Large and small firms

Question 1

Turnover (method of measuring)

Answer 1

The amount of money that comes into the business

Question 2

Number of employees (method of measuring)

Answer 2

Large firms tend to have large numbers of employees

Question 3

Balance sheet total (method of measuring)

Answer 3

Measure of the money invested in the business by owners

Question 4

Advantages of being a small firm

Answer 4

Flexibility - small forms can adapt and change quickly
Personal service - bigger firms find it hard to offer individual customers service
Lower wage costs - not in trade unions there negotiation power is weaker
Better communication - fewer employees
Innovation

Question 5

Disadvantages of being a small firm

Answer 5

Higher costs
Lack of finance
Difficulty attracting quality staff
Vulnerability

Question 6

Advantages of a firm being large

Answer 6

Economies of scale
Large scale contracts
Market domination

Question 7

Disadvantages of a firm being large

Answer 7

Too bureaucratic
Coordination and control
Poor motivation

Question 8

Factors influencing growth

Answer 8

• Government regulation
• Economies of scale
• Desire to take over competitors
• Access to finance
• Desire to spread risk

Question 9

Why firms stay small

Answer 9

Size of the market
Nature of the market
Lack of finance
Aims of entrepreneur
Diseconomies of scale