Business Environment

The business environment is defined as the specific environment in which a business operates. The “business environment” can be found in other fields aside from the business process. The term may also refer to how business organisations are organised, how they interact with their employees, the goals they pursue, and how they distinguish themselves from those of their competitors. It includes a framework of rules and norms and an economic system that sets prices and provides incentives for business enterprises to behave in certain ways.

MCQs: 

Q.1: Which is not a component of specific forces of the business environment?

1. 1. Customers
   2. Technological conditions
   3. Investors
   4. Employees

Answer: B, Technological conditions.

Explanation: Technological condition is a component of general forces that affect the business environment of an enterprise.

Q.2: How to show the elements of the method of production?

1. 1. Capital Investment
   2. Wage labour
   3. Entrepreneurial
   4. Cooperative.

Answer: B, Wage labour.

Explanation: All enterprises engaged in production activities tend to be organised to allow exploitation or oppression of wage labour by capital. Workers are paid wages for their services, and resources may be bought through investment or taken from non-working people through plunder, rent, or usury.

Q.3: How to show the role of government in business?

1. 1. Positive
   2. Negative
   3. Neutral
   4. None of the above

Answer: C, Neutral.

Explanation: Some activities of government are useful to business. They may provide rules that help moderate conflicts and make agreements more stable or may protect some enterprises from competition from others. However, the government’s positive and negative impacts on business are very different. The government’s impact on business is largely negative.

Q.4: Name the things that help the development of the business?

1. 1. Technological innovation
   2. Capital investment
   3. Economic growth
   4. Trade liberalisation.

Answer: B, Capital investment.

Explanation: Capital investment helps in the development of business. It is used as a source for creating new and improved products or services, which, on the other hand, help in technological advancement and allows effective production. Also, capital investment promotes growth.

Q.5: What is the general concept of business ethics?

1. 1. Ethical principles follow a universal truth.
   2. All people involved in business should act in a morally correct way.
   3. The way of doing business should be fair and honest.
   4. None of the above.

Answer: D, None of the above.

Explanation: Business ethics is concerned with what is right and wrong in the practice of business and how organisations should behave ethically.

Q.6: What is the major component of business ethics?

1. 1. Ethics
   2. Ethical principles
   3. Rules of behaviour.
   4. All of the above.

Answer: A) Ethics.

Explanation: Business ethics requires that business people observe a sense of morality and honour their word; they should not cheat customers or clients and not harm the environment. They must act honestly with all people involved in their business, and it should be fair, open and honest among them.

Q.7: Which of the following is not a major component of ethical business practice?

1. 1. Honesty
   2. Self-respect
   3. Respect for law and public opinion.
   4. None can be answered.

Answer: D, None can be answered.

Explanation: The major component of business ethics is a moral and ethical code of practice based on a moral stance on the world and business. It covers the responsibilities that individuals have to customers, workers, stockholders, and other stakeholders.

Q.8: What are business ethics?

1. 1. Ethics of the company
   2. The ethical theory of the company.
   3. Rules and policies.
   4. Compromise between ethics and customs.

Answer: D, Compromise between ethics and customs.

Explanation: The ethical way of business behaviour provides a good example to others. Standards apply across cultures and time, whether recognising illegal acts, avoiding conflicts of interest, or dealing with sensitive issues such as safety or the environment.

Q.9: What are the basic components of business ethics?

1. 1. Morality
   2. Business practice
   3. Principles and values.
   4. All of the above.

Answer: D, All of the above.

Explanation: Several basic components make up business ethics, such as morals, ethical principles, ethical theories, codes of conduct, values and standards. No one is perfect; it’s normal to make mistakes or to break with ethical principles (at least sometimes).

Q.10: Which of the following is not a profit-making objective of most businesses?

1. 1. Leading product and customer satisfaction
   2. Aggressive competitive pricing policy.
   3. All of the above.
   4. None can be answered.

Answer: D, None can be answered.

Explanation: There are generally three main objectives for business in the marketplace: competition, innovation and growth. The first two objectives are related, but competition does not necessarily yield growth.

Q.11: What is the goal of business?

1. 1. Maximising profit
   2. Maintaining customer satisfaction.
   3. Solving customer problems.
   4. All of the above

Answer: A, Maximizing profit.

Explanation: Profit is the main purpose of any business. Profit is required to make an organisation sustainable and successful. However, different types of profits can be pursued, such as short-term profits or long-term profits, and profits should be generated to return on investments or economic growth.

Q.12: What is the role of management in business?

1. 1. Managerial skills are essential for the success of any enterprise.
   2. Managerial skills should not be emphasised because only a few people can achieve true greatness.
   3. Management and leadership skills are essential for the success of any enterprise.
   4. None can be answered.

Answer: D, None can be answered.

Explanation: Management is an important function in business. It does not exist by itself, but it is still very important for the operation of a business. The role of management is to manage human, financial and material resources within the enterprise.

Q.13: What is the primary mode of satisfying customer needs?

1. 1. Trade-in cash or barter
   2. Production
   3. Production by contracting out
   4. All of the above

Answer: D, All of the above.

Explanation: In a market economy, products are produced and sold mainly through the process of production. However, both production and trade in cash or barter are modes of satisfying customer needs.

Q.14: Which of the following is not a part of industrial policy?

1. 1. Tariff reduction
   2. Subsidies to industry
   3. Change in the corporate tax regime.
   4. All of the above

Answer: D, All of the above.

Explanation: Industrial policy is concerned with economic growth. It includes changes in tax and tariff regimes, subsidies and changes in the financial structure of an economy, such as through government-sponsored enterprises.

Q.15: Which of the following industries are considered natural monopolies?

1. 1. Banking industry
   2. Railways
   3. Electricity generation industry
   4. All of the above.

Answer: D, All of the above.

Explanation: Natural monopolies are industries in which economies of scale cause it to be efficient for a single firm to supply the entire market. Such industries usually require large initial investments and barriers to entry.

Q.16: Which of the following is not an element of the economic theory known as economic efficiency?

1. 1. Consumer surplus
   2. Corporate surplus
   3. Public surplus
   4. None can be answered.

Answer: A Consumer surplus.

Explanation: The consumer’s willingness to pay for a specific good or service is the consumer’s “consumer surplus”. Consumers are willing to pay this amount of money (or other benefits) above and beyond what they pay for a product.

Q.17: Which of the following is not a common way the “invisible hand” works?

1. 1. When debt repayment reduces consumption, consumption is spent on servicing the debt.
   2. When interest rates decrease, consumers save more money.
   3. When firms can sell at a higher price than production costs.
   4. All of the above.

Answer: D, All of the above.

Explanation: The invisible hand is a theory developed by Adam Smith in his book called Wealth of Nations. Smith used the expression to explain why markets are self-regulating and able to coordinate disparate individuals’ interests.

Q.18: Which of the following is not a factor that affects consumption patterns?

1. 1. Age
   2. Standard of living
   3. Type of family.
   4. All of the above can be answered.

Answer: D, All of the above can be answered.

Explanation: Standard of living, Age, Type of family and size of the family are factors that affect consumption patterns.

Q.19: Which of the following is not a way to classify consumers?

1. 1. Consumers with different income levels.
   2. Consumers with different tastes and preferences.
   3. Consumers with different social statuses.
   4. All can be answered.

Answer: D, All can be answered.

Explanation: Different income levels, tastes and preferences, and social statuses are ways to classify consumers.

Q.20: Which of the following is not a factor that affects the demand curve?

1. 1. Number of buyers
   2. Prices of related goods
   3. Consumer taste and preference.
   4. All can be answered.

Answer: D, All can be answered.

Explanation: The number of buyers, prices of related goods and consumer tastes and preferences affect the demand curve.

Q.21: Which of the following is not a method used to assess the ability of a firm to generate demand for its products?

1. 1. Survey of customers.
   2. Market survey.
   3. Sales forecast.
   4. None can be answered.

Answer: C, Sales forecast.

Explanation: Market surveys estimate demand for specific products or services by tracking actual sales over time to see what the trends were in terms of identifying trends and evaluating the information obtained from this process.