What to Consider in Operation Sustainability

B

When determining whether an operation is self-sustaining or integrated, you need to consider various factors such as the source of financing, nature of outputs, price drivers, and location of the market. The correct answer to the question is option D, "location of the market," as it is not a relevant factor to consider.

A self-sustaining operation is one that generates enough revenue to cover its costs and sustain itself without external funding. In contrast, an integrated operation is one that requires external funding to sustain its operations. To determine whether an operation is self-sustaining or integrated, the following factors need to be considered:

A. Source of financing: The source of financing is an essential factor to consider when determining whether an operation is self-sustaining or integrated. A self-sustaining operation should be able to generate enough revenue to cover its costs and sustain itself without external funding.

B. Nature of outputs: The nature of the outputs of an operation is another critical factor to consider. An operation that produces outputs that are in high demand and can be sold at a premium is more likely to be self-sustaining than an operation that produces outputs that are in low demand and can only be sold at a low price.

C. Price drivers: The price drivers of an operation are factors that affect the prices of its outputs. For example, an operation that produces outputs that are highly sensitive to changes in commodity prices may not be self-sustaining if commodity prices are volatile and difficult to predict.

D. Location of the market: The location of the market is not a relevant factor to consider when determining whether an operation is self-sustaining or integrated. The location of the market may affect the demand for an operation's outputs, but it does not affect the operation's ability to generate enough revenue to cover its costs.

In summary, when determining whether an operation is self-sustaining or integrated, you need to consider various factors such as the source of financing, nature of outputs, and price drivers. However, the location of the market is not a relevant factor to consider.