3 - Size of business

Question 1

Define revenue

Answer 1

the total value of sales made during the trading period = selling price x quantity sold

Question 2

Define capital employed

Answer 2

the total value of all long-term finance invested in the business

Question 3

Define market capitalisation

Answer 3

the total value of a company’s issued shares

Question 4

Define market share

Answer 4

sales of the business as a proportion of total market sales

Question 5

Define organic growth

Answer 5

expansion of a business by means of opening new branches, shops or factories

Question 6

Define external growth

Answer 6

business expansions achieved by integrating with another business by wither merger or takeover

Question 7

Define meger

Answer 7

an agreement by owners and managers of two businesses to bring them together in a new combined business. This is often referred to as a friendly merger

Question 8

Define takeover

Answer 8

when a company buys more than 50% of the shares of another company and becomes its controlling owner. it can be called as acquisition

Question 9

Define horizontal integration

Answer 9

integration with a business in the same industry and a the same stage of production

Question 10

Define vertical integration

Answer 10

integration with a business in the same industry

Question 11

Define forward vertical integration

Answer 11

vertical integration with a customer business

Question 12

Define backward vertical integration

Answer 12

vertical integration with a supplier business

Question 13

Define conglomerate integration

Answer 13

integration with a business in a different industry

Question 14

Define strategic alliance

Answer 14

agreement between two organisations to commit resources to achieving a specific objective while remaining independent