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.
Frequently asked questions
What is the correct answer to this question?
Production may stop if supply stops
Why is this the correct answer?
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.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
