under-taxed. This could
 include implementing the recommended agricultural
tax.
2. Increasing Direct Taxes: The government could
consider increasing the share of direct taxes,
especially from the top 10 percent of households
whose incomes and savings have been steadily
increasing.
3. Improving Public Sector Efficiency: Efforts could
be made to improve the efficiency of public sector
enterprises to generate a larger re-investable surplus.
4. Reducing Dependence on Borrowing: The
government could aim to reduce its dependence on
borrowing, which leads to interest and tax
concessions, by improving its revenue collection and
reducing unnecessary expenditures.
5. Addressing Inter-sectoral Imbalances: The
government could work on addressing the grave inter-
sectoral imbalances in India’s tax structure.
6. Implementing Progressive Taxation: A
progressive taxation system, where the rich are taxed
more heavily than the poor, could be considered.
Remember, these are potential remedies and their
effectiveness would depend on various factors including the
execution of the policies, the socio-economic context, and
the overall economic environment. It’s also important to
note that any changes in fiscal policy should be carefully
considered and implemented to avoid unintended
consequences.
School of Management and Commerce
 Question Bank - Unit no: 3
Program: MBA
Course Name: Business Environment Course Code: 23MBA103
Academic year: 2023-25 Sem/Year: 1st/1st
Level A. Easy Questions (2 marks each)
S. No. Questions
Q1 What are the responsibilities of the business to the Government? CO3
Businesses have several responsibilities towards the government, including
the timely payment of taxes, compliance with rules and regulations, and
social responsibility
Q2 How does the legal environment affect business decisions? CO3
The legal environment can significantly impact business decisions. It
includes laws and regulations that businesses must follow, which can
influence everything from the company’s structure to its operations
Q3 What is PSU, give some examples. CO3
PSUs are government-owned enterprises in which the government holds 51
percent or more share capital. Examples include government companies,
statutory corporations, banking institutions, and departmentally run
companies
Q4 Who is responsible for presenting the Union Budget before the Parliament? CO3
The Union Budget is presented before the Parliament by the Finance
Minister of India
Q5 What is FDI? CO3
Foreign Direct Investment (FDI): FDI is an investment made by a
company or an individual in one country into business interests located in
another country
Q6 What is demonetization? CO3
Demonetization is an economic process where a currency unit’s status as
legal tender is declared invalid. This is usually done when old currency
notes or coins are being replaced by new ones
Q7 List some Promotional roles of the Government CO3
1. The government promotes businesses by providing subsidies,
implementing favorable policies, providing infrastructural facilities, etc.

Q8 List some entrepreneurial roles of the Government CO3

The government plays an entrepreneurial role by initiating, managing, and
owning many industries and services
Q9 What is the major role of RBI CO3
The Reserve Bank of India (RBI) is the country’s central banking
institution, which controls the issuance and supply of the Indian Rupee.
RBI’s role is to implement the monetary policy of India
Q10 What is the major role of SEBI CO3
2. : The Securities and Exchange Board of India (SEBI) protects the
interests of investors in securities and promotes the development of the
securities market.

Q11 What is Per Capita Income. Per capita income is a measure of the amount CO3
of money earned per person in a nation or geographic region. It is used to
determine the average per-person income for an area and to evaluate the
standard of living and quality of life of the population
Q12 Briefly describe GDP. GDP is the total monetary or market value of all the CO3
finished goods and services produced within a country’s borders in a
specific time period. It functions as a comprehensive scorecard of a given
country’s economic health
Q13 Briefly describe the role of consumer court. CO3
 School of Management and Commerce
Question Bank - Unit no: 4
Program: MBA
Course Name: Business Environment Course Code: 23MBA103
Academic year: 2023-25 Sem/Year: 1st/1st
Level A. Easy Questions (2 marks each)
S. No. Questions
Q1 Enlist some Socio-cultural forces of the business environment. CO4
These include culture, age composition, geography, ethnicity,
language, values, family structures, employment, social
developmental statistics, etc. All these factors impact decision-
making, business operations as well as long-term planning
Q2 What demographic factors are relevant to business? CO4
Key demographic factors include age, sex, income, education
level, and occupation. These factors can influence consumer
behavior, marketing strategies, and overall business operations
Q3 What is socio-cultural environment? CO4
The socio-cultural environment refers to the trends,
developments, values, attitudes, and behaviors prevailing in
society. It affects business decision-making due to its close
relation to the tastes, customs, traditions, lifestyles, and
preferences of customers
Q4 What are the effects of socio-culture on business? CO4
Socio-cultural factors such as social attitudes, belief systems,
education, law, politics, etc., have a bearing on the prospects of a
business. If a business overlooks, or fails to identify the effects of
socio-cultural factors, it runs the risk of alienating itself with its
immediate environment
Q5 What do you mean by taboos. CO4
A taboo is a subject, word, or action that is avoided for religious or social
reasons
Q6 What is literacy rate. CO4
The literacy rate is defined by the percentage of the population of a given
age group that can read and write
Q7 What is a social institution. CO4
A social institution is a group or organization that has specific roles, norms,
and expectations, which functions to meet the social needs of society
Q8 What is inequality of wealth. CO4
1. This refers to the unequal distribution of assets
among a population. It is a measure of the financial
differences between households in a country.

Q9 What are social groups. These are collections of individuals who CO4
interact with each other and share similar characteristics and a
sense of unity
Q10 Define Consumerism. CO4
This is a social and economic order that encourages the
acquisition of goods and services in ever-increasing amounts
Q11 List any 4 reasons of uneven income distribution in India CO4
Some reasons include lack of access to quality education,
regional disparities, caste system, gender inequality, and the
 informal sector of the economy.
Q12 List out the four consumer rights highlighted by President John F. Kennedy CO4
in his consumer message to the Congress in March, 1962
The four basic consumer rights outlined by President Kennedy
are: the right to safety, the right to be informed, the right to
choose, and the right to be heard.
Q13 What is family Structure. CO4
Family structure describes the relationships between people
living in a household who consider each other family. There are
several types of family structures, from the traditional nuclear
family to nontraditional (but increasingly common) single-parent
or same-sex families
Q14 What is Consumers Protection act. CO4
The Consumer Protection Act, implemented in 1986, gives easy
and fast compensation to consumer grievances. It safeguards and
encourages consumers to speak against insufficiency and flaws in
goods and services
Q15 What is globalization. CO4
Globalization is the process of interaction and integration among
people, companies, and governments worldwide. It involves
economic, cultural, and political aspects of globalization
Q16 What is Patriarchy. CO4
Patriarchy is a social system in which positions of dominance and
privilege are primarily held by men. It can be used to describe
different social structures in which men dominate over women
and children, or to explain and justify male dominance with
natural or cultural explanations
Q17 What is Materialism CO4
Materialism: Materialism is a form of philosophical monism
which holds that matter is the fundamental substance in nature,
and that all things, including mental states and consciousness,
are results of material interactions of material things
Q18 Explain Maslow's hierarchy of needs CO4
Maslow’s hierarchy of needs: Maslow’s hierarchy of needs is a
motivational theory in psychology comprising a five-tier model of
human needs, often depicted as hierarchical levels within a
pyramid. The five levels of the hierarchy are physiological, safety,
love/belonging, esteem, and self-actualization
Q19 What is Diffusion theory. CO4
The diffusion theory, also known as the diffusion of innovations
theory, is a theory concerning the spread of innovation, ideas,
and technology through a culture or cultures. The theory has
been extensively studied by sociologists, psychologists, and
anthropologists
Q20 What is Perception. CO4
Perception is the organization, identification, and interpretation of
sensory information to represent and understand the
environment. All perception involves signals in the nervous
system, which in turn result from physical or chemical stimulation
of the sense organs
Level B. Intermediate Questions (5 marks each)
Q21 Explain the traditional values and their impact on social and cultural CO4
environment.
Traditional values play a significant role in shaping the social and
 cultural environment. Here’s how:
1. Influence on Behavior: Traditional values guide societal
behavior and norms1. They form the ethical base of a society and
influence how people interact with each other1.
2. Cultural Diversity: Traditional values contribute to cultural
diversity2. They are part of the cultural heritage that helps us
understand ourselves better3.
3. Business Environment: Traditional values can impact the
business environment4. For instance, societies with a scientific
aptitude and rationality can provide a conducive environment for
business4.
4. Socio-Cultural Factors: Traditional values are part of the socio-
cultural factors that human resource specialists have to deal with

Q22 Explain the rationale of technology adaptation and absorption CO4

Technology adaptation and absorption are crucial for businesses and
economies for several reasons:
1. Competitive Advantage: Adapting to new technologies can
provide businesses with a competitive edge, allowing them to
operate more efficiently and effectively1.
2. Economic Growth: Technology absorption and adaptation play
a vital role in economic development2. They can lead to industrial
growth and increased productivity2.
3. Knowledge Acquisition: Technology absorption refers to the
acquisition, development, assimilation, and utilization of
technological knowledge and capability by a firm or some macro
entity from an external source3.
4. Adaptive Research: Importing technology initially and then
using adaptive research to modify the performance can help
reduce the lead time between developed and developing
countries2.
5. Continuous Growth: The technical know-how is not static, but
is a continuous process of growth2

Q23 What is the impact of Age distribution and social values on business CO4
keeping different states of India in context.
Age distribution and social values can significantly impact businesses in
different states of India. Here’s how:
1. Age Distribution: The age distribution of a state’s population can
influence the types of products and services that are in demand 1. For
instance, states with a younger population might see more demand for
education, technology, and entertainment services. On the other hand,
states with an older population might have more demand for healthcare
and retirement services1.
2. Social Values: Social values, often rooted in traditional customs and
beliefs, can shape consumer behavior2. For instance, in states where
traditional values are strong, businesses offering products and services
that align with these values might be more successful2. Conversely, in
states where modern values are more prevalent, businesses that offer
innovative and contemporary products and services might have the
upper hand2.
3. Caste System: India’s society is categorized into a hierarchically
organized caste system, encompassing certain rights and values for
each caste1. Those belonging to a lower echelon often face
discrimination and hardship1. This can impact the labor market and
consumer behavior in different states1.
4. Entrepreneurship: The age of entrepreneurs and their social value
creation goals can also impact businesses2. Younger and older
entrepreneurs tend to create more social value with their businesses,
while middle-aged entrepreneurs are more focused on economic value 2.

Q24 How does different religious beliefs of population impact any business. CO4
 Religious beliefs can significantly impact businesses in various ways:
1. Consumer Behavior: Religious beliefs often guide consumer
behavior1. For instance, dietary restrictions based on religion can
influence the food industry, with businesses offering halal or
kosher products to cater to Muslim and Jewish consumers
respectively1.
2. Work Ethics: Different religions have different work ethics that
can influence business operations1. For example, the Protestant
work ethic, which values hard work and frugality, has been linked
to the development of capitalism1.
3. Business Practices: Some religions encourage or discourage
certain business practices2. For instance, Islamic banking
adheres to the principles of Sharia law, which prohibits charging
interest1.
4. Holidays and Festivals: Religious holidays and festivals can
impact businesses, especially in sectors like retail and
tourism3. Businesses often see increased sales during these
periods3.
5. Global Business: In global business, religion is a key factor in
how global teams work together, schedule meetings and more 4.

Q25 What is the impact of literacy rate on the business environment. CO4
The literacy rate can significantly impact the business environment in
several ways:
1. Workforce Productivity: Businesses rely on employee literacy
for tasks such as reading and replying to emails, filling customer
orders, and following written instructions1. Higher literacy levels
can lead to increased productivity and efficiency 1.
2. Hiring Challenges: In communities with high rates of illiteracy,
hiring can be a challenge1. The estimated impact of illiteracy on
the U.S. economy is more than $225 billion in lost productivity
and inefficiencies1.
3. Consumer Behavior: Literacy levels can influence consumer
behavior and demand for certain products and services 1. For
example, higher literacy rates can lead to increased demand for
products and services that require a certain level of literacy to
use1.
4. Economic Impact: Higher literacy levels can lead to greater
employability across all sectors2. In Canada alone, less than 60
percent of native Canadians with low literacy levels are
employed2.
5. Business Practices: Literacy levels can influence how
businesses operate. For instance, businesses in areas with low
literacy rates may need to adapt their practices to communicate
effectively with their customers1.

Q26 Write a short note on dualism in India. CO4

Dualism in the business environment in India refers to the coexistence
of two distinct sectors within the economy123:
1. Traditional Sector: This sector is characterized by small-scale
industries, peasant agriculture, and handicrafts, which largely
adopt labor-intensive techniques of production 1. It is often
associated with rural areas and is marked by lower levels of
technology and productivity1.
2. Modern Sector: This sector includes large-scale industries like
mining, iron and steel, power plants, and others, which are
characterized by capital-intensive techniques of production 1. It is
often associated with urban areas and is marked by higher levels
of technology and productivity1.
This dualism can be broadly categorized into two types 1:
 Technological Dualism: This refers to the application of
 different production functions in the advanced sector as well as
in the traditional sector1. The advanced sector is capital-
intensive, and the backward sector is labor-intensive 1.
 Social Dualism: This indicates the presence of two different
strata, i.e., upper strata and lower strata in society1. However, in
the Indian economic structure, social dualism and such
consequent conflict is largely absent1.
The phenomenon of economic dualism in India is evident in the stark
divide between the urban and rural sectors2. This dualistic structure
poses significant challenges for economic development and policy-
making123.

Q27 Explain the concept of culture and its main elements. CO4
Q28 Distinguish between Social Institutions and Social Groups CO4
difference between Social Institutions and Social Groups.
Social Institutions are established practices, traditions, behaviors, or systems
of roles and relationships that are considered a normative structure or
arrangement within a society1. They are organized to meet the needs of people
chiefly through well-established procedures1. Examples of social institutions
include family, media, education, and the government1. They are enduring and
stable, serve a purpose, ideally providing better chances for human survival and
flourishing, and have roles that need to be filled1.
Social Groups are a collection of individuals who interact with each other and
share similar characteristics and a sense of unity2. A social group can be defined
as two or more humans who interact with one another, share similar
characteristics, and collectively have a sense of unity .
2

Q29 Distinguish between Attitudes and Interests CO4

Q30 Define the term 'Culture" CO4

In a business environment, culture refers to the values, beliefs, goals, practices,

behaviors, and communication patterns that impact a company's operations,

decisions, and relationships. Culture is also the set of behavioral and procedural

norms that can be observed within a company. These include:

 Policies

 Procedures

 Ethics

 Values

 Employee behaviors and attitudes

 Goals
  Code of conduct
Culture creates the day-to-day experience at a company. It's
about the experience people have at work and how that
experience aligns with the external brand and messaging of the
company.

Level C. Difficult Questions (10 marks each)

Q31 How does socio-cultural environment affect business decision-making? Give a brief sketch CO4
of the nature of socio-cultural environment prevailing in India
The socio-cultural environment plays a significant role in business
decision-making. It includes the trends, developments, values, attitudes,
and behaviors prevailing in society1. These factors are closely related to
the tastes, customs, traditions, lifestyles, and preferences of
customers1. For instance, McDonald’s had to consider the culture,
values, and food habits while opening outlets in India 1. That’s why it did
not include any Beef recipes in any Indian Outlets 1.
The socio-cultural environment includes culture, age composition,
geography, ethnicity, language, values, family structures, employment,
social developmental statistics, etc1. All these factors impact decision-
making, business operations as well as long-term planning 1.
As for the socio-cultural environment in India, it is characterized by its
rich diversity and deep-rooted traditions. India offers astounding variety
in virtually every aspect of social life2. Diversities of ethnic, linguistic,
regional, economic, religious, class, and caste groups crosscut Indian
society, which is also permeated with immense urban-rural differences
and gender distinctions2.
The socio-cultural environment in India includes social customs, values,
codes of conduct, beliefs, traditions and more3. These elements are
critical to understanding while planning an entry into the Indian
market3. The socio-cultural environment in India is also characterized by
various social institutions and systems, social groups, and social values
and attitudes3.

Understanding these socio-cultural factors is crucial for businesses to

effectively cater to their target audience, adapt their products or
services to local tastes and preferences, and make informed business
decisions. I hope this helps! Let me know if you have any other
questions.

Q32 What are the important feature of Indian culture and value system? How does the culture CO4
effect the business?
Indian culture is known for its rich diversity and deep-rooted
traditions. Some of the important features of Indian culture and value
system are12:

1. Longevity and Continuity: Indian culture has a long history

and has been continuous over centuries.
2. Unity in Diversity: India is known for its diverse culture where
people of different religions and languages live together.
3. Tolerance: Indian culture is known for its tolerance towards
different ideas and beliefs.
4. Amalgamation of Spirituality and Materialism: Indian
culture balances both spiritual and materialistic aspects of life.

The Indian value system emphasizes on concepts like Ahimsa (non-

violence), Yoga, Ayurveda, and the principle of “Vasudaiva
Kutumbakam” (the world is one family)2.
 The culture and value system of a country significantly impact business
operations. In the context of India, understanding these cultural
nuances is crucial for businesses34. For instance, business in India is
rooted in building long-term relationships4. Also, Indians tend to prefer
formal titles and have a particular style of
communication3. Understanding these aspects can help businesses
navigate the market dynamics effectively and make informed
decisions34. I hope this helps! Let me know if you have any other
questions.

Q33 “Business Social responsibility is confined only up to balancing profit and social goals”. CO4
Discuss
Business Social Responsibility (BSR) is not just about balancing profit
and social goals. It’s a broader concept that includes ethical business
practices, contributing to the community, and sustainable operations 123.
While profit is a primary goal for businesses, BSR emphasizes that
businesses have a responsibility to act ethically and contribute
positively to society123. This can include anything from donating money
to charity, investing in renewable energy, reducing the environmental
impact of the company’s products, to ensuring fair labor practices 2.
Moreover, BSR and profit are not mutually exclusive. In fact, they can be
complementary. Ethical and socially responsible businesses can attract
more customers, employees, and investors, thereby increasing
profitability123.
In essence, BSR goes beyond just balancing profit and social goals. It’s
about integrating social and environmental concerns into business
operations and decision-making123. I hope this helps! Let me know if you
have any other questions

Q34 Discuss the role and impact of Technology on the Business Environment. CO4
Technology plays a crucial role in the business environment and has a
significant impact on how businesses operate and make decisions 1234.
Here are some ways technology impacts the business environment:

1. Efficiency and Productivity: Technology can automate tasks,

streamline processes, and improve efficiency, thereby reducing
costs and increasing productivity1234.
2. Communication: Technology enhances communication within
the organization and with customers, making interactions more
effective1234.
3. Data Collection and Analysis: Technology enables businesses
to collect, store, analyze, and utilize vast amounts of data,
leading to better decision-making1234.
4. Innovation: Technological advancements drive innovation,
leading to the development of new products, services, and
business models1234.

In the context of India, businesses are leveraging technologies like AI,

ML, Blockchain, Cloud Computing, Augmented and Virtual Reality to
drive growth and stay competitive1. However, it’s important for
businesses to adapt to technological changes and invest in the right
technologies to reap these benefits1234
Level D. Case Study (20 marks each)
Q35 Case Study: CO4
Soft core consultancy services is in the information technology sector. Is it
currently facing a shortage of skilled manpower and is fuelling a hike in
employee salaries, which have been posting a 10-40 percent growth during
the last couple of years. While there is an abundance of trainable human
resources, a dearth in skilled manpower is being felt across the industry and
this has resulted in a hike in salaries. Typically, salary jumps happen not
only in the conventional manner of being promoted but also because of
professionals changing jobs more frequently. The increase in salaries varies
from job to job and ranks highest in the IT sector where employees get a
hike of over 40 percent when they join a new establishment. There is no
dearth in entry-level human resources as there is a large supply, but a severe
shortage is felt in the middle-level positions. According to Mr. Raj, CEO of
soft core, many new captives and third-party offshore facilities being set up
in the country have led to a competition for skilled human resources that are
already scarce. This is also leading to an ever-widening demand-supply gap
and raise in the average salary level for all positions, apart from pushing up
attrition in existing facilities, he said. There is new trend of employees
moving to multinational companies abroad for higher salaries and global
experience. The salary package and working environment is far better than
India in countries like USA. Then returning to India with global experience
makes for a higher pay and position. This is also one reason for the shortage
of skilled manpower and hike in employee salaries in the IT sector.
Question:
(a) What problems in soft core facing? Suggest some remedies for its
problems.
(b) Do you support globalization?
Ans.
(a) Soft Core Consultancy Services is facing the following
problems:

1. Shortage of Skilled Manpower: There is a dearth of

skilled manpower, especially for middle-level
positions.
2. Salary Hikes: Due to the shortage of skilled
manpower, there is a hike in employee salaries.
3. Attrition: The shortage of skilled manpower and
better opportunities abroad are leading to higher
attrition rates.

Here are some potential remedies for these problems:

1. Training Programs: Implement comprehensive

training programs to upskill the existing workforce.
2. Retention Strategies: Develop effective retention
strategies, such as competitive compensation, career
development opportunities, and a positive work
environment.
3. Partnerships with Educational Institutions:
Partner with universities and colleges to ensure a
steady supply of skilled graduates.
4. Attractive Return Packages: Offer attractive
packages to those who have gained global experience
and are willing to return, thereby utilizing their skills
and experience.

(b) As an AI, I don’t form personal opinions. However, it’s

important to note that globalization has both advantages
and disadvantages. On one hand, it allows companies to tap
into a global market, access a larger talent pool, and benefit
from global expertise. On the other hand, it can lead to job
displacement in certain sectors and increased competition.
The impact of globalization can vary depending on various
factors, including the strategies implemented by companies
and the policies set by governments.
 School of Management and Commerce
Question Bank - Unit no: 5

Program: MBA
Course Name: Business Environment Course Code: 23MBA103
Academic year: 2023-25 Sem/Year: 1st/1st

Level A. Easy Questions (2 marks each)

S. No. Questions
Q1 What is WTO. CO5
World Trade Organization (WTO): The WTO is the only global
international organization dealing with the rules of trade between
nations
Q2 What is EXIM policy. CO5
EXIM Policy: The EXIM (Export-Import) Policy contains guidelines
governing the imports and exports of products and services in and
out of India
Q3 What is FII CO5
Foreign Institutional Investor (FII): An FII is an investor or
investment fund investing in a country outside of the one in which
it is registered or headquartered
Q4 What is DII CO5
Domestic Institutional Investors (DII): DIIs are entities that
obtain money via various means and invest a significant portion of
it in the financial markets of their nation
Q5 What do you mean Disinvestment CO5
Disinvestment is when governments or organizations sell or liquidate assets
or subsidiaries
Q6 What is Capital Market CO5
Capital Market: Capital markets are where savings and
investments are channeled between suppliers and those in need
Q7 What is FDI CO5
Foreign Direct Investment (FDI): FDI is an investment in the
form of a controlling ownership in a business in one country by an
entity based in another country
Q8 Name a few Public Sector Units CO5
Public Sector Units: Public Sector Units (PSUs) can be classified
as Central Public Sector Enterprises (CPSEs), Public Sector Banks
(PSBs), or State Level Public Enterprises (SLPEs) 22. Some
significant PSUs in India include Bharat Heavy Electricals Limited
(BHEL), Steel Authority of India Limited (SAIL), Oil and Natural Gas
Corporation (ONGC), and National Thermal Power Corporation
(NTPC)
Q9 Discuss the impact FDI on Domestic business CO5
Impact of FDI on Domestic Business: FDI leads to the long-
 term growth of the economy. It brings about technology transfer
to the domestic companies, strengthens the balance sheet as it
raises the assets of the companies, and can affect domestic
investment
Q10 What is the impact of Technology on the business environment in Indian CO5
context.
Impact of Technology on Business Environment in Indian
Context: Technology is continually evolving, offering radical new
growth opportunities for businesses to innovate, re-invent, and
open new vistas to create and contribute to humanity’s well-being
Q11 Discuss the role of FII and DII in the Capital Market. CO5
FIIs and DIIs play a significant role in the capital market. They
invest in the financial instruments and securities of a country,
influencing the economy’s net investment flows
Q12 Discuss the role of technology in various business verticals. CO5
Technology plays a crucial role in various business verticals by
continually evolving and offering new growth opportunities. It has
significantly impacted sectors like education, manufacturing,
construction, hospitality and tourism, food processing, metal and
mining, and many more
Q13 Analyze and discuss the impact of FDI in Education sector in Indian Context CO5
FDI in the education sector can lead to increased access to
educational resources, improved quality of education, and the
introduction of new educational technologies and methodologies.
However, the specific impact can vary based on the nature of the
FDI and the policies of the Indian government.
Q14 What are the various ways of Disinvestment, discuss with Example. CO5
Various Ways of Disinvestment: Disinvestment can take
various forms, including selling off assets, spinning off
subsidiaries, or reducing capital expenditures
Q15 Discuss the role of WTO with its impact on the Business Environment in CO5
Indian Context.
The WTO plays a crucial role in facilitating international trade by
providing a platform for negotiating trade agreements and settling
trade disputes. Its impact on the Indian business environment
includes promoting fair trade practices, protecting the interests of
Indian exporters, and contributing to the growth of the Indian
economy
Q16 What is the relationship between GATT and WTO? CO5
The General Agreement on Tariffs and Trade (GATT) was a legal
agreement between many countries, whose overall purpose was
to promote international trade by reducing or eliminating trade
barriers such as tariffs or quotas. The WTO replaced GATT in 1995
and incorporated all its agreements

Q17 What are the objectives of globalization? CO5

The primary objectives of globalization include promoting
international trade, increasing economic growth, enhancing
cultural exchange, and fostering global cooperation. It aims to
create a global market where goods, services, and labor can move
freely across borders

Q18 State the difference between TRIMS and TRIPS. CO5

Q19 What is the impact of the impact of trade-related investment measures in CO5
developing countries.
It was found that TRIMs policies tend to have a significant impact on service and
other capital-intensive sectors, but have only a minor impact on mining, utilities,
agriculture and other highly protected and labor intensive sectors

Q20 What is Uruguay round policy. CO5

The main objectives of the Uruguay Round were: to reduce agricultural
subsidies. to lift restrictions on foreign investment. to begin the process of
opening trade in services like banking and insurance.

Level B. Intermediate Questions (5 marks each)

Q21 What is the impact of WTO on Indian Economy. CO5

Q22 Write a short note on UR agreement. CO5

UR Agreement: The Uruguay Round (UR) Agreement was adopted at
the Fourth Ministerial Conference in Doha, Qatar, in November 20011. It
was the largest trade negotiation ever and probably the largest
negotiation of any kind in history1. The UR Agreement covered almost
all trade, from toothbrushes to pleasure boats, from banking to
telecommunications1. It brought about the biggest reform of the world’s
trading system since GATT was created at the end of the Second World
War1. The WTO replaced GATT as an international organization, but the
General Agreement still exists as the WTO’s umbrella treaty for trade in
goods, updated as a result of the Uruguay Round negotiations 1

Q23 How The Global Business Environment Affects Business. CO5

1. Global Business Environment: The global business
environment is a complex one and affects businesses in various
ways2345. When businesses operate across national borders, they
 need to consider a number of important variables including
different tax systems and tariffs, legal requirements, regulatory
and compliance frameworks, social and cultural norms, political
climates, technologies, economic and market factors, and
shipping and transport processes2. Current topics and challenges
in global business include inflation, global supply chain issues,
and changes in international trade2. For businesses, high inflation
rates can increase the cost of business operations and reduce
purchasing power2. Many businesses are currently grappling with
global supply chain issues, with the supply and shipments of
goods unable to keep up with demand, causing global
shortages2.

Q24 Distinguish between WTO and GATT. CO5

Q25 What are the factors to be considered when conducting business in global environment. CO5
1. Factors to consider when conducting business in a global
environment12345:
o Market Research & Target Audience: Understanding
the needs and preferences of the target market.
o Economic Factors: The state of the economy can impact
all aspects of business from employee well-being to
company’s ability to thrive.
o Legal and Regulatory Environment: Understanding
local laws and regulations.
o Cultural Understanding: Awareness of cultural
differences and norms.
o Language Barriers: Effective communication in the local
language.
o Political Stability: Political conditions can affect
business operations.
o Technological Factors: Adapting to local technological
advancements.
o Currency Exchange Rates: Fluctuations in exchange
rates can impact profitability.
o Ethical Considerations: Ensuring business practices
align with local ethical norms.

Q26 Do WTO commitments prevent governments from protecting the CO5

environment?
 WTO commitments and environmental protection: WTO
agreements confirm governments’ right to protect the
environment, provided certain conditions are met. The objectives
of sustainable development and environmental protection are
important enough to be stated in the preamble to the Agreement
Establishing the WTO

Q27 How does global environment affect business decision-making? Give a CO5
brief sketch of the nature of global environment prevailing in India.
Impact of global environment on business decision-
making in India: The global environment impacts business
decision-making in various ways. For instance, the global
monetary policy cycle, slowing global growth, and elevated
commodity prices can affect India’s economic outlook 10. However,
India’s economy is relatively insulated from global spillovers due
to its large domestic market and relatively less exposure to
international trade flows

Q28 What are the important features of WTO. CO5

1. Important features of WTO:
o Non-Discrimination: All members are treated
equally.
o Free Trade: WTO promotes free trade among
member countries.
o Stability in the Trading System: WTO provides a
stable and predictable environment for international
trade.
o Promotion of Fair Competition: WTO promotes
fair competition in international trade.
o Special Concern for Developing Countries: WTO
takes into account the interests of developing
countries.

Q29 Discuss the role of EXIM Policy in the development of an economy. CO5
Role of EXIM Policy in the development of an economy:
The EXIM Policy aims to regulate and develop foreign trade by
facilitating imports into and exports from India 18. It plays a
significant role in accelerating the economic flow of trade
activities from a country to India by making the Indian economy
globally oriented18

Q30 Discuss the benefits of WTO trading system. CO5

Benefits of WTO trading system:

 Promotes Peace: Smoothly flowing trade helps reduce

political conflict21.
 Handles Disputes Constructively: WTO provides a
constructive and fair outlet for dealing with disputes over
trade issues.
 Makes Life Easier: WTO rules make life easier for all.
  Cuts the Costs of Living: Freer trade cuts the costs of
living.
 Provides More Choice of Products and Qualities: WTO
provides more choice of products and qualities.
 Raises Incomes: Trade raises incomes.
 Stimulates Economic Growth: Trade stimulates
economic growth.
 Encourages Good Government: The system encourages
good government

Level C. Difficult Questions (10 marks each)

Q31 What is the relationship between India and the World Trade Organization? CO5
As a developing country, India has played a significant role
in the proceedings of the WTO, especially in voicing its own
concerns and those of the entire developing world 3. For
instance, in the Doha WTO conference in 2001, India
emerged as one of the most outspoken advocates for the
developing bloc3.
India’s participation in the WTO’s rule-based system of
international trade regulation has brought greater stability
and predictability, leading to increased commerce and
prosperity4. However, there are many implications for the
Indian economy as a result of the many agreements signed
as part of the WTO3. These include the reduction of tariff
and non-tariff barriers, trade-related investment measures
(TRIMS), and trade-related intellectual property rights
(TRIPS)3.
In essence, the relationship between India and the WTO is
characterized by active participation and advocacy for the
interests of developing countries

Q32 What is the Doha Declaration? Discuss its significance. CO5

The Doha Declaration was adopted at the Fourth Ministerial Conference
in Doha, Qatar, in November 20011. It provides the mandate for
negotiations on a range of subjects, and other work including issues
concerning the implementation of the present agreements1. The
declaration reconfirms the long-term objective already agreed in the
present WTO Agreement: to establish a fair and market-oriented trading
system through a programme of fundamental reform1.
The significance of the Doha Declaration lies in its emphasis on the
rights of WTO member governments to take measures to protect public
health2. It reaffirms the members’ rights to use fully the provisions of
the TRIPS Agreement, which provide flexibility for this purpose 2. The
declaration makes it clear that the TRIPS Agreement should be
interpreted and implemented in a manner that supports WTO members’
right to protect public health and, in particular, to promote access to
medicines for all2.

In essence, the Doha Declaration is a significant milestone in the history

of the WTO as it addresses the concerns of developing countries and
underscores the importance of public health in the context of
 intellectual property rights

Q33 What are the disadvantages of WTO to India? CO5

While the World Trade Organization (WTO) has brought several benefits
to India, there are also some disadvantages12:

1. TRIPs Agreement: The TRIPs agreement went against the

Indian Patents Act (1970). The introduction of product patents in
India by MNCs caused a hike in drug prices, leaving no generic
option for the poor1.
2. Government Subsidies Issue: WTO pressurizes to remove or
lessen the government subsidies. This can impact sectors like
agriculture where subsidies play a crucial role2.
3. Disadvantages in Indian Agriculture: The Agreement on
Agriculture (AOA) set a limit for developing nations like India that
describe at what percentage of GDP subsidy can be
provided2. This has led to criticisms that it inserts a monopoly of
developed nations2.
4. Influence of Developed Nations: There has been continuous
criticism that the WTO is influenced mainly by developed
nations2.

Q34 Is WTO bad for developing countries. Discuss. CO5

The World Trade Organization (WTO) has both positive and negative
impacts on developing countries1234.

Positive Impacts:

 Trade Liberalization: WTO promotes free trade, which can lead

to economic growth and development4.
 Dispute Settlement: WTO provides a platform for resolving
trade disputes4.
 Special Provisions: All WTO agreements contain special
provisions for developing countries, including longer periods to
implement agreements and commitments, measures to increase
their trading opportunities, and support to help them build the
infrastructure for WTO work5.

Negative Impacts:

 Agriculture Negotiations: The major area of concern among

developing countries is agriculture negotiations 2. Developed
countries maintain huge subsidies whereas developing countries
could afford only nominal subsidies2.
 Influence of Developed Nations: There has been continuous
criticism that the WTO is influenced mainly by developed
nations1.
 TRIPs Agreement: Poor people in developing countries are
unable to access affordable medicine because WTO member
states have failed to clarify ambiguities between the need for
governments to protect public health on the one hand, and to
protect the intellectual property rights of pharmaceutical
companies on the other hand1.

In essence, while the WTO has brought several benefits to developing

countries, it also poses certain challenges. It’s important for these
countries to effectively leverage the opportunities provided by the WTO
 while addressing the challenges.

Level D. Case Study (20 marks each)

Q35 Case study: CO5
“World Software’s” is a software giant. It has many branches throughout
the world. The company knows that it has great opportunities in its path.
When it was limited only to its native country. With the passage of time
within 20 years the economies of various countries have integrated. This
has come as a great advantage to this company which has expanded. In
many of the countries where it has its, branches the control of government
in the public sector enterprises has diluted leading to more control in the
hands of the private sector. One of the major reasons for the success of the
company has been the role of the initiator the company has played as it was
the first company of its kind to enter the market.
(a) Identify the two important concepts highlighted above.
(b) Which type of advantage has been indicated in the last line of the
above case?
Ans.
(a) The two important concepts highlighted in the case
study are:
1. Globalization: This is evident from the expansion of
“World Software’s” to various countries around the
world, taking advantage of integrated economies.
2. Privatization: In many countries where “World
Software’s” has branches, the control of government
in public sector enterprises has diluted, leading to
more control in the hands of the private sector.
(b) The type of advantage indicated in the last line of the
case study is the First-Mover Advantage. “World
Software’s” was the first company of its kind to enter the
market, which likely gave it a competitive edge and
contributed to its success. Being a first-mover often allows a
company to establish strong brand recognition and
customer loyalty before other competitors enter the arena.