Download App

Enterprise Marketing — Entrepreneurship STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipEnterprise Marketing5 Marks
Question
Explain the reasons for business failures.
✓

Answer

Following are the reasons of business failures:
  1. Lack of industry experience: The internal resources of a firm has to match the needs of the environment to which the firm belongs. Lack of experience in the field will lead to poor organization of a firm and resources. This may lead to loss and business failure.
  2. Inadequate financing: Financing is the lifeblood of a business at every stage. Many businesses fail due to lack of proper financing channels. The lack of planning for funding to support opportunities for growth is the root cause of failure. Planning in advance, rather than looking for financing just when needed, is a good practice. It includes lack of sufficient awareness of the costs involved in raising capital, lack of alternative sources in case of rejection from financiers, etc.
  3. Lack of adequate cash flow: Cash flow is the measure of a firm’s ability to maintain sufficient funding to meet its expenses for the day-to-day activities of the business. Many businesses fail because owners have a difficult time projecting what cash will come in every month, and thus, how much can be produced. Cash flow projections and its knowledge will help owners to understand how much they can afford to spend.
  4. Poor business planning: Ninety per cent of business failures are caused by a lack of general business management skills and planning. Owner, manager must have sufficient knowledge of such skills. This will lead to proper understanding of the practical situation which can then be resolved using basic management skills.
  5. Management incompetence: Ninety per cent of business failures are associated with “management inadequacy”, which can be due to either management inexperience or incompetence. A good strategic plan is only good as the management’s ability to implement changes in day-to-day operations.
  6. Ignoring the competition: Customers always looking for the better deal. If competition offers better products, services, or prices, the customers will succeed at the expense of the business. So keeping an eye on competitors and positioning the products accordingly is vital to staying in business.
  7. Unworkable goals: Setting goals is one thing and setting workable goals is another. Enterprises are influenced by uncertainty. Setting realistic goals, within the bounds of acceptable risk taking and optimism, is important.
  8. Diminished customer base.
  9. Uncontrolled growth.
  10. Inappropriate location.
  11. Poor system of control.
  12. Lack of entrepreneurial skills.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "5 Marks Question" from Enterprise Marketing→Enterprise Marketing — all question types→Entrepreneurship STD 12 Commerce question papers→CBSE Board STD 12 Commerce question papers→CBSE Board question paper generator→

Similar questions

Mr. Raghav had always wanted to manufacture an innovative, energy efficient fan. He was looking into various options and has finally narrowed it down to one option. He understands that the entire idea would have to follow a process. Identify and explain the process.
→
An entrepreneur can raise the required capital in the primary market. Explain the various methods of raising the funds in the primary market by an entrepreneur. Give some value points for this method of raising funds.
→
Nandini, Purvi and Smrithi are establishing a manufacturing company, "NPS Co”. that makes two brands of writing pens; The Elite Gel Pen and the Delite Ball Point Pen. They plans to sell the pens to retailers all across the county. They decided to sell the Elite Pen to retailers for 20 and the Delite Ball Point Pen for 10. Through market research, NPS Co. estimates 40% of his customers (retail outlets) will purchase the Elite Pen, while the remaining 60% of customers (retail outlets) will purchase the high quality Delite Ball Pen. The cost to manufacture each Elite Pen is estimated to be 5 while the cost to manufacture each Ball Point Pen is forecasted at 3. These manufacturing costs are the only variable costs incurred by the company. In addition, NPS Co. forecasts the company's fixed costs for the upcoming year at 120,972 (assumed).From the following information calculate:
  1. Overall Break-even point in units.
  2. Product-wise Break-even point in Units.
  3. Product-wise Break-point in ₹.
Verification by Income statement.
→
How is production plan helpful?
OR
A production plan helps to plan the work in such a manner that one can clearly form an idea about which aspects?
→
Business activities which are done mainly for economic consideration can be classified into manufacturing, service and trading. Explain each of them.
→
Explain any four growth sustaining activities adopted by an Entrepreneur.
→
State whether the following require small or large working capital. Answer should be SEO supported by a valid reason:
  1. Selling ice-creams.
  2. Following a liberal credit policy.
  3. Dealing in stainless steel wares.
  4. Using capital intensive technology.
→
Assuming that you wish to start a small scale industry for manufacturing and selling detergent powder, discuss how would you seek support of financial institutions.
→
Stock exchange performs a number of functions in respect of marketability of different types of securities for investors and borrowing companies. Explain the important functions of stock exchanges.
→
How franchising helps start-ups?
→