Consider the following statements about the importance of business environment:
(A) Environment is a source of inputs like finance, machines and raw materials, which a firm draws from financiers, government and suppliers.
(B) Threats refer to the internal environment trends and changes that will hinder a firm’s performance.
(C) Many studies reveal that the future of an enterprise is closely bound up with what is happening in the environment.
(D) In today’s business environment, it is not the pace of change that is so important as the fact of change itself.
(E) Understanding of environment can be the basis for deciding the future course of action, which is called planning.
Choose the incorrect statements from the above.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (B) and (D) only
(A) Environment is a source of inputs like finance, machines and raw materials, which a firm draws from financiers, government and suppliers. — True. This is the point of tapping useful resources. A firm gets its inputs from its environment.
(B) Threats refer to the internal environment trends and changes that will hinder a firm’s performance. — False. Threats are external environment trends and changes that hinder a firm’s performance. They come from outside, like a foreign multinational entering the market with new substitutes.
(C) Many studies reveal that the future of an enterprise is closely bound up with what is happening in the environment. — True. This is the point of improving performance. Firms that keep watching their environment do better and succeed for longer.
(D) In today’s business environment, it is not the pace of change that is so important as the fact of change itself. — False. The point is the other way round. It is not the fact of change itself that is so important as the pace of change. Today changes take place at a fast pace.
(E) Understanding of environment can be the basis for deciding the future course of action, which is called planning. — True. This is the point of planning and policy formulation. Deciding the future course of action is planning; guidelines for decision making are policy.
NCERT (2026-27 Edition): “(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. …” “(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. …” |