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Business Size. DO NOW - Quiz. Name the three sectors of the economy? Primary, Secondary and Tertiary Name the sector of the economy that is owned or controlled by the Government? Public Sector Provide two Advantages of being a Sole Trader? Easy to set up Keep all the profits
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DO NOW - Quiz • Name the three sectors of the economy? Primary, Secondary and Tertiary • Name the sector of the economy that is owned or controlled by the Government? Public Sector • Provide two Advantages of being a Sole Trader? Easy to set up Keep all the profits • Define limited liability? The owners or shareholders will not lose there personal assets if the business fails.
How Do we Measure • What is a big Business? • What is a Small Business? • How do you think we measure business size? • Class Discussion
Business Size • We measure in may different ways the most common are turnover (profit) and the number of employees. This can be misleading however as you can be consider a big business by turnover but only have 4 employees
Number of Employees • Obvious if an organization has 1 employee it would be small, and if like Google it had upwards of 14000 employees you would consider it big. • Koves example (previous employer had 45 staff being a manufacturing plant and turnover was low)
Sales Turnover • Used mainly to compare businesses within the same industry. (market share purposes) • Would Michael hills sales turnover be less than Countdowns?
Capital Employed • The total value of all long term finance invested in the business. • Problems – what if you work from home or don’t have the same machinery requirements
Market Capitalization • The total value of a companies issued shares. • Current share price x total number of shares issued. • Share prices change everyday so it can be misleading. • Only used by public limited companies.
Market Share • Sales of a business as a proportion of total market sales. • Different industries have different market size’s ie Soft Drink industry compared with antiques industry.
Business Size • No measure is the best will depend on the industry that is the focus, often you should compare businesses within industries on at least two of the measures to get a more accurate picture.
Small Business • Are small businesses important to our economy? • What is a Small business in NZ’s economy?
Benefits of Small Business to the Economy • NZ is predominantly a small to medium size business economy. • Many jobs are created by small businesses. • They are often run by entrepreneurs with new ideas which creates greater choice for consumers. • Increased competition within industries meaning large businesses cant hike up prices to make more money.
Benefits of Small Business to the Economy • All Businesses start out small, the Warehouse started with one small shop, now one of NZ’s biggest retailers. • Small firms often have lower overheads (ie less staff so less wages expense) meaning they don’t need to charge as much for goods and services.
Small Business Activity • Activity 3.1 page 44 questions 1,2,3
Homework • Questions 5 and 6 page 52 Business Studies text book. • Blog Duty –Student to discuss today's lesson, others to check and comment
DO NOW • Explain three benefits small businesses bring to the NZ Economy?
Small Business - Video • http://www.youtube.com/watch?v=O0j-p6J4HAg
Group Activity • In groups fill out the sheet on advantages and disadvantages of small and big businesses. (10-15 mins)
Advantages of Small Business • Can be managed and controlled by the owner. • Can adapt to the changing needs of customers. • Offer personalized service to customers • Find it easier to know each worker.
Disadvantages of Small Business • Limited access to sources of finance • Owners often have large burden of responsibility, if cant employ managers. • Less diversification of products leading to greater risk from external change (ie recession)
Advantages – Large Business • Can employ specialist managers. • Cost reductions as a result of large scale production. • May set low prices that other firms have to follow. • Have access to different sources of finance. • Can afford research and product development
Disadvantages – Large Business • Can be difficult to manage , especially if geographically spread. • Could have cost increases as a result of large scale production. • Could suffer from slow decision making and poor communication.
Question - Individual • Using New Zealand examples compare small and large business and their impact on our economy? (reference to the advantages and disadvantages is expected) (15 mins)
Business Growth • There are reasons for and against business growth, some people want to remain in control, or don’t want to take to many risks. While others would prefer to see there business grow. Common reasons include.
Business Growth • Increased profits – expand business more sales more profit. • Increased market share – higher market profile and greater bargaining power. • Increased power and status of owners – can influence the community. • Reduced risk of being taken over. • Increased economies of scale
Internal Growth • Expansion by opening new branches or stores. I.e. JBHIFI – have opened stores all around Auckland and new Zealand over the past 3 years. • External growth – taking over or merging with another organization.
Homework • Questions 3,4 and 5 page 52 Business studies text book. • Blog Duty –Student to discuss today's lesson, others to check and comment
