Business Failure (2.3.3)

Question 1

What is Business Failure?

Answer 1

When an organization involuntarily ceases trading

Question 2

What are the Internal Causes of Business Failure?

Answer 2

-Poor Management
-Weak Leadership
-Failure to Innovate
-Lack of Planning
-Insufficient Finance
-Cash Flow Problems
-IT Systems Failures

Question 3

What does Internal Causes of Business failure mean?

Answer 3

It means we can control it as they are internal and are in the business so can be changed

Question 4

What are the External causes of Business Failure?

Answer 4

-Reccesions
-Rising Interest Rates
-Appreciation of £
-Environmental impacts
-Competition
-Changing Trends
-Changing Legislation

PESTLE

Question 5

What does PESTLE stand for?

Answer 5

P=Political
E=Economic
S=Social
T=Technological
L=Legal
E=Environmental

Question 6

What does External Causes of Business failure mean?

Answer 6

It means that we can’t control and change the problem because it is outside of the business

Question 7

What are the main financial causes of failure?

Answer 7

-Insufficient Cash Flow meaning you can’t pay bills
-Insufficient Revenue means you can’t cover costs

Question 8

What are the main Non-financial causes of failure?

Answer 8

-Poor management and leadership
-Poor business planning
-Failure to adapt to dynamic markets