Question : Advance understanding of business environment will help in:
Option 1: Planning and policy formation
Option 2: Privatisation
Option 3: Developing new principle of management
Option 4: Liberalisation
Correct Answer: Planning and policy formation
Solution : The major strategies or plan and policies in the organisation are formed keeping in mind business environment because the policies and strategies have to be implemented in the presence of environmental forces.
Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or training guidelines for decision making (policy).
Hence, option 1 is the correct answer.
