Multiple Choice Questions

1. Which of the following does not characterize the business environment?

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

2. Which of the following indicates the importance of the business environment?

(a) Identification (b) Improvement of performances (c) The Constitution of the country (d) all of them

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

(a) Money supply in the economics (b) Consumer Protection Act (c) The Constitution of the country

(d) Composition of family

4. Liberalisation means:
(a) Integration among economics (b) Reduced government controls and restrictions (c.) Policy of
planned disinvestments (d) none of them

5. Which of the following does not explain the impact of Government policy changes on business
and industry?
(a) More demanding customers (b) increasing competition (c.) Change in agricultural prices (d)
Market orientation

6. Many businesses are using social media like face book and twitter to promote themselves. This is
an example of which dimension of the Business environment:

(a) Social (b) Economic (c) Legal (d). Technological

7. In winters the demand for woolens rises. This is an example of which feature of Business
Environment:
(a) Dynamic nature (b) Inter- relatedness (c.) Complexity (d) uncertainty

8. Recently the government has decontrolled the price of Diesel. This is an example of:
(a)Privatisation (b) Globalisation (c.) Liberalisation (d) Nationalisation

9. The court issued the order that it is essential for the vehicles to be smokeless and that any one
violating this order shall have to pay fine. Identify the dimension of business environment. ​
(a) Economic (b) Political (c) Social (d) Legal

10. Online reservation of railway ticket is an example for which types of dimensions of business
environment.
(a) Economic (b) Political (c) Social (d) Technological
11.

(a) A (iv), B (iii), C (i), D (ii)

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

Direction (Q. No.12 to 14) There are two statements marked as Assertion (A) and Reason (R). Read
the statements and choose the appropriate option from the options given below:
(a) Both Assertion(A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A)
(b) Both Assertion (A) and Reason (R) are true but reason (R) is not the correct explanation of
Assertion (A)
(c) Assertion (A) is true but Reason (R) is false
(d) Assertion (A) is false but Reason (R) is true

12. Assertion (A): Manufacturers have flexible manufacturing systems.

Reason (R) : Agricultural and industrial production trends are the economic dimensions of the
environment which affect the business environment.

13. Assertion (A): Entry of new firms in the market may make an enterprise think afresh about how to
deal with the situations.
Reason (R): Business Environment assists in planning and policy formulation.

14. Assertion (A): Reservation of jobs for backward classes as per the constitution of India affects
the business environment.
Reason (R): Various elements of legal dimension affect the business environment

Direction: Read the following text and answer the question number 15-19 on the basis of the
same.

The government all over the world are becoming more and more cautious towards the environment.
To ensure the same, recently, many state governments passed an order to ban polythene bags since
these are non-biodegradable. As a result, the government also decided to give a subsidy to jute
industry (bags). The minister said in the statement that they believe it will be helpful as income of
people is rising and people can afford jute bag. After this subsidy, Aman saw great potential in jute
multi-pocket bags business which was not established yet in India but had been flourishing in UK
where he studied during his graduation. He launched the product and his business started to boom.
So, more companies entered into the market with other articles and improvisations.

15. Which business dimension is highlighted in the line," As a result, the government also decided to
give a subsidy to jute industry (bags)."
(a) Legal (b) Political (c) Economic (d) Social

16. Which business dimension is highlighted in the line," The Minister said in the statement that he
believes it will be helpful as income of people are rising and people can afford jute bags."?
(a) Legal (b) Political (c) Economic (d) Social

17.Which merit of business environment is highlighted in the lines, "After the subsidy Aman saw
great potential in jute multi-pocket bags business which was not established yet in India but had
been flourishing in UK where he studied during his graduation."
(a) Identify opportunities (b) Tapping useful resources (c) Coping with rapid changes (d)Assisting in
planning

18. Which merit of business environment is highlighted in the lines," He launched the product and his
business started to boom. So, more companies entered into the market with other articles and
improvisations."
(a) Identify opportunities (b) Identified threats (c) Assisting in planning (d) Coping with rapid changes

19. Which dimension of business environment is highlighted in the given lines," To ensure the same,
many state governments passed an order to ban polythene bags since these are
non-biodegradable."?
(a) Political (b) Legal (c) Technological (d) Economic

Direction: Read the following text and answer the question number 20-23 on the basis of the
same

Rita and Rohit are good friends and after finishing their graduation they decided to start their own
travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of
providing tickets through the use of internet. They discussed the idea with Rita’s uncle Manoj who
was working as a professor in a reputed university. He liked their idea and suggested them to first
analyse the business environment which consist of investors, competitors and other forces like
social, political etc. that may affect their business. He further told them about the technological
improvements and shifts in customer preferences that were taking place and hence, they should be
aware of the environmental trends and changes which may hinder their business performance.

19. Identify the component of business environment highlighted in the above paragraph:

(a) Economic Environment (b) Social Environment (c) Technological Environment (d) Political
Environment
20. Identify the feature(s) of business environment as discussed by Professor Manoj with Rita and
Rohit.
(a) Specific and general forces (b) Inter-relatedness (c) Dynamic nature (d) Uncertainty

21. Identify the point(s) of importance of business environment as stated by Professor Manoj in the
above situation.
(a) It enables the firm to identify opportunities and getting the first mover advantage.
(b)It helps the firm to identify threats and early warning signals.
(c) It helps in tapping useful resources.
(d)It helps in assisting in planning and policy formulation

22. “Rita and Rohit after finishing their graduation they decided to start their own travel agency which
will book Rail Tickets and Air Tickets on commission basis” Which dimension of business
environment highlighted here?
(a) Economic (b) Political (c) Legal (d) Social.

23. Statement – I : Business Environment is dynamic as it differs from country to country.

Statement – II : Business Environment is largely uncertain as it is very difficult to predict future
happenings. Choose the correct option from the following :
(A) Statement I is true and Statement II is false.
(B) Statement II is true and Statement I is false.
(C) Both the statements are true.
(D) Both the statements are false.

24. Which of the following is NOT a feature of demonetisation ?

(A) It leads to creation of a less-cash or cash-less (free) economy i.e. channeling more savings
through the formal financial system and improving tax compliance.
(B) It is interpreted as a shift on the part of the government indicating that tax evasion will no longer
be tolerated or accepted.
(C) It is viewed as a tax administration measure.
(D) It led to tax administration channelising savings away from the formal financial system.

25. Samaira and her friend, Sana wanted to watch a movie over the weekend. They booked the
movie tickets online and chose the seats as per their preference at the click of a button at the
desired movie hall. Now going to theatre for booking of tickets is no longer required. The dimension
of business environment reflected in the above para is :
(A) Political environment (B) Social environment (C) Legal environment (D) Technological
environment

26. Rajat was carrying on a business of manufacturing plastic disposables like plastic plates, plastic
cups and plastic straws. He heard about the upcoming ban on single use plastics. He was able to
identify this external environmental trend which could hinder his firm’s performance. So he took
action and shifted to manufacturing the plates, cups and straws from bamboo and palm leaves. As a
result, his business not only survived but was able to generate profit. The point of importance of
Business Environment highlighted above is :
(A) It enables the firm to identify opportunities and getting the first mover advantage.
(B) It helps the firm to identify threats and early warning signals.
(C) It helps in tapping useful resources.
(D) It helps in assisting in planning and policy formulation.

27. Due to increasing presence of women in the workforce, ‘Kisan Mart’ comes out every Friday with
big discount offers on daily use items to attract office-going women to shop on weekends. Which
dimension of business environment is being highlighted in the above case ?
(A) Social environment (B) Legal environment (C) Political environment (D) Technological
environment

28. Raunaq, while studying at the university, felt that there should be a food joint in the university
campus to provide food to students round the clock. After passing out of college, he set up ‘Hunger
Point’, a food joint with a varied menu ranging from burgers, pizzas, street food and much more, in
the university campus. For this, he obtained necessary permissions from the university
administration. Since he was the first one to recognize the need for a food joint for all the students in
an environment where students study day and night, it soon became a popular eating joint. Within
six months, ‘Hunger Point’ started earning good profits. Identify the point of importance of business
environment discussed in the above case :
(A) It enables the firm to identify opportunities and get the first mover advantage.
(B) It helps the firm to identify threats and early warning signals.
(C) It helps in assisting in planning and policy formulation.
(D) It helps in improving performance.

29. Choose the incorrect statement with respect to demonetization :

(A) The two largest denomination notes of ₹ 500 and ₹ 1000 were demonetized with immediate
effect, ceasing to be legal tender except for buying properties.
(B) The aim of this step was to curb corruption and accumulation of black money.
(C) It led to the tax administration channelizing savings into the formal financial system.
(D) Restrictions were placed on the convertibility of domestic money and bank deposits.

30. As per Plastic Waste Management Rule 2022, single use plastic items were prohibited in Delhi
from 1st July, 2022. The dimension of business environmentreferredtohereis________.
(A) Economic environment (B) Legal environment (C) Technological environment (D) Political
environment

Subjective Questions

1. Lately many companies have planned for significant investment in organised retailing in India.
Several factors have prompted their decision in this regard- customer income is rising. People have
developed a taste for better quality products even though they may have to pay more. The
government permitted cent percent foreign direct investment in some sectors of retailing. Identify the
change in business environment under different dimension quoting the line from the above para.

2. Understanding of environment by business managers enables them not only to identify and
evaluate, but also to react to the forces external to their firms.’ In light of the statement, explain by
giving any four points why in the present-day competitive market, it is essential for a business
enterprise to remain alert and aware of its environment.

3. Karodimal ltd. manufactures fashionable and designer clothes. Recently it finds that the demand
for its product been declining. After market research it was discovered that fashion and tastes of the
consumers is changing a pace. Consumers demand is increasing. New competitors have entered
the market with new design. It is difficult for the company to predict future happening. Also, it is
difficult to know the extent of the relative impact of the social, economic, political, technological or
legal factors on decrease in demand of its product in the market. A meeting was held in which
managers from different functional level heading production, marketing, financial etc. for example,
chief operating officer, chief finance officer, vice president (marketing) were present to discuss how
to deal with the situation. After a long discussion, it was decided that they would study and analyse
the market first to identify customers taste and fashion and then manufacture garments accordingly.
It was also decided to increase expenditure on advertising, after sale service, etc.

(a) Identify any two features a business environment by quoting the lines from the above case.
(b) State the importance of understanding of environment by business managers in the light of the
above para.

4. Two big Bollywood movies were scheduled to be released on the same date. But, at the last
moment, release of one movie had to be postponed due to opposition by a group of people because
of some unethical content in the movie. The loss suffered by the postponed movie provided
opportunity for the released movie to earn maximum profits.

(a) Which characteristic of Business Environment is highlighted in the given case?

(b) Identify and explain the dimension of Business Environment which led to the postponement of
movie.

5. Mahinder Agro Ltd. started a new venture for distribution of harmful and chemical fertilizers free
vegetables. They conducted a survey to find out consumer preference for such vegetables. They
found that most of the consumers were concerned about the harmful chemicals being used in
growing the vegetables. They found that 90% of the households were searching for its alternatives.
The company contacted a group of agriculture experts to lay down the procedure for growing the
vegetables by the farmers. They decided to train the framers in new technology to grow chemical
free vegetables according to new Tech. innovative methods the experts also suggested soil
management techniques through which farmers would be able to create an abundant and lasting
harvest. Identify and explain the two dimensions of business environment highlighted in the above
para.

6. The court passed an order that all school must have water purifier for the school children as
society in general is more concerned about quality of life. Innovative techniques are being developed
to manufacture water purifier at competitive rates. Incomes are rising and children at home are also
drinking purified water. The government is also showing positive attitude towards the water purifier
business. State the meaning of Business environment and identify the different dimensions of
business environment by quoting lines from the above details.

7. The government of India announced Demonetization of ₹500 and ₹1,000 currency notes with
effect from the midnight of November 8, 2016. As a result, the existing ₹500 and ₹1,000 currency
notes ceased to be legal tender from that date. New currency notes of the denomination of ₹500 and
₹ 2,000 were issued by Reserve Bank of India after the announcement. Recently ₹2000 also
demonetized. This step resulted in a substantial increase in the awareness about and use of Point of
Sale machines, e-wallets, digital cash and other modes of cashless transactions. Also, increased
transparency in monetary transactions and disclosure led to a rise in government revenue in the
form of tax collection.
(a) Enumerate the dimensions of business environment highlighted above.
(b) State the features of Demonetization
8. Mahinder Agro Ltd. started a new venture for distribution of harmful and chemical free fertilizers
vegetables. They conducted a survey to find out consumer preferences for such vegetables. They
found that most of the consumers were concerned about the harmful chemicals being used in
growing the vegetables. They found out that 90% of the households were searching for alternatives.
The company contacted a group of agricultural experts to lay down the procedure for growing the
vegetables by the farmers. They decided to train the farmers in new technology to grow chemical
free vegetables according to new innovative methods. The experts also suggested soil management
techniques through which farmers would be able to create an abundant and lasting harvest. Identify
and explain the two dimensions of business environment highlighted in the above para.

9. In an environment of rising petroleum prices and a large middle-class population in India, RK

Motors Ltd. recognized the need for small cars in India. It created a product far superior than their
competitors not only in terms of quality but also in terms of overall driving experience, it soon
became the leader in the small car market. As the Indian government was encouraging foreign
investment, MNCs having a big name in car manufacturing entered the Indian market. RK Motors
further expanded its service network and quality creating an entry barrier for the competitors. It
depicted its strengths through various brand-building activities, As a result, the market share of RK
Motors is refusing to go down in spite of all major automakers as its competitors. Quoting the lines,
explain any two points of importance of Business Environment being highlighted in the above case.

10. The rapid changes having taken place in the society have created pressure on organisations to
readapt its products, type of jobs required and type of skills necessary to complete these jobs. To
keep up pace with the rapid changes in the business environment, ‘Suzon cars’, a company
manufacturing automobiles for the last thirty years decided to start manufacturing electric cars with
Artificial Intelligence technology. With the introduction of Artificial Intelligence, the company had to
improve the knowledge and skills of its employees. They wanted that all their employees improve
their performance on the current job and are prepared for any intended job in future. This way they
would not only be able to increase their knowledge and skills but would also improve their
performance. By doing this, the organisation too would get various benefits.
(a) Identify the concept discussed above which would help the employees to do the job in a better
way using Artificial Intelligence Technology.
(b) State any five benefits of the concept identified in (a) above to the organisation.