Question

Which of the following is not a problem of expansion of business ?

• A. Risk Management
• B. Profit planning & Expense control
• C. Price Policy
• D. Trend of Demand

Hint:

Differentiate between a problem and a tool used to solve a problem. Risk, costs, and demand are problems to be managed. A pricing policy is a tool for management.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
The question asks to identify which of the given options is NOT a problem associated with the expansion of a business. It is asking for the odd one out in the context of challenges faced during growth.
Step 2: Analysis of Options:
Let's analyze each option as a challenge during business expansion.

(A) Risk Management: Expansion inherently brings new risks - financial risks from large investments, operational risks from new markets or processes, and strategic risks from increased competition. Managing these risks is a major problem of expansion.

(B) Profit planning & Expense control: As a business grows, its cost structure becomes more complex. Maintaining profitability requires careful planning and stringent control over rising expenses. This is a significant challenge.

(D) Trend of Demand: Forecasting and managing the demand in new or expanded markets is a critical problem. Misjudging the demand trend can lead to excess inventory or lost sales.

(C) Price Policy: A price policy is a strategic tool or a set of guidelines that a business uses. While a business needs to adapt its pricing policy during expansion, the policy itself is a solution or a strategy, not an inherent problem. The *challenge* would be setting the right price, but the policy itself is a framework to address that challenge. Compared to the others, which are direct problems (managing risk, controlling costs, forecasting demand), the price policy is a management lever.

Step 3: Final Answer:
Risk management, profit/expense control, and demand trends are all direct problems or challenges of expansion. A price policy is a strategic tool used to manage the business. Therefore, it is not a 'problem' in the same sense as the others. The correct answer is (C).