Choose the incorrect statements from the following about the importance of business environment:
(A) Opportunities refer to the positive internal trends or changes that will help a firm to improve its performance.
(B) Environmental awareness can help managers to identify various threats on time and serve as an early warning signal.
(C) Environment is a source of various resources for running a business.
(D) Maruti Udyog became the leader in the small car market as it was the first to recognise the need for small cars when petroleum prices were falling.
(E) Turbulent market conditions, less brand loyalty and fragmentation of markets are images used to describe today’s business environment.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) and (D) only
(A) Opportunities refer to the positive internal trends or changes that will help a firm to improve its performance. — False. Opportunities are positive external trends or changes. They arise outside the firm.
(B) Environmental awareness can help managers to identify various threats on time and serve as an early warning signal. — True. Knowing the environment helps managers see threats in time.
(C) Environment is a source of various resources for running a business. — True. A firm gets its inputs, such as finance, machines and labour, from its environment.
(D) Maruti Udyog became the leader in the small car market as it was the first to recognise the need for small cars when petroleum prices were falling. — False. Maruti saw the need for small cars when petroleum prices were rising. Rising fuel costs made small cars attractive.
(E) Turbulent market conditions, less brand loyalty and fragmentation of markets are images used to describe today’s business environment. — True. These images show how fast the environment changes today.
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. …” “(iii) It helps in tapping useful resources: Environment is a source of various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs like finance, machines, raw materials, power and water, labour, etc., from its environment including financiers, government and suppliers. …” “(iv) It helps in coping with rapid changes: Today’s business environment is getting increasingly dynamic where changes are taking place at a fast pace. It is not the fact of change itself that is so important as the pace of change. Turbulent market conditions, less brand loyalty, divisions and sub-divisions (fragmentation) of markets, more demanding customers, rapid changes in technology and intense global competition are just a few of the images used to describe today’s business environment. …” |