17. Kapil Sharma wants to start business of fashionable items. But he is hesitating to go ahead with his plants because of the various kinds of risks which are inherent in every business. He consults his friends Sunil in this regard for guidance about ways to overcome such situations effectively in his business.
In this context of above case:-
a) Describe briefly the various types of business risks.
b) State any two suggestions which Sunil is likely to give to Kapil Sharma to overcome such situations effectively in his business
Dear Student
17) a) Business enterprises face two types of risks namely, Speculative and pure risks
Speculative risks may arise due to change in market conditions that are caused by fluctuations in demand and supply, price change and also based on changes in tastes of consumers. Favourable conditions may result in profits in business while unfavourable conditions may result in losses
Pure risks include only the possibility of two conditions, loss or no loss. For example, the situations of theft, fire and strike. Their occurrence may result in loss or their non occurrence may result either in loss or gain
b) Sunil may give suggestions to Mr. Kapil that every business has certain degree of risks and it is highly dependent on volume of production, and may also advise him to start the business in small scale with small volume of production and can increase if the market for the products pick up in the market
17) a) Business enterprises face two types of risks namely, Speculative and pure risks
Speculative risks may arise due to change in market conditions that are caused by fluctuations in demand and supply, price change and also based on changes in tastes of consumers. Favourable conditions may result in profits in business while unfavourable conditions may result in losses
Pure risks include only the possibility of two conditions, loss or no loss. For example, the situations of theft, fire and strike. Their occurrence may result in loss or their non occurrence may result either in loss or gain
b) Sunil may give suggestions to Mr. Kapil that every business has certain degree of risks and it is highly dependent on volume of production, and may also advise him to start the business in small scale with small volume of production and can increase if the market for the products pick up in the market