Different situations in different business are being elaborated below: (i)Raghunath Gorkha
had a match stick factory in Nepal which got destructed by the recent earthquake.
(ii)Mr Arya, a senior manager in a telecom company shared confidential information about
the company with a competitor which led to huge losses for the company.
(iii)Vodafone Co. was charged with evasion of tax and asked to pay fine in cross which would
lead to heavy losses for the company.
(iv) Type writers becoming redundant is being referred to in all the above cases?
(a)Which characteristic of business is being referred to in all the above cases.Explain
(b)How can you classify the different cases based on this characteristic?
Answers
Explanation:
Answer
a) Risk bearing characteristic of business is referred to in all above cases. All business activities carry
some elements of risk because future is uncertain and business has no control over several factors like,
strikes, fire, theft, change in consumer taste etc. Every business invests money with the objective of
earning profit but the amount of profit earned may very also there is always a possibility of losses.b) (i)Raghunath Gorkha had a match stick factory in Nepal which got distructed by the recent
earthquake:
It is classified as Natural Causes of Business risks. Human beings have little control over natural
calamities like flood, earthquake, famine etc. They result in heavy losses of life, property & income in
business.
(ii)Mr Arya, a senior manager in a telecom company shared confidential information about the company
with a competitor which led to huge losses for the company:
It is classified as Human Causes of Business Risks. Human causes include such unexpected events like
dishonesty, carelessness or negligence of employees, strikes, riots, management ineffeciency etc. Here
he shared confidential information with competitor which led to huge losses
(iii)Vodafone Co. was charged with evasion of tax and asked to pay fine in cross which would lead to
heavy losses for the company:
It is classified as Human Causes of Business Risks. It include unexpected events, like dishonesty,
carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots,
management inefficiency etc which leads to heavy losses to company.
(iv) Type writers becoming redundant:
It is classified as Economic causes of business riskes. They are related to a chance of loss due to change
in market condition e.g., fluctuations in demand and prices, competition, change in technology etc.
Typewriter became redundant is change in technology which leads to loss in company.
Answer:
a) Risk bearing characteristic of business is referred to in all above cases. All business activities carry
some elements of risk because future is uncertain and business has no control over several factors like,
strikes, fire, theft, change in consumer taste etc. Every business invests money with the objective of
earning profit but the amount of profit earned may very also there is always a possibility of losses.b) (i)Raghunath Gorkha had a match stick factory in Nepal which got distructed by the recent
earthquake:
It is classified as Natural Causes of Business risks. Human beings have little control over natural
calamities like flood, earthquake, famine etc. They result in heavy losses of life, property & income in
business.
(ii)Mr Arya, a senior manager in a telecom company shared confidential information about the company
with a competitor which led to huge losses for the company:
It is classified as Human Causes of Business Risks. Human causes include such unexpected events like
dishonesty, carelessness or negligence of employees, strikes, riots, management ineffeciency etc. Here
he shared confidential information with competitor which led to huge losses
(iii)Vodafone Co. was charged with evasion of tax and asked to pay fine in cross which would lead to
heavy losses for the company:
It is classified as Human Causes of Business Risks. It include unexpected events, like dishonesty,
carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots,
management inefficiency etc which leads to heavy losses to company.
(iv) Type writers becoming redundant:
It is classified as Economic causes of business riskes. They are related to a chance of loss due to change
in market condition e.g., fluctuations in demand and prices, competition, change in technology etc.
Typewriter became redundant is change in technology which leads to loss in company.
Explanation: