Business Size and Growth Flashcards

1
Q

What factors need to be taken into account when judging a businesses size?

A
  • Number of Employees
  • Number of Factories, Shops and Offices
  • Turnover and profit levels
  • Stock Market Value
  • Capital Employed
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2
Q

Number of Employees??

A

IN the UK a business with less than 50 employees is regarded as a small business - a business with over 250 employees is regarded as a large business.

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3
Q

Number of Factories, Shops and Offices??

A

The higher the number of factories the business has the ‘larger’ the business is perceived.

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4
Q

Turnover and Profit Levels??

A
  • If a business has a large profit it is seen a large
  • However; jewelers have high profits and some large businesses may be going through financial difficultly so this isn’t always 100% true.
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5
Q

Stock Market Value??

A
  • Value of the company is calculated by multiplying the current share price by the number of shares given.
  • Higher the number higher the larger the company is likely to be.
  • However; Tesco share price fell in 2013 & 2014 due to Lidl and Aldi competition but the company size didn’t change
  • Share prices also change daily so figures can be misleading.
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6
Q

Capital Employed??

A
  • Capital Employed is the total value of a businesses assets
  • If the figure is high then it is reasonable to assume a business is large.
  • However; geographical factors play a part ( factories are more expensive in London than the Cotswolds ) so prices can rise and fall without any changes in the actual number.
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7
Q

What 2 factors does the EU use to measure the size of a business??

A
  • Employees

- Turnover

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8
Q

How does the EU define a Medium Sized Business?

A
  • More than 250 employees

- More than 50 million Euro turnover

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9
Q

How does the EU define a Small Sized Business?

A
  • More than 50 employees

- More than 10 million Euro turnover

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10
Q

Why are these EU definitions important?

A
  • Because an EU regulation of business is that they are ‘all operating on a level playing field’
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11
Q

Define Business Size?

A
  • The EU has a standardised way of measuring size based on the number of employees, turnover and balance sheet value
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12
Q

What 4 factors affect the size of a Business?

A
  • Market Size
  • Nature of Product
  • Personal Preference
  • Ability to access resources for expansion
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13
Q

How does Market Size affect the Size of a Business?

A
  • Where the market is small it is dominated by relatively small firms
  • Because big business don’t benefit from economies of scale as much, or don’t get the desired level of profit
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14
Q

How does the Nature of the Product affect the Size of a Business?

A
  • If a product is large and technologically complicated the firms are larger because of the necessary resources needed to make the product
  • If a product is Standardised then the companies are large because they can benefit from economies of scale
  • If a product has a ‘personal touch’ the business is often small.
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15
Q

How does Personal Preference affect Business Size?

A
  • An Entrepreneur may not want to expand nationally, this could be due to building more offices could lead to loss of control over the company.
  • Also the time devoted to expansion may not be worth the time
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16
Q

How does Ability to Access Resources for Expansion affect business size?

A

Less availability to funds means business can invest into expansion.