_____ involves examining a company's operating environment to identify opportunities and threats.

• A. External Analysis
• B. Internal Analysis
• C. Gap Analysis
• D. Pareto Analysis

Answer: (A)

This question tests understanding of evaluating the business landscape outside the company to spot opportunities and threats. Examining the operating environment to identify external opportunities and threats is external analysis. It concentrates on factors beyond the organization's walls—market trends, competitors, customers, suppliers, regulations, and macroeconomic shifts—that could create chances for success or pose risks. Internal analysis, in contrast, looks at strengths and weaknesses inside the firm. Gap analysis compares current performance with a desired target to see what’s lacking, while Pareto analysis prioritizes issues by impact rather than identifying external opportunities or threats. So identifying opportunities and threats in the environment best fits external analysis.