If a country's inflation rate rises sharply, which response is most consistent with analysing the business environment?
Correct answer: A. Review costs and pricing assumptions
- A. Review costs and pricing assumptions
- B. Ignore suppliers and customers
- C. Assume demand is unchanged in every market
- D. Replace the firm's mission with a tax policy
Explanation
Higher inflation can increase input costs and alter customers' purchasing power, so reviewing costs and pricing is a rational business response. The other options ignore the effects of the economic environment or confuse business decisions with government policy.
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About The Business Environment
Business environment includes the internal factors and external forces that affect business decisions, performance and survival. It covers customers, competitors, suppliers, government, technology, economic conditions, society, law and ecology, including the distinction between the microenvironment and the wider PESTLE environment.
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