Why should an entrepreneur prepare a contingency plan in an uncertain market?
Answer and explanation
Correct answer: To reduce losses and respond effectively to sudden changes
Market conditions may change because of shifts in demand, input costs, competition, technology or government rules. A contingency plan provides an alternative course of action, such as changing suppliers, controlling expenses or adjusting operations. It does not replace the main plan or abandon business goals. Thus, it helps the entrepreneur reduce possible losses and continue operations during unexpected events.
Frequently asked questions
What is the correct answer to this question?
To reduce losses and respond effectively to sudden changes
Why is this the correct answer?
Market conditions may change because of shifts in demand, input costs, competition, technology or government rules. A contingency plan provides an alternative course of action, such as changing suppliers, controlling expenses or adjusting operations. It does not replace the main plan or abandon business goals. Thus, it helps the entrepreneur reduce possible losses and continue operations during unexpected events.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
