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An entrepreneur depends on only one source of raw material. What is the main risk?

Answer and explanation

Correct answer: Production may stop if supply stops

Dependence on one supplier creates concentration risk. If that supplier faces shortage, delay, price changes, transport problems, or closure, the enterprise may not receive essential material and production may slow or stop. The entrepreneur can reduce this risk by qualifying alternative suppliers, maintaining suitable inventory, and comparing quality and prices. Single sourcing does not guarantee better quality or lower cost.

Related tags

Supply-RiskRaw-MaterialBusiness RiskBusinessTrade And CommerceBusiness Trade And CommerceBusiness StudiesClass 11 Mcq

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