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In which situation can legal environment become a threat to business?

Answer and explanation

Correct answer: When a business fails to comply with applicable laws

The correct answer is when a business fails to comply with applicable laws. Violation of legal provisions can lead to fines, cancellation of licences, legal action and loss of reputation, making it a threat to the business. Depositing correct taxes on time is an example of legal compliance, not a threat. Exam tip: In questions on legal environment, look for terms such as compliance, penalties, restrictions and violation of law.

Related tags

Business EnvironmentLegal EnvironmentLegal ComplianceBusiness RiskClass 12 Business StudiesBusiness StudiesClass 12 Mcq

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