CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment
Which of the following is an example of a factor in the internal environment of a business firm rather than its external environment?
The firm's own mission statement and organisational culture belong to the internal environment because they arise within the organisation and are controllable by management. Interest rate changes, tax rates and consumer preferences are external forces that the firm cannot control and can only respond to.
- AA change in the repo rate announced by the Reserve Bank of India
- BThe firm's own mission statement and organisational cultureCorrect
- CA new GST rate notified by the government
- DRising consumer preference for electric two-wheelers
Explanation
Internal environment covers factors within the firm's control such as mission, culture, management style and resources. Repo rate changes, tax notifications and shifts in consumer taste originate outside the firm and form part of the external environment.
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