A business is a social and economic institution that deals with goods and/or services in the hopes of generating profit through sale or service. It is a social undertaking and, as such, has certain risks and liabilities. Businesses have a variety of goals, but all of them aim to provide a product or service that benefits people. Among these goals are social responsibility and profit-making. In this article, we will discuss some of the risks that can arise from owning a business.
Business is a social and economic institution
The conventional view of business is that it is a force for good in society, responsible for creating economic growth and ensuring that the interests of the private sector are met. This is often based on environmental and social concerns. However, business is becoming more concerned with its wider social and environmental impact, such as pollution, and the effects of business practices on society. Liberalisation of the economy in the 1990s made Indian business competitive on a global scale, despite the widening gap between the rich and poor.
Critics of capitalism argue that it does not live up to its unique promise. Milton Friedman argued that the social responsibility of business is to maximize wealth for its stockholders, but this maxim often works against the interests of society and long-term stockholders. In this way, business has become a source of power, identity, and purpose. Despite its apparent contradictions, business continues to offer an alternative vision of capitalism.
In addition to economics, there are social concerns of sustainability and morality. The recent world financial crisis exposed the deficiency of economic institutions in ensuring a level playing field for its employees and the community. It also exposed the lack of accountability and responsible management practices that contribute to the crisis. As a result, the evolution of capitalism requires a cultural shift. The shift from a market-based economy to a social-ecological-economic model is necessary.
Big business is generally accepted as a private entity. Despite its independence, it pursues its goals independently of the government. While it may be considered private, it is an important asset to the community and is public in its mores and impacts. This view is contradicted by public-opinion surveys. Hence, public approval of big business is essential for the continued growth of the free society. Today, we accept the concept of big business as private but it is not.
It faces risk
What are the types of risks it faces as a business? These risks have various impacts, ranging from short-term threats such as cyberattacks to longer-term ones like global warming and depletion of critical natural resources. There are also a number of medium-term risks, which include disruptive technologies and radical strategic moves by industry players, such as Apple's recent entry into the consumer electronics and mobile phone industries.
As the business landscape becomes more shaky and precarious, identifying three major drivers of risk is crucial. These include technological, societal, and political risks. The pandemic, for instance, has highlighted the importance of collaboration between public and private sectors. In the US alone, the recovery cycle has been particularly unkind to small businesses. During the first four months of 2018, over 43% of micro, small, and medium enterprises (MSME) closed, with many more facing permanent closure.
The types of risks a business faces are different for each industry. In the production process, a company faces risks from equipment failures, labor unrest, and changes in supply and demand. Natural disasters and political unrest may also cause companies to lose assets. And even if a company has a reputation for being risk averse, it may still risk its image by sponsoring competitive sports teams. This is because risk is part of the business model.
It faces uncertainty
Uncertainty is a fact of life for business owners today. The uncertainty can come in the form of many things, including the state of the economy, the level of competition, and social changes. The economy is the center of all production, consumption, and trading activities, including business. Economic downturns can create a great deal of uncertainty for businesses, including changes in consumer needs, technological developments, and distribution channels. It can also make it difficult to survive and expand, and it may also threaten the viability of existing business models.
As a business owner, you must understand the sources of business uncertainty and turn them into opportunities for growth and innovation. You can do this by recognizing risks and implementing proactive strategies. Although it may be a long climb, this investment can reap rich rewards. In this article, we will review some of the ways to handle business uncertainty. Here are four ways to deal with uncertainty:
When the level of uncertainty in the business environment is low, decision-makers are better able to develop workable strategies that can achieve their goals. For example, a grocery store may face declining sales due to an outbreak of a coronavirus. A fast-food restaurant may enter the market to take advantage of consumers' demand and provide delivery services. In this case, the grocery store is able to respond to this uncertainty with a proactive plan and a well-documented business continuity plan.