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 KCSE business studies paper 2 revision questions and answers set 6

Explain five ways in which external business environment may negatively affect business operations.

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Answer Text:
-Obsolete technology leads to cost of production
-Changing demographic features leads to irrelevant products
-Political instability leads to frequent stoppage or closure of the firm
-Worsening economic environment leads to reduced demand for products.
-Change in laws leads to firms operations being illegal and may stop business operations
-poor relations with suppliers lead to unfavorable terms and high costs
-Failure to analyze competitors strategies results in losing market share