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.

Which of the following statements is TRUE?

1. Business environment is static in nature i.e. it is constant and does not change very easily.
2. Since business environment consists of numerous interrelated and dynamic conditions or forces which rise, it is difficult to comprehend what exactly constitutes a given environment.
3. Analysis of business environment enables the firm to identify opportunities and getting the first mover advantage.
4. Analysis of business environment helps the firm to identify threats and early warning signals.

2, 3 and 4

1) Business environment is static in nature i.e. it is constant and does not change very easily- This statement is false because business environment is dynamic in nature i.e. it keeps on changing whether in terms of technological improvements, shifts in consumer preferences or entry of new competition in the market.

2) Since business environment consists of numerous interrelated and dynamic conditions or forces which rise, it is difficult to comprehend what exactly constitutes a given environment- This statement is true because various interrelated and dynamic conditions exist in business environment and business have to work according to that.

3) Analysis of business environment enables the firm to identify opportunities and getting the first mover advantage- This statement is true because by analysing business environment we can identify the opportunities and threats. By grasping the opportunities we can take first move and get advantage of it.

4) Analysis of business environment helps the firm to identify threats and early warning signals- This statement is true because by analysing business environment we can identify the opportunities and threats. By seeing the threat in the environment we can plan according to that.