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CMA Intermediate · Operations Management and Strategic Management · Strategic Analysis and Strategic Planning

A two-wheeler maker in Pune notes that rising RBI repo rates have increased customer loan costs and reduced vehicle demand. Which element of environmental analysis does this observation represent?

Rising repo rates affecting loan costs and demand is an economic factor of the macro environment. Interest rates are an external macroeconomic variable beyond the firm's control, so the observation is not a social factor, industry force or internal weakness.

  1. AAn economic factor in the macro environmentCorrect
  2. BA social factor in the macro environment
  3. CA threat of new entrants in the industry environment
  4. DAn internal weakness in the value chain

Explanation

Interest rates are a macroeconomic variable, so they sit in the economic part of PESTEL. Threat of new entrants is a Porter industry force and unrelated to loan costs. The factor is external, so it cannot be an internal weakness. Social factors deal with demographics and culture.

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