Its a question of size! • Research: • Whatisthebiggestcompany in theWorld? • (youneedtojustifyyouranswer).
Its a question of size! • How can wemeasurethesize of companies? • Againsteachcriteriathatyou come up with;findthecompanythatisthebiggest in theWorld.
Size of business Measurement of business size Significance of small businesses Internal growth
Measurement of business size Learning objectives • Identification of different ways to measure the size of a business
Measuring business size • Methods (more useful when comparing firms in same industry): • Number of employees • Problem: highly automated firms • Sales turnover • Problem: high-value production vs low-value production • Capital employed – long-term investment • Problem: Firms in different industries have very different capital equipment needs • Market capitalisation = • Problem: share price changes everyday • Market share = • Problem: more than one way to measure this.
Other forms of measurement • Number of outlets • Total floor sales space – supermarkets • Number of guest rooms • Number of students • No best measure – depends on the need • Good to compare on at least two criteria
Significance of small businesses Learning objectives • Be able to identify the advantages and disadvantages of being a small business • Know the strengths and weaknesses of family businesses • Understand the importance of small businesses and their role in the economy • Know the role of small businesses within the economy
Significance of small businesses • UK: • Turnover less than £2m a year • Assets less than £950,000 • Employees less than 50 • They are very important to all economies
Significance of small businesses • Create many jobs • Create new product ideas – greater choice for consumers • Compete with larger firms – eg. the cost of air travel has been reduced significantly due to small airlines • Possibility to grow into large companies – eg. The Body Shop, Hewlett-Packard, Tesco, Microsoft • Lower average costs allow small businesses to offer lower prices to the consumer
How do governments assist small businesses • Reduced rate of income tax • Loan guarantee scheme • Providing information • Subsidised rent in some areas
What problems do small businesses have • Lack of specialist management expertise • Problems raising finance • Limited product range • Finding suitable and reasonably priced premises
Student activity You are setting up your own small business in Lima with some friends. Prepare a verbal description for the rest of the class explaining • What your business does. • The advantages that you will have as a small business.