Chapter 14: Measuring Success In Business (Version)

Question 1

What is one way to measure the success of a business?

Answer 1

The amount of revenue generated. Increasing revenue year-on-year indicates success.

Question 2

What factors can affect whether increased revenue signifies business success?

Answer 2

Sales objectives, trading conditions, and industry benchmarks.

Question 3

Why might increasing market share be considered a sign of success?

Answer 3

It shows the business is dominating the market and possibly charging higher prices.

Question 4

What challenges are associated with measuring market share?

Answer 4

Requires accurate data on total market size and competitors’ revenues, which may be difficult to obtain.

Question 5

How can customer satisfaction be used to measure business success?

Answer 5

By monitoring complaints, conducting surveys, and analyzing customer loyalty trends.

Question 6

Give an example of a business practice aimed at measuring customer satisfaction.

Answer 6

Sending emails to customers after purchase to collect feedback.

Question 7

Why might rising profits indicate business success?

Answer 7

It shows financial improvement, but depends on factors like market competition and business size.

Question 8

What are two metrics for evaluating profits relative to business size?

Answer 8

Return on capital employed and profit margin.

Question 9

What are some ways to measure business growth?

Answer 9

Turnover/revenue, number of employees, market share, and capital employed.

Question 10

What is the EU’s definition of business size based on?

Answer 10

Turnover, number of employees, and capital employed.

Question 11

What is one risk of rapid business growth?

Answer 11

Overtrading, which occurs when a business runs out of resources to meet rising demand.

Question 12

How do shareholders in public limited companies measure business success?

Answer 12

Through rising dividend payments and share prices.

Question 13

What might private limited company shareholders consider as business success?

Answer 13

Survival, rising salaries, or business growth.

Question 14

What aspects of success are important to employees?

Answer 14

Job security, fair wages, good working conditions, training opportunities, and promotion.

Question 15

Why might profitability not always signify success to employees?

Answer 15

Profit-driven layoffs or cost-cutting measures negatively impact employees’ views of success.

Question 16

How can setting objectives help measure business success?

Answer 16

Objectives provide clear targets and can motivate staff to achieve measurable goals.

Question 17

Revenue

Answer 17

Measures the amount of income generated from sales of goods & services. Increasing revenue typically indicates success. Context, such as objectives and market conditions, is important.

Question 18

Market Share

Answer 18

The proportion of sales in a total market that a business or product enjoys

Question 19

Customer Satisfaction

Answer 19

Assesses how well a business meets consumer needs. Businesses use surveys and feedback to monitor and improve satisfaction.

Question 20

Profit

Answer 20

Indicates financial gain. Factors such as market competition, business size, and industry benchmarks affect interpretation.

Question 21

Growth

Answer 21

Measured by turnover, number of employees, market share, or capital employed. Sustained growth often reflects success.

Question 22

Owner/Shareholder Satisfaction

Answer 22

Focuses on dividend growth and share prices for public companies. Private owners value financial security and market survival.

Question 23

Employee Satisfaction

Answer 23

Involves wages, benefits, job security, and working conditions. Businesses must balance profit and employee welfare.

Question 24

Overtrading

Answer 24

Taking on more work than a business can afford to fund effectively

Question 25

Capital employed

Answer 25

Amount of money invested in a business