2.3.3 Business failure

Question 1

What are the internal causes of business failure?

3

Answer 1

• Marketing failure
• Poor management of cash flow
• Systems or operations failure

Question 2

How can systems or operations failure result in business failure?
2

Answer 2

• IT system = confusion

- Stock ordering goes wrong, can’t satisfy demand

Question 3

How can a marketing failure result in business failure?

2

Answer 3

• Lose market share

- Lack innovation

Question 4

What are the external causes of business failure?

4

Answer 4

• Changes in technology
• New competitor
• Economic change (recession)
• Behaviour of banks

Question 5

What are the main roles of banks which are helpful to businesses?
2

Answer 5

• Fund LT investment, to fund comp

- ST finance, to help working capital

Question 6

How can the behaviour of banks result in business failure?

2

Answer 6

• Won’t supply credit to firm

- Unreasonably ^interest rates