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3. Size of a business

3. Size of a business. BUSINESS STUDIES 9708 AS Level Friday 4, October 2013. Measuring Business Size. Several different ways of measuring or comparing the size of a business. No universally accepted measure of size for small, medium, large businesses.

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3. Size of a business

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  1. 3. Size of a business BUSINESS STUDIES 9708 AS Level Friday 4, October 2013

  2. Measuring Business Size • Several different ways of measuring or comparing the size of a business. • No universally accepted measure of size for small, medium, large businesses.

  3. Different ways of measuring business size • Number of employees • Sales turnover – value of sales in given time • Capital employed – total value of long term capital invested • Market capitalization – the total value of shares issued • Market share – sales of a business as a percentage of total market sales

  4. Other measures • Industry specific: • Hotels & Hospitals: number of rooms, beds. • Department stores & Supermarkets: floor space • Retailers: number of outlets / shops • Commercial banks: number of branches • Textile mills: number of spindles or looms

  5. Which measure is best? • No ‘best’ measure. • The choice of measure depends on: • Whether the firms being considered for absolute or relative size • Are the firms within one industry? • Usually best to use more than one measure of size.

  6. Activities & practice questions • Activity 3.1 on page 44 • Discuss whether all businesses should aim to grow at the fastest rate of growth possible [20] • Examine three different ways in which business size may be compared [10]

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