Chapter 4 business size growth, and external growth

Question 1

Distinguish between small, medium and large enterprises

Answer 1

Micro
Employees -10
Turnover -2,000,000
Balance sheet total -2,000,000

Small
Employees -50
Turnover -10, million
Balance sheet total -10,000,000

Medium sized
Employees -250
Turnover -50,000,000
Balance sheet total -43 million

Question 2

Explain how and why the size of a business is measured

Answer 2

Number of employees-A business with human and 50 employees is regarding is small and a business with more than 250 is large

Number of factories, shops, or offices

Turnover and profit levels

Stock market value

Capital employees -total value of a businesses assets

Question 3

Evaluate the factors affecting the size of a business

Answer 3

Market size-Where the markets small it’s often dominated by relatively small businesses as larger firms do not think they can gain the economies of scale or the levels of sales to gain the design level of profits.

Nature of the product -if a product is large, the firm will usually be larger because of the resources necessary to make and upgrade it and also it can gain economy scale.

Personal preference -such as whether there’s enough time and trouble that will need to be devoted is worth it

Ability to access resources for expansion -

Question 4

Evaluate the impact and importance of the size of a business to the stakeholders of a business

Answer 4

Owners
Small business -ownership is concentrated in the hands of a few individuals meaning they have more control over decision-making and can gain more of a close relationship with employees and customers, but the financial risk is higher as they may be personally liable for businesses debt and may struggle to raise external capital
Large business -ownership is spread across numerous shareholders. decisions are made by board of directors reducing the individual influence of owners, but there is greater financial stability and the potential for higher returns with less financial risk and they have better access to capital markets allowing them to raise funds easily.

Employees
Small businesses -they work more intimately and in collaborative environments where they have more direct contact with the owners and decision-makers there is more flexibility and taking on more responsibilities. Opportunities can be limited job security might be lower.

Large business -structured with defined, roles policies and benefits. There are clearer opportunities for progression and professional development, but the size of a business can sometimes create a sense of impersonality where employees feel less connected to the top of management

Suppliers
Small businesses -they have less purchasing power meaning they might pay higher prices for supplies or lack negotiation. Less reliable, making supplies more cautious.

Large businesses-they can negotiate better deals, secure book discounts and receive more favorable credit terms, but they can place pressure on supplies to meet demand for quality, delivery times and cost which can strain supplier relationships

Question 5

Explain what is meant by a joint venture

Answer 5

It is a formal business arrangement between two or more businesses who commit to work together on a particular project where they both invest many time and effort. joint venture will often result in the creation of a new business to implement the venture, but the two companies forming to not have to be in the same country

Question 6

Explain what is meant by a strategic alliance

Answer 6

Very similar to a joint venture, but it’s less involved less permanent. Each party hopes that the benefits from the alliance will be greater than those that could be obtained from operating on its own. there will not be a creation of a new company, and each party will maintain its own identity.

Question 7

Evaluate the impact and importance of joint ventures to a business and its stakeholders

Answer 7

1. Owners.
   -Access to New markets
   -Shared risks and resources
   -Profit and loss sharing
2. Employees.
   -Job opportunities and skilled development
   -job security
   -cultural integration
3. Customers.
   -Access to better products and services
   -Expanded reach
4. Community
   -job creation
   -Social responsibility
   -Environmental and social risks

Question 8

Evaluate the impact unimportance of a strategic alliance to a business and its stakeholders

Answer 8

1. Owners.
   -Access to Newmarket and resources
   -Risk sharing
   -cost efficiency
2. Employees.
   -job security
   -cultural integration challenges
   -Job creation and skilled development
3. Customers
   -Improve products and services
   -Enhanced offerings
   -Competitive advantage

Question 9

Explain what is meant by the term stakeholder

Answer 9

A person or party with an interest in the success of a business

Question 10

Identify the internal and external stakeholders of a business

Answer 10

Internal stakeholders are found within the business and are the owners employees, including managers and external stakeholders are suppliers, lenders customers, and the local community