Consider the following statements:
(A) Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small cars.
(B) Maruti Udyog saw the need for small cars in an environment of falling petroleum prices in India.
(C) Opportunities refer to the positive external trends or changes that will help a firm to improve its performance.
(D) Threats refer to the internal trends and changes in a firm that will hinder its performance.
(E) An Indian firm can meet the threat of a foreign multinational entering with new substitutes by reducing its cost of production.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (C) and (E) only
(A) Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small cars. — Correct. Being the first to spot this need gave Maruti the first mover advantage.
(B) Maruti Udyog saw the need for small cars in an environment of falling petroleum prices in India. — Incorrect. Petroleum prices were rising, not falling. Rising fuel costs made small cars attractive.
(C) Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. — Correct. This is the meaning of opportunities.
(D) Threats refer to the internal trends and changes in a firm that will hinder its performance. — Incorrect. Threats are external trends and changes, not internal ones.
(E) An Indian firm can meet the threat of a foreign multinational entering with new substitutes by reducing its cost of production. — Correct. Reducing the cost of production is one way to meet such a threat, along with better quality and aggressive advertising.
NCERT (2026-27 Edition): “(i) It enables the firm to identify opportunities and getting the first mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors. For example, Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small cars in an environment of rising petroleum prices and a large middle class population in India.” “(ii) It helps the firm to identify threats and early warning signals: Threats refer to the external environment trends and changes that will hinder a firm’s performance. Besides opportunities, 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. For example, if an Indian firm finds that a foreign multinational is entering the Indian market with new substitutes, it should act as a warning signal. On the basis of this information, the Indian firms can prepare themselves to meet the threat by adopting such measures as improving the quality of the product, reducing cost of the production, engaging in aggressive advertising, and so on.” |