explain the causes of business ricks
Answers
Answer:
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Explanation:
Natural causes: Natural causes are beyond the control of human beings. Natural disasters can lead to huge losses in business. Let us take example of various small hotels which were wiped out during the massive floods in Uttarakhand. Nobody could do anything when the flood hit the hilly state.
Human causes: Strikes, dishonesty, carelessness, etc. are examples of human causes of business risk. Labour unrest have often resulted in shutdown of many factories. The factory of Maruti at Gurgaon is an example of crippling operations due to labour unrest.
Economic causes: Inflation, unemployment, economic slowdown, etc. are examples of economic causes of business risk. The recent economic slowdown has resulted in reduced demand for housing. According to leading newspapers, there is huge inventory in the housing sector which would take at least ten years to be sold. Luxury products suffer severe decline in demand during an economic slowdown.
Other causes: Some political events can change the business scenario. A major policy change by the government can change the business environment. A very good example of effect of policy change on a business is the upsurge in mobile telephony market in India when the then telecommunications minister favoured CDMA by making some changes in policy. It is always seen that a stable government at the centre improves the business climate, while an unstable government is detrimental to the business climate.
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Answer:
Explanation:
Business Risk - Business Risk refers to the factors which can affect the business environment internally or externally.
Internal Business Risk is the factors that caused internally due to the lag of operations or communication. Corrective measures can be used to work them out.
External Business Risk is the situation of the factors which are beyond the boundaries of the frim and out of the control of the entrepreneur.
Cause of Business Risk -
Change is technology - Sudden, change in the technology of the operation can lead to limiting the potential of the firm. Although which hamper its effectiveness and efficiency.
Cut-throat Competitiveness - Being ambitious is healthy for the firm to achieve its goals and objectives. Whereas, becoming extra ambitious to prove best and stand creates cut-throat Competitiveness which leads to the stressful situation in the environment to cope up.
Unstable financial Condition - The frim which have unstable financial condition leads to the lack of resources which hamper the overall operational working. This also leads to the creation of debts which lead to the downfall of the firm in the market area.