U4.2: Business Lifestyles and Responding to Challenges

Question 1

Why do businesses enter decline?

Answer 1

1. Lack of funds
2. Lack of management experience
3. Level of competition
4. Other factors

Question 2

Lack of funds

Answer 2

• “undercapitalisation”: lack of sufficient funds to operate a business
• financial mangement is important
• sufficient capital and a positive cash flow is necessary to meet financial standards

Question 3

Lack of management experience

Answer 3

• need experience in running and planning a business
• continual re-assessment of plans
• technical competence and knowledge in the field

Question 4

Level of competition

Answer 4

• many competitors or unexpected competition
• need to keep up with competitors
• need to maintain a competitive advantage

Question 5

Other factors

Answer 5

• unmotivated or poorly performing employyes
• not keeping up iwth changes
• poor/incorrect location
• natural disasters
• government policies