21. Size of Business Flashcards

1
Q

How would you measure the size of a business with no. of employees?

A

A large business may be one with lots of employees

or one with a small number of employees but is capital intensive

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2
Q

How would you measure the size of a business?

A
Number of employees
Revenue
Capital Employed
Value of output
Market Share
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3
Q

What is Revenue?

A

Total sales made by a company in a period of time

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4
Q

What is Capital employed?

A

The total value of finance in the business

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5
Q

What is Value of Output?

A

The total value of a companies production

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6
Q

What is Market Share?

A

The sales of a business as a proportion of the whole market

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7
Q

How do you calculate Market Share?

A

MS = Total sales of a Business

Total Sales of Industry

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8
Q

What are the advantages of a small business?

A

Can be easily managed
Easily adapt to consumer needs
Business culture is more personal

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9
Q

What are the advantages of a large business

A

Can afford specialists
Have economies of scale
Set low prices that the entire market has to follow
Has access to more sources of finance

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10
Q

What are the disadvantages of a small business

A

Limited access to finance
Risk of failure is high
No economies of scale
Cannot afford specialists

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11
Q

What are the disadvantages of a large business

A

Difficult to manage
Large costs
Slow decision making

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12
Q

What is internal growth

A

When a business expands its operation

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13
Q

What are examples of external growth

A

Mergers

Takeovers

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14
Q

What is merging?

A

Two or more businesses come together to form a new business

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15
Q

What is a takeover?

A

When one business buys out another business

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16
Q

What is horizontal integration

A

When a business who operates in the same industry and at the same stage of production as another, merges with or takes over the other.

17
Q

What is vertical integration?

A

When a business who operates in the same industry but at a different stage of production as another, merges with or takes over the other.

18
Q

What is conglomerate integration

A

When a business merges with or takes over another business from a completely different industry

19
Q

What are the benefits of horizontal integration

A

Reduces competition
More market share
economies of scale

20
Q

What are the benefits of Vertical integration

A

Guaranteed place to sell your products

Guaranteed supply of materials