1. Business environment refers to:
a) Internal factors only
b) External factors only
c) Both internal and external factors affecting business
d) Economic factors only
✅ Answer: c
Explanation: Business environment includes internal (strengths, weaknesses)
and external (opportunities, threats) influences.
2. Which of the following is NOT a
characteristic of business environment?
a) Dynamic in nature
b) Complex in character
c) Predictable in every aspect
d) Inter-relatedness
✅ Answer: c
Explanation: Environment is uncertain and unpredictable; other options are
correct features.
3. The business environment is said to be
“dynamic” because:
a) It never changes
b) It changes slowly
c) It keeps changing frequently and unpredictably
d) It is influenced only by internal factors
✅ Answer: c
Explanation: Political, social, economic, and technological changes occur
continuously.
4. Which of the following is NOT an
element of macro environment?
a) Technological
b) Political-legal
c) Social
d) Competitors
✅ Answer: d
Explanation: Competitors belong to micro environment, not macro.
5. PESTEL analysis studies:
a) Micro environment
b) Macro environment
c) Internal environment
d) SWOT
✅ Answer: b
Explanation: PESTEL (Political, Economic, Social, Technological,
Environmental, Legal) covers macro-level factors.
6. Customers, suppliers, competitors, and
intermediaries are part of:
a) Internal environment
b) Micro environment
c) Macro environment
d) Global environment
✅ Answer: b
Explanation: These directly affect company operations, hence part of micro
environment.
7. Which of the following is a part of the
internal environment?
a) Organisational culture
b) Government policies
c) Economic reforms
d) WTO guidelines
✅ Answer: a
Explanation: Internal factors include structure, culture, vision, mission,
employees.
8. The concept of SWOT analysis refers to:
a) Strength, Weakness, Opportunities, Threats
b) System, Work, Output, Target
c) Social, Welfare, Organizational, Technology
d) None of the above
✅ Answer: a
Explanation: SWOT is used for strategic analysis of internal and external
conditions.
9. Government rules and regulations form
part of which environment?
a) Economic
b) Political-legal
c) Technological
d) Social
✅ Answer: b
Explanation: Legal rules, stability, and policies fall under political-legal
environment.
10. Which among the following is a “social
environment” factor?
a) GDP growth rate
b) Lifestyle changes
c) Inflation rate
d) Foreign trade policy
✅ Answer: b
Explanation: Lifestyle, culture, population growth → all social environment
aspects.
11. The major economic reforms (LPG
policy) in India were introduced in:
a) 1975
b) 1980
c) 1991
d) 2005
✅ Answer: c
Explanation: 1991 reforms initiated Liberalization, Privatization, and
Globalization.
12. The term “Globalization” means:
a) Restriction on foreign trade
b) Free flow of goods, services, and capital across nations
c) Ban on multinational companies
d) Domestic market only
✅ Answer: b
Explanation: Globalization integrates national economies with the global
economy.
13. Which of the following is NOT included
in economic environment?
a) Inflation rate
b) Interest rate
c) Industrial growth
d) Company’s mission
✅ Answer: d
Explanation: Mission and vision belong to internal environment.
14. Which of the following is considered
as a technological environment factor?
a) Tax policy
b) Development of Artificial Intelligence
c) Labour laws
d) Population growth
✅ Answer: b
Explanation: Innovations, automation, IT, AI → technological factors.
15. The “Uncertainty” element in business
environment arises mainly due to:
a) Static policies
b) Rapid changes in environment
c) Stability of technology
d) Clear government control
✅ Answer: b
Explanation: Frequent policy, economy, or tech changes bring uncertainty.
16. An organization’s mission and vision
are part of its:
a) Internal environment
b) External environment
c) Technological environment
d) Global environment
✅ Answer: a
Explanation: Mission, values, structure are internal factors.
17. Which one of the following is a
feature of business environment?
a) Simplicity
b) Predictability
c) Uncertainty
d) Stability
✅ Answer: c
Explanation: Uncertainty is an essential characteristic of environment.
18. Which of the following institutions
regulates monetary policy in India?
a) Ministry of Finance
b) World Bank
c) Reserve Bank of India
d) SEBI
✅ Answer: c
Explanation: RBI manages inflation, interest rates, and credit supply.
19. Liberalization mainly means:
a) Reducing restrictions on private enterprises
b) Increasing public sector control
c) Closing foreign trade
d) Fixing prices by government
✅ Answer: a
Explanation: Liberalization reduces government controls on industries.
20. Privatization refers to:
a) Increasing role of government
b) Reducing private sector power
c) Transferring ownership to private sector
d) Limiting FDI inflow
✅ Answer: c
Explanation: Privatization is shifting ownership/control from public to
private hands.
21. WTO stands for:
a) World Trade Organization
b) World Transport Office
c) World Treaty Organization
d) World Tourism Office
✅ Answer: a
Explanation: WTO regulates global trade practices among nations.
22. Which of the following is a global
environment factor?
a) Local competitors
b) WTO agreements
c) Organisational policies
d) Employee morale
✅ Answer: b
Explanation: WTO, IMF, global treaties → all part of global environment.
23. The economic environment of business
in India is shaped by:
a) National income, inflation, and interest rates
b) Employee relations
c) Cultural values
d) Political parties
✅ Answer: a
Explanation: Economic conditions directly influence business decisions.
24. Which of the following is a correct
match?
a) Political Environment – Mission and Vision
b) Technological Environment – Lifestyle changes
c) Social Environment – Education levels
d) Economic Environment – Competitors
✅ Answer: c
Explanation: Education level is a social factor; other options are
mismatched.
25. Which of the following statements is
TRUE about business environment?
a) It is completely predictable
b) It remains static over time
c) It affects all organizations differently
d) It consists only of economic factors
✅ Answer: c
Explanation: Environment affects industries and firms in different ways
depending on size, sector, and resources.
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