EXAMINATION PAPER

FACULTY : BUSINESS AND ACCOUNTANCY

COURSE : MASTER OF BUSINESS ADMINISTRATION (MBA)

YEAR/ SEMESTER : FIRST YEAR / SEMESTER ONE

MODULE TITLE : BUSINESS ENVIRONMENT ANALYSIS

CODE : MGT 516

DATE : 22-AUG, 2018, WEDNESDAY

TIME ALLOWED : 3 HOURS

START : 1:00 PM FINISH : 4:00 PM

Instruction to candidates
1. This question paper has THREE (3) Sections.

2. Answer ALL questions in Section A, MCQ.

3. Answer 5 questions in Section B, MSAQ.

4. Answer 2 questions in Section C, MEQ.

5. No scripts or answer sheets are to be taken out of the Examination Hall.

6. For Section A, answer in the OMR form provided.

Do not open this question paper until instructed

 SECTION A
Multiple Choice Questions (30*1=30)

1. Analyzing process of change in the business environment involves

conceptualizing it as:
a. Complex
b. Dynamic
c. Static
d. Diverse

2. Which of the following is NOT a component of internal environment?

a. Goods
b. Tactics
c. Policies
d. Strategies

3. Which of the following is NOT studied as a part of task environment?

a. Labour Unions
b. Media
c. Employees
d. Customer

4. Nature of political risk is ______.

a. operating restrictions
b. nationalizations
c. agitation
d. all of the above

5. The text defines a number of levels at which an organization’s environment can

be defined. Which of the following is NOT a commonly used term to describe an
element of the business environment?
a. Micro-environment
b. Macro-environment
c. Extrinsic environment
d. Internal environment

6. Which of the following does NOT form part of an organization’s micro-

environment?
a. Intermediaries
b. Customers
c. Statute legislation
d. Suppliers
7. Which of the following does NOT form part of a firm’s macro-environment?
a. Internal environment
b. Economic environment
c. Technological environment
d. Political environment

8. What term is used to describe the process which basic goods pass through as they
are transformed into goods for final consumption?
a. Circular flow of income
b. Final delivery
c. Logistics
d. Value chain

9. Which of the following is the BEST example of the concept of the business cycle?
a. The concept is the same as a value chain, but with the addition of a feedback
loop
b. The process of internal business planning
c. The process of developing an external business plan
d. Prosperity in Europe during the decade to 2007, followed by the “credit

10. The Planning Commission was first created in Nepal in ______.

a. 1956
b. 1958
c. 1954
d. 1955

11. Analyzing process of change in the Business environment involves

conceptualizing it as:
a. Diverse
b. Complex
c. Dynamic
d. Static

12. NAFTA Stands for:

a. North American Free Trade Agreement
b. North Asia Free Trade Agreement
c. North American Free Transaction Agreement
d. North American Free Transit Agreement
13. FMCG stands for:
a. Fast Moving Consumer Goods
b. Fancy Moving Consumer Goods
c. Finished Moving Consumer Goods
d. Functional Moving Consumer Goods

14. An analysis of the external environment enables a firm to identify______.

a. strength and opportunities
b. strength and weakness
c. weakness and threads
d. opportunities and threads

15. ______is the process of analyzing the environment for the identification of the
factors which have impact on or have implication for the business.
a. Forecasting
b. Assessment
c. Scanning
d. None of the above

16. When a company taken over another one and clearly becomes the new owner,
the action is called:
a. Merger
b. Acquisition
c. Strategic Alliances
d. None of the above

17. Liberalization means:

a. Reducing number of reserved industries from 17 to 8
b. Liberating the industry, trade and economy from unwanted restrictions
c. Opening up of economy to the world by attaining international
competitiveness
d. Free determination of interest rates

18. Which of the following is NOT an element of internal environment?

a. Marketing capabilities
b. Operational Capabilities
c. Money and capital market
d. Personal Capabilities
19. The factors included in the total environment of Business are:
a. Political- Administrative
b. Social – Cultural
c. Economic Factor
d. All of the above

20. ______occupies the central place in business.

a. People.
b. Raw material.
c. Labour.
d. Finished goods.

21. Which of the following is NOT a part of Michael Porter’s five-force model?
a. Threat of substitution
b. Company policy
c. Supplier power
d. Buyer power

22. Innovation is a/an ______ for growth and value in business.

a. engine
b. unity
c. initiation
d. energy

23. ______ is a process that systematically surveys and interprets relevant data to
identify external opportunities and threat.
a. Corporate Societal Responsibility
b. Environmental Scanning
c. Forecasting
d. Environmental Situation

24. Forecasts is/are:

a. Predictions
b. Projections
c. Estimates of future situations
d. All of the above
25. ______is the process of continually comparing an organization’s performance
against the performance of the best organization in similar business to determine
what should be improved.
a. Benchmarking
b. Screening
c. Both „a‟ and „b‟
d. None of the above

26. The value of scenario development is that it helps managers develop ______
plans.
a. consequence
b. value creation
c. validation
d. contingency

27. A Company employs a consultant to regularly look through newspaper, trade

journals and internet forums to gather insights that may be of use to the
company in understanding and predicting the nature of its business
environment. Which term is commonly used to describe this process?
a. Environmental audit
b. Environmental scanning
c. Business audit
d. Historical log analysis

28. A large corporation with operation and divisions spread over several countries
but controlled by a central headquarter is called:
a. Ventures
b. Joint Foreign Direct Investments
c. Subsidiary Agencies
d. Multinational Enterprises

29. Which policy is concerned with raising revenue through taxation and deciding
on the level and pattern of expenditure?
a. Monetary Policy
b. Fiscal Policy
c. Trade Policy
d. Business Policy
30. ______ is concerned with holding the balance between economic and social goals
and between individual and communal goals.
a. Corporate Management
b. Business Ethics
c. Corporate Governance
d. None of the above
 SECTION B
Short Answers Questions
Answer any five (5) questions out of seven (7) questions (5*6=30)

1. Shortly analyze Contemporary innovation, creative and ideas of business trends

and its environment in different region.

2. “The operating environment has more immediate effects on the growth and
development of a business.” Do you agree with this statement? Support your
argument.

3. To what extent do you think a change of government in your country would affect
the business community?

4. Why business and politics are closely connected? Explain the nature of business-
government relations in under developing country.

5. How technological environment shape the business environment. State pros and
cons of E-knowledge and E- Commerce.

6. Briefly explain the Socio-cultural forces that influence business community.

7. Define globalization. Explain the major risk factor that affect in global business
environment.
 SECTION C
Long Answer Questions
Attempt any two (2) questions but question no three (3) is compulsory (2*20=40)

1. “Developing nation like Nepal is facing huge trade imbalance, Imports have gone
very fast pace but exports have declined” State your argument how can WTO,
SAFTA, BIMSTIC, NAFTA and other regional trade blocks have to play the roles
to achieve trade balance on Asian country.

2. Explore the major environment forces in terms of operate and affect the operations
of Nepalese business.

3. Read the following case study and answer the question asked at the end.

Peru is located on the west coast of South America. It is the third largest
nation of the continent (after Brazil and Argentina), and covers almost 500,000
square miles (about 14% of the size of the United States). The land has enormous
contrasts, with a desert (drier than the Sahara) the towering snow-capped Andes
mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people; of which about 20% live in Lima, the capital.
More Indians (one half of the population) live in Peru than in any other country in
the western hemisphere. The ancestors of Peru's Indians were the famous Incas,
who built a great empire. The rest of the population is mixed and a small
percentage is white. The economy depends heavily on agriculture, fishing mining
and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4300. In recent years the economy has gained some
relative strength and multinationals are now beginning to consider investing in the
country.
One of these potential investors is a large New York based bank that is
considering a $25 million loan to the owner of a Peruvian fishing fleet. The owner
wants to refurbish the fleet and add one more ship.

During 1970's the Peruvian government nationalized a number of industries

and factories and began running them for the profit of the state. In most cases,
these state-run ventures become disasters. In the late 1970's the fishing fleet owner
was given back his ships and allowed to operate his business as before. Since then,
he has managed to remain profitable, but the biggest problem is that his ships are
getting old and he needs an influx of capital to make repairs and add new
technology. As he explained it to the New York banker; "Fishing is no longer just
an art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market, you have to have the latest equipment for both
locating as well as catching and then loading and unloading the fish".
Having reviewed the fleet owner's operation, the large multinational bank
believes that the loan is justified. The financial institution is concerned, however,
that the Peruvian government might step in during the next couple of years and
again take over the business. If this were to happen, it might take an additional
decade for the loan to be repaid. If the government were to allow the fleet owner
to operate the fleet the way he has over the last decade, the loan could be repaid
within seven years.
Right now, the bank is deciding on the specific terms of the agreement. Once these
have been worked out, either a loan officer will fly down to Lima and close to the
deal or the owner will be asked to come to New York for the signing. Whichever
approach is used, the bank realizes that final adjustments in the agreement will
have to be made on the spot. Therefore, if the bank sends a representative to Lima,
the individual will have to have the authority to commit the bank to specific terms.
These final matters should be worked out within the next ten days.

a. What are some current issues facing by Peru? Discuss the climate for doing
business in Peru today. [10 Marks]
b. What type of political risks does this fishing company need to evaluate?
Identify and describe them. [10 Marks]

****BEST OF LUCK****