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Question
Justify the following statement.
Changing fashions is one of the important causes of business risk.
Solution
- Business is exposed to various kinds of risk.
- The risks can be due to the loss of goods by fire or theft, bad debts, changes in government policies, goods remaining unsold, etc.
- Goods remaining unsold due to changes in fashion, is also an important type of risk in the business. Due to this risk businessmen can suffer loss.
- However this risk is there in case of some goods only e.g. clothes, footwear, jewellery, accessories, sunglasses etc.
- This risk is not there in case of food grains or vegetables as they are essentials and their demand remains somewhat constant.
- Thus, changes in fashion is an important risk in the business.
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