Saturday, March 27, 2010

E. REASONS OF BUSINESS FAILURE

Usually the manager is responsible for the failure of a business. However, failure is also due to several such causes beyond the control of him. Thus, the causes of failure may broadly be grouped under two categories :
1. External Causes, and
2. Internal Causes

(1) External Causes : External causes are such causes which are not in control and power of the trader/manager. The important external causes are as follows:

(a) Intense Competition : Intense competition in the market may make the existence of a trader impossible.
(b) Change in Demand : Change in demand may also lead to the failure of the trade. With the coming of the substitute, demand of the commodity may be adversely affected.
(c) Legal Decisions : Sometimes legal decisions may also bring an end to a trade. If such decisions impose restriction on the production and consumption of a particular commodity then the sales will be adversely affected.
(d) Natural Calamities : Natural calamities, like floor, earthquake, fire, etc. may also lead to the destruction of business.

(2) Internal Causes : Internal causes are within the organization and manager. Majority of business fails due to internal causes such as:

(a) Inefficient Management and Control : Inefficient management and control, on the one hand, result in unnecessary excessive expenditure and on the other hand, lead to reduction of profits and ultimately, to losses.
(b) Insufficient Resources : Insufficient resources hinders the trade. In the absence of sufficient capital, the trader has to give up several profitable opportunities, which may cause loss to the business later.
(c) Fraud and cheating : Fraud and cheating on the part of managers and employees may lead to failure of business.

3 comments:

admin said...

There can be so many reasons for a business to fail.This post clearly divides into two part 1) Internal and 2)External. While a fear of being failed in business takes a lot of people to pursue a career where they can get a job.

Saloni panjwani said...

HI..
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https://www.hapchap.in/jee-advanced-complete-details/

Shivam Bansal said...

fight back from a business failure

business failure

fight from business failure

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