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CMA Final · Entrepreneurship and Startup · Entrepreneurial Skill Sets

Anil, who runs a Surat textile-trading startup, studies three possible new markets, estimates demand and costs for each, and enters the one where he can limit the worst-case loss to what he can afford, even though success is not certain. Which entrepreneurial trait does this behaviour most clearly illustrate?

This illustrates calculated risk-taking. Anil analyses alternatives, estimates demand and costs, and limits the potential loss to an affordable level before acting despite uncertainty. That differs from gambling, which ignores analysis, and from risk aversion, which would avoid uncertain ventures altogether.

  1. ACalculated risk-takingCorrect
  2. BGambling propensity
  3. CRisk aversion leading to inaction
  4. DDependence on external luck

Explanation

Anil evaluates options, estimates outcomes and caps downside loss before acting, which is the essence of calculated risk-taking. Gambling would involve committing without analysis. Risk aversion would mean not entering any uncertain market, which he does not do.

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