Business Environment BEST MCQs With Answers

Business Environment is the sum total of all the internal and external factors that creates an impact on the business. It is referred to as the collection of all individuals and entities that may or may not be under the control of the organisation, but which can have a greater impact on the performance, growth, profitability and in some cases survival of the organisation.

Business environment helps in determining the various business opportunities, resources and also assists in forming plans for the growth of the organisation.

The components of a business environment can be media, customers, government, economic conditions, suppliers, competitors etc. There are two types of environment within the business environment which are known as micro environment and macro environment.

Following are some of the business environment multiple choice questions and answers that will help the students in brushing up their understanding of the concept of business environment.

Question 1.
Which one of the following is not a feature of business environment?
(a) Uncertainty
(b) Interdependence
(c) Complexity
(d) Stability

Question 2.
Which one of the following is a part of economic environment?
(a) Public debt
(b) Lifestyle of people
(c) Technological changes
(d) Level of education

Question 3.
Proper understanding of business environment is not a prerequisite for
(a) tapping of useful resources.
(b) identification of opportunities and threats.
(c) formulation of strategies.
(d) better coordination of employee efforts.

Question 4.
Globalisation means
(a) reduced role of public sector
(b) integration of economies
(c) lowering interest rates
(d) control of inflation

Question 5.
Which one of the following is the impact of Government policy changes on business and industry?
(a) Increase in agricultural productivity
(b) Increase in product prices
(c) Increase in competition
(d) Increase in urbanisation

Question 6.
___ nature of business environment suggests that environment keeps on changing.
(a) Dynamic
(b) Pervasive
(c) Continuous
(d) Multidimensional

Question 7.
___ is the integration of world economy into a single market through removal of trade barriers between countries.
(a) Privatisation
(b) Liberalisation
(c) Globalisation
(d) Both(a) and (b)

Question 8.
___ feature of business environment states that various factors of business environment affect each other.
(a) Pervasive
(b) Continuous
(c) Dynamic
(d) Interrelatedness

Question 9.
Legal rules and regulations relevant to business are included in ___ environment of business.
(a) Legal
(b) Political
(c) Economic
(d) Technological

Question 10.
A business has to offer wider choice in purchasing enhanced quality of goods and services in order to maintain an edge over its competitors. The implementation of the new economic policy with liberalisation, privatisation and globalisation has posed various challenges for the corporate sector. One of the important challenges is explained in the above lines. Identify it.
(a) Increasing competition
(b) More demanding customers
(c) Necessity for change
(d) Market orientation

Question 11.
On 8th November 2016, with the announcement from Government of India, all the ₹500 and ₹1,000 banknotes of the Mahatma Gandhi series have ceased to be a legal tender. The govemment also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes. Identify the concept being described in the above lines.
(a) Globalisation
(b) Liberalisation
(c) Demonetisation
(d) Privatisation

Question 12.
The Government of India launched “Make in India” initiative in September, 2014 to increase foreign direct investment (FDI) in 25 sectors. As of April, 2015, FDI inflow in India increased by 48% since the launch of “Make in India” initiative.
Identify the concept being described in the above lines, with regard to inflow of FDI.
(a) Demonetisation
(b) Privatisation
(c) Liberalisation
(d) Globalisation

Question 13.
According to a report by the India Staffing Federation (ISF), India has emerged as the
fifth largest market worldwide in flexi-staffing in 2018 and the country would have 6.1 million flexi-workforce by 2021. It showed that Haryana, Gujarat, Karnataka, Madhya Pradesh and Telangana are the states with high growth potential for flexi- staffing but Andhra Pradesh tops the list of states with favourable business environment. Identify the feature of business environment being discussed above,
(a) Relativity
(b) Dynamic nature
(c) Uncertainty
(d) Interrelatedness

Question 14.
India’s population is expected to grow under 0.5 per cent during 2031-41 due to decline in fertility rate and increase in life expectancy. These changes in India’s demography will also have implications such as the proportion of elementary school-going children will witness significant declines, lack of hospital beds and increase in retirement age. The related feature of business environment being described in the above lines is
(a) Totality of external forces
(b) Dynamic nature
(c) Interrelatedness
(d) Relativity

Question 15.
As a result of major government initiatives, more and more people are going ‘green’. In order to keep in line with the trend, ‘Clapaway’ a carpet cleaning company has advertised that they only use natural cleaners that come from renewable resources and that all their service vehicles are hybrid vehicles that use both gas and electricity. Identify one of the points related to the importance of business environment and its understanding by managers which is being highlighted in the above case.
(a) It helps in assisting in planning and policy formulation.
(b) It helps in coping with rapid changes.
(c) It helps in improving performance.
(d) It enables the firm to identify opportunities and getting the first mover advantage.

Question 16.
Electric vehicles with zero tail pipe emission are emerging as a good alternative to ‘ problems like climate change, surging pollution leading to ill health, crude import bill and energy security. Identify the related dimensions of business environment.
(a) Economic dimension, Legal dimension and Social dimension
(b) Social dimension, Political dimension and Economic dimension
(c) Economic dimension, Technological dimension and Social dimension
(d) Social dimension, Political dimension and Legal dimension

Question 17.
In order to boost and double India’s export of goods and services to over USD 1,000 billion by 2025, it is important to lower effective corporate tax rate, bring down cost of capital and simplify regulatory and tax framework. Identify the related dimension of business environment.
(a) Social dimension and Legal dimension
(b) Technological dimension and Political dimension
(c) Political dimension and Social dimension
(d) Economic dimension and Legal dimension

Question 18.
DigiLocker is the country’s first secured cloud-based platform for the storage, issuance and verification of documents with the Driving Licence & Vehicle Registration System of the Road Transport Ministry. The integration of a government department with DigiLocker since its launch last year is one of the biggest of its kind. It will spare 1 people the trouble of carrying licences & vehicle papers, which can be accessed on phones using the DigiLocker app. Identify the related dimension of business environment.
(a) Ecoriomic dimension
(b) Technological dimension
(c) Social dimension
(d) Political dimension

Question 19.
Any kind of external devices, like compact discs (CD’s) for computer, have become obsolete. Google, with its Google Drive service, Apple with its iCloud offering, enables the users store documents, photos, music and movies on web-based servers. Identify the feature of business environment being described in the above lines.
(a) Relativity
(b) Dynamic nature
(c) Uncertainty
(d) Interrelatedness

Question 20.
Since more number of people have become more beauty and health conscious, our economy has witnessed an unprecedented surge in the number of health and beauty spas and wellness clinics. Related feature of business environment being described in the above lines is —
(a) Totality of external forces
(b) Dynamic nature
(c) Interrelatedness
(d) Relativity

Business Environment True or False

State with reasons whether the following statements are True or False.

1. Investors and customers are the two components of specific forces of business environment.

2. Dynamic nature of business environment suggests that it is pervasive.

3. Privatisation involves freedom of doing business.

4. Political environment consists of political system and its working.

5. Business environment consists of factors which are certain by nature.

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