Direction: Read the following text and answer the questions given below:

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 (Foreign Direct Investment) in the retail sector. The FDI policy allows foreign 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 the products of these companies as their income is rising gradually. It will increase research and innovations in the retail sector which will provide new ways of producing goods as well as increase the variety of goods in the market. This will eventually improve the quality of life.

“As the government has opened up its economy to Multinational Corporations, it has encouraged foreign companies to invest in some sectors of retailing.”

Identify which dimension of business environment is depicted here.

Economic Environment

Economic environment is depicted in the lines “As the government has opened up its economy to Multinational Corporations, it has encouraged foreign companies to invest in some sectors of retailing.”

The economic environment refers to the conditions and factors that affect the performance and behavior of businesses within a particular country or region.

1. The statement talks about the government's decision to open up its economy to Multinational Corporations (MNCs). This decision is deeply rooted in economic policy, aiming to attract foreign investment, stimulate economic growth, and foster competition in various sectors, including retail.

2. It mentions how the government encourages foreign companies to invest in some sectors of retailing. This encouragement is a deliberate economic strategy aimed at boosting investment, creating jobs, and improving consumer choice within the retail sector.

While the political environment does play a role in shaping economic policies and regulations, the statement primarily emphasizes the economic dimensions of the government's actions, such as attracting foreign investment, stimulating economic growth, and fostering competition. Therefore, while option 1, Political Environment, is relevant to some extent, it's not the primary focus of the statement, making it less directly applicable compared to option 3, Economic Environment.