Page 1 - Microsoft Word - HA code - 241507010121
P. 1

LECTURE NOTES

                                                    CODE- 241504010112

                                                    XI ENTREPRENEURSHIP

                            TOPIC-ENTREPRENEURSHIP AS INNOVATION AND PROBLEM SOLVING


                       SUB TOPIC- BUSINESS RISKS AND ROLE OF TECHNOLOGY IN TODAY’S BUSINESS

                   1.  Business risks mean the possibility of some unfavorable occurrence.
                            Insurable  risks  are  those  which  can  be  covered  through  different  types  of

                              insurance policies. The probability of an insurable risk can be determined.
                            Non-insurable  risks  are  those  whose  probability  cannot  be  determined  and
                              which cannot be insured against.

               Basis             Internal risk                       External risk
               Factors           Internal risk arises due to internal  External  risk  arises  due  to  external
                                 factors    such     as    human,  factors  such  as  economic,  natural  and
                                 technological and physical factors.  political factors.
               Controllability   These  risks  are  controllable  to  a  These risks are uncontrollable.
                                 certain extent.



               2. The factors responsible for business risks can be classified as:

               (i) Internal factors: These are those factors which arise from the events taking place within the
               business  itself.  Since  these  factors arise  from within an  organization, therefore, they  can be
               controlled by the entrepreneur to a certain extent.


               (ii) External factors: These are those factors which arise due to the events occurring outside the
               business organization. Such factors are generally beyond the control of an entrepreneur.

                     The various internal factors which lead to business risks are as follows:


               (i) Human factors: These factors are an important cause of internal risks. A business may face
               risk  in  the  form  of  strikes,  lockout  by  the  trade  unions,  negligence  and  dishonesty  of  an
               employee, accident or death of a key person in the company, incompetence of managers or of
               other key persons in the organization etc. Also failure of suppliers to supply the materials or
               goods on time or default in payment by debtors are also human factors which are a risk for a
               business and can adversely affect the business enterprise.


               (ii)  Technological  factors:  Risk  in  technological  factors  can  arise  in  the  form  of  unforeseen
               changes in the techniques of production or distribution leading to technological obsolescence.
   1   2   3   4