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CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment

A manufacturing firm in India reviews the following: (i) a new GST rate change on its product, (ii) an amendment to labour codes, (iii) a stricter pollution-control norm, (iv) a rise in consumer preference for organic goods. How many of these are primarily part of the legal and regulatory environment?

Three of the four items belong to the legal and regulatory environment: the GST rate change, the labour code amendment and the pollution-control norm are government-imposed rules. The shift in consumer preference towards organic goods is a socio-cultural factor, so it is excluded from the count.

  1. AOne
  2. BTwo
  3. CThreeCorrect
  4. DFour

Explanation

GST rate change, labour code amendment and pollution-control norms are all laws or regulations imposed by government, so they are three items. Rising consumer preference for organic goods is a socio-cultural trend, not a legal requirement. Counting all four wrongly includes this trend.

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