Entrepreneurship as Innovation and Problem Solving — Entrepreneurship STD 11 Commerce — Question
CBSE BoardEnglish MediumSTD 11 CommerceEntrepreneurshipEntrepreneurship as Innovation and Problem Solving4 Marks
Question
Discuss the various external factors responsible for business risks.
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Answer
The various external factors which give rise to risks are as follows:
Economic factors: These factors are the most important cause of external risks. They result from the change in the prevailing market conditions.
The changes may be in the form of:
Change in demand for the product.
Price fluctuations.
Change in tastes and preferences of the consumers.
Change in the income of the consumer.
Natural factors: These are the unforeseen natural calamities over which an entrepreneur has very little or no control. They result from natural calamities such as earthquakes, floods, famines, cyclones, lightening, tornadoes, etc. Such calamities may cause loss of life and property to the firm or may damage its products, e.g. the Gujarat earthquake caused irreparable damage not only to business enterprises, but also adversely affected the whole economy of the state.
Political factors: These factors influence the functioning of the business, both in the long, as well as, in the short-term. These factors result from political changes in a country, such as:
Fall or change in the government.
Communal violence or riots in the country.
Civil war.
Hostilities with the neighbouring countries.
Changes in government policies and regulations.
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