chapter 3- size of business Flashcards
what are the 5 ways to measure business size
number of employees, revenue, capital employed, market capitalization, market share
define revenue
total value of sales made by a business in a given time period
define capital employed
the total value of all long term finance invested into the business
define market capitalisation
total value of a company’s issued shares
define market share
sales of the business as a proportion of total market sales
how do you calculate market share
total sales of business/ total sales of industry x100
how do you calculate market capitalization
current share price x total number of shares issued
name 3 advantages that prove why small and micro businesses are significant
many jobs are created, small firms generate competition for larger firms, small firms supply specialist goods, all businesses start small, small firms have lower average costs
name 2 disadvantages to small businesses
may have limited sources of finance, owner has lots of responsibility, market might not be diverse so the risk is combined, fewer opportunities for economies of scale
give 2 examples of how governments can aid small businesses
reduced profit tax, loan guarantee scheme, information, advice and support, workshops
name 3 advantages to small businesses
can be managed and controlled by the owner, often able to adapt quickly to meet changing consumer needs, offer personal service to consumers, can meet the human needs of employees, if family owned the business can have culture and employees can fulfill many roles
name 3 advantages to large businesses
can afford specialist managers, benefit from cost reductions, can be set lower prices that other firms, have access to lots of sources of finance, can be diverse in markets so risk is spread, more likely to be able to afford better research and development
name 2 disadvantages to large businesses
may be difficult to manage if the markets are geographically far, may have potential costs associated with large scale production, may suffer with slow decision making and poor communication due to structure, can have conflict
name a possible reason for business growth
increased profits, increased market share, increased economies of scale, increased power and status, reduced risk of takeover
name 2 strengths and 2 weaknesses of family owned businesses
strengths- commitment, reliability and pride, knowledge and continuity
weaknesses- succession, informality, traditional, conflict
