Business Environment MCQ | Class 12 | Business Studies | Chapter 3

Business Environment MCQ Chapter 3

Below are some of the very important NCERT MCQ Questions of Business Environment Class 12 Business Studies Chapter 3 with Answers. These Business Environment MCQ have been prepared by expert teachers and subject experts based on the latest syllabus and pattern of term 1 and term 2. We have given these Business Environment MCQ Class 12 Business Studies Questions with Answers to help students understand the concept.

MCQ Questions for Class 12 Business Studies Chapter 3 are very important for the latest CBSE term 1 and term 2 pattern. These MCQs are very important for students who want to score high in CBSE Board.

We have put together these NCERT Questions Business Environment MCQ for Class 12 Business Studies Chapter 3 with Answers for the practice on a regular basis to score high in exams. Refer to these MCQs Questions with Answers here along with a detailed explanation.


Business environment mcq

MCQ 1-17

1. Even though the political condition vary from country to country, they impact the sentiment of an investor in the business, if there in stability of the political condition cause uncertainty and make it difficult for him to predict the future. Which feature of the business environment is being highlighted in the above statement?

(a) specific and general forces
(b) dynamic nature
(c) relativity
(d) all of the above

2. “The increase in the demand for many ayurvedic medicines, health products and services in the past few months, is related to the need for building immunity and and increase awareness for health care due to the spread of coronavirus.” Identify the feature of business environment being described above.

(a) specific and general forces
(b) interrelatedness
(c) relativity
(d) none of the above

3. Which of the following is the feature of Business Environment?

(a) It is a relative concept since it differs from country to country and even region to region.
(b) It enables the firm to identify opportunities and getting the first mover advantage.
(c) It helps in tapping useful resources.
(d) All of the above

4. The term ‘Business Environment’ means the sum total of

(a) All individual
(b) Institutions
(c) Other forces that are outside
(d) All of the above

5. “The shift of demand from soft drinks to juices is an opportunity for juice companies and threat for soft drink companies.” Identify the feature of business environment.

(a) relativity
(b) complexity
(c) uncertainty
(d) dynamic

6. Which of the following statements is incorrect?

(a) business environment is a relative concept
(b) business environment is the sum total of all things internal to business firms
(c) opportunity is referred to the positive internal trends or changes that will help performed to improve its performance
(d) none of the above

7. “The components of business environment keep on changing due to changes in various circumstances”. This shows that business environment as _________

(a) dynamic
(b) uncertain
(c) complex
(d) relative

8. Match the following.

COLUMN 1COLUMN 2
(a) Complexity(i) Very difficult to predict future happenings
(b) Specific forces(ii) Easier to understated in parts but difficult to grasp in its totality
(c) Uncertainity(iii) Affect individual enterprises directly and immediately

(a) (ii), (iii), (i)
(b) (iii), (ii), (i)
(c) (ii), (i), (iii)
(d) (iii), (i), (ii)

9. “Even after the opening of the Indian economy and 1991 foreign companies found it extremely difficult to cut through the bureaucratic red tape to get permit for doing business in India, which created and negative impact on business.”

Identify the dimension of the business environment which led to the creation of negative impact on business.

(a) social environment
(b) technological environment
(c) political environment
(d) legal environment

10. Which of the following is not an element of social environment?

(a) birth and death rate
(b) constitution of the country
(c) population ships
(d) life expectancy

11. Which of the following dimensions of business environment includes legislations passed by the government administrative orders issued by government authorities?

(a) technological environment
(b) social environment
(c) legal environment
(d) economic environment

12. “The current government initiated Make in India programme which is good for the manufacturing sector.”

Out of the following, identify the components of business environment court in the above lines.

(a) economic
(b) political
(c) legal
(d) technological

13. “Increase in the use of mobile phones and iPods instead of paper and radio” refers to an example of a key component of general environment of business. Identify the components of business environment.

(a) technological
(b) political
(c) legal
(d) economic

14. “Due to enforcement of Euro-IV emission norms and automobile company had to face out one of its model.” Identify the dimension of environment highlighted in the given statement.

(a) technological
(b) political
(c) legal
(d) economic

15. Which of the following statements is true with respect to political environment?

(a) it include the social forces like customs and traditions values, social trends, society’s expectations from business etc.
(b) it includes forces relating to scientific improvement and innovations
(c) it includes political conditions at the general stability and peace in the country
(d) none of the above

16. “Service sector contributes to almost half of India’s GDP but employees only one-third of its workforce.”

Which of the following dimension of business environment is stated in the above line?

(a) economic
(b) social
(c) political
(d) legal

17. Match of following.

COLUMN 1COLUMN 2
(a) Social Environment(i) Advancement in computers and electronics
(b) Legal Environment(ii) Decisions rendered by various commisions and agencies
(c) Technological Environment(iii) Customs and traditions

(a) (ii), (iii), (i)
(b) (iii), (ii), (i)
(c) (iii), (i), (ii)
(d) (ii), (i), (iii)

MCQ Answers

1. (d)

Business environment includes both specific and general forces. Business environment is dynamic, i.e., it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market. Business environment is a relative concept since it differs from country to country and even region to region.

2. (b)

Different forces of business environment are interrelated to each other. One component of the business environment affects the functioning of other components.

3. (a)

Business environment is a relative concept whose impact differs from country to country, region to region and firm to firm. Political conditions in the USA for instance differ from those in China and Pakistan. Similarly demand for sarees may be fairly high in India where is it it may be almost non-existent and France.

4. (d)

The economic, social, political, technological and other forces which operate outside of business enterprise a part of its environment. So also, the individual consumers are competing enterprise as well as the government consumer group, competitor, courts, media and other institution working outside and enterprise constituted its environment institute in environment.

5. (d)

Business environment is dynamic, therefore it keeps on changing weather in terms of technological improvements, ships and consumer preferences are entry of new competition in the market.

6. (b)

The term the ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.

7. (a)

Environmental change is concerned with the degree to which and organisation’s in parliament is dynamic and ever changing. Change in environment occurs in area like product, market, law or technology. However, some environment factors such as technological and competitive environment factors are changing faster than the political environment .

8. (a)

(ii), (iii), (i)

9. (c)

Political environment means that the actions were taken by the government, which potentially affect the routine activities of any business or company on a domestic or at the global level.

10. (b)

Constitution of the country Is an element of legal environment. Legal environment includes various laws passed by the government, administrative orders issued by government authorities, court judgements as well as decisions rendered by the central, state or local government.

11. (c)

Legal environment consists of rules and regulations, framed by the parliament, under which business must operate. To exist and grow, business is required to follow all the rules and regulations that constitutes this environment.

12. (b)

Political environment consists of forces such as political stability and peace in the country and attitude of the ruling party and its representatives towards business. These forces significantly affect the functioning of business.

13. (a)

Technological environment includes forces relating to scientific improvements and innovation which provide new way of producing goods and services and new methods and techniques of operating a business.

14. (c)

Legal environment consists of legislation that is passed by Parliament and state legislatures. Legal environment consists of legal framework within which business has to function, including legislation passed by the government, administration orders court judgement etc.

15. (c)

Political environment is the outcome of a combination of various ideologies advocated by different political parties. It includes political condition such as General stability and peace in the country and political attitude of elected government towards business.

16. (a) 

Economic environment consists of economic factors that influence the business in a country. It consists of the factors and forces concerning with means of production and distribution of wealth, example Gross Domestic Product, inflation rate, money supply etc.

17. (b)

(iii), (ii), (i)


Assertion-Reasoning Based MCQ

Code

  1. Both assertion and reason are true and reason is the correct explanation of assertion.
  2. Both assertion and reason are true but reason is not the correct explanation of assertion.  
  3. Assertion is true but reason is false.
  4. Assertion is false but reason is true. 

1. Assertion Changes and fashion and tastes of consumer may shift in demand in the market from existing products to new ones.

Reason Business environment is dynamic hence it keeps on changing in consumer preference.

2. Assertion The business environment helps in understanding the threats which are likely to happen in the future. 

Reason Environmental awareness can help managers to identify various threats on time and serve as an early warning signal.

3. Assertion Business environment includes both specific and general forces. 

Reason General forces such as investors, customers, competitors and suppliers affect individual Enterprises directly and immediately in that day to day working.

4. Assertion Interest rates, taxes, inflation, stock market indices, value of rupee, personal disposable income, unemployment rate, etc. are the factors which affect the economic environment. 

Reason The economic environment consists of an economic system, economic policies and economic conditions prevailing in a country.

5. Assertion Understanding of legal knowledge is a prerequisite for the smooth functioning of business and industry.

Reason Legal environment includes various legislations passed by the government, administrative orders issued by government administrative orders issued by government authorities, court judgements as well as the decisions rendered by various commissions and agencies at every level of the government, centre, state or local.

6. Assertion Shift in demand from propeller airplanes to Jets from and from typewriters to computer based word processors have all been responsible and creating new businesses.

Reason Technological environment includes forces relating to scientific improvements and innovations, which provide new ways and techniques to operate a business.

7. Assertion Economic environment includes economic policies of the government, including industry, monetary and fiscal policies. 

Reason Business enterprises in India do realise the importance and impact of the economic environment on their working.

Assertion-Reasoning Based MCQ Answers

1. (1)

Business environment is dynamic, therefore it keeps on changing weather in terms of technological improvements, shifts in consumer preference or entry of new competition in the market.

2. (1)

Environment happens to be the source of many threats. Environmental awareness can help managers to identify various threats on time and serve as an early warning signal.

3. (3)

General forces such as social, political, legal and technological conditions have an impact on all business enterprises and thus, may affect an individual form only indirectly.

4. (1)

Economic environment consists of factor like inflation rate, interest rates, consumer income, economic policies, market condition etc. which affect the performance of a business firm.

5. (2)

Non-compliance with the laws of the land can put business forms into legal problems.

6. (1)

Technological environment includes the discovery of new methods and techniques for the production of goods and services. Technological changes make available better methods of production and that make the optimum use of the raw material possible.

7. (2)

The economic environment in India consists of various macro level factors related to the means of production and distribution of well which have an impact on business and industry.


Case-Study Based MCQ

  1. Read the following passage and answer accordingly.

The name and taste of Coca Cola is known to almost each and every individual in India as well as throughout the world. This carbonated soft drink who is the most market share in the soft drink market and got itself is special seat in each and every gathering. The Coca-Cola company has an occasion introduced other Cola drinks under the Coke name.

The most common of these are Diet Coke along with others including caffeine free Coca-Cola, Diet Coke caffeine free, Coca Cola zero sugar, Coca-Cola Cherry, Coca-Cola Vanilla and the list goes on. It has capitalised on each and every opportunity to market itself effectively and place itself in the middle of every gathering.

The main reason for such an outstanding placement of products goes to the way they have establish the connection between every occasion and need for Coke to be present there, product design and creative advertising.

(i) In the context of the above given case, identify one identify one valid importance of business environment.

(a) enables a firm to identify opportunities and getting first mover advantage
(b) uncertainty
(c) delay and action
(d) pervasive function

(ii) Identify the feature of business environment which the Coca-Cola Company managed to get in their favour

(a) complex
(b) specific and general forces
(c) futuristic
(d) mental exercise

(iii)  which business environment did Coca-Cola majorly get into?

(a) technological environment
(b) social environment
(c) political environment
(d) economic environment

(iv) Which of the following is not a product of Coca-Cola?

(a) Diet Coke Caffeine free
(b) Coca-Cola zero sugar
(c) Coca-Cola avocado
(d) Coca-Cola Cherry

2. Read the following passage and answer accordingly.

As the government has opened up its economy to multinational corporations, it has encouraged foreign companies to invest in some sectors of retailing. It has also put in place new rules and regulations for FDI in retail sector. The FDI policy allows for an investment through two modes.

It may be either under the ‘automatic route’ or under the ‘approval route’ where prior approval of the Indian government is required for any foreign investment in an Indian company which is carrying on retailing business in India. Moreover, the policy also talks about ‘Single brand retailing’ like Nike or ‘Multi brand retailing’ like Walmart.

The argument is that customers can afford to purchase products of these companies as their income is rising gradually. It will increase Research and innovation in the retail sector which will provide new ways of producing goods as well as increased the variety of good in the market. This will eventually improve the quality of the life.

(i) “As the government has opened up its economy to multinational corporations, it has increased foreign companies to invest in some sectors of retailing.” Identify which dimension of business environment is depicted here.

(a) political environment
(b) legal environment
(c) technological environment
(d) economic environment

(ii) Customer can afford to purchase the products of these companies as their income is rising gradually.” Identify which dimension of business environment is depicted here.

(a) social environment
(b) legal environment
(c) technological environment
(d) economic environment

(iii) “It will increase research and innovation in the retail sector …”. Identify which dimension of business environment is depicted here.

(a) social environment
(b) political environment
(c) technological environment
(d) economic environment

(iv) “This will eventually improve the quality of life.” Identify which dimension of business environment is depicted here.

(a) social environment
(b) legal environment
(c) technological environment
(d) economic environment 

Case-Study Based MCQ Answers

1. (i)(a) (ii)(b) (iii)(b) (iv)(c)

2. (i)(a) (ii)(d) (iii)(c) (iv)(a)


Final Words

From the above article, you have practiced Business Environment MCQ of class 12 Business Studies Chapter 3. We hope that the above-mentioned MCQs for term 1 of chapter 3 Business Environment MCQ would will surely help you in your exam. 

If you have any doubts or queries regarding Business Environment MCQ (Multiple Choice Questions) with answers, feel free to reach us and we will get back to you as early as possible.

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