Size
This is the simplest measure of business size
Number of employees
selling price x quantity sold
Revenue
Can be managed and controlled by the owners
Advantages of small business
Creating employment
often run by dynamic entrepreneurs with ideas for consumer foods and services
Creating competition for larger businesses
small businesses economic benefits
This is another name for external growth
Integration
current share price x total number if shares issued
Market Capitalization
Integration with a business in the same industry and the same stage of production
Horizontal Integration
may have limited access to sources of finance
Disadvantages of small businesses
expansion of a business by means of opening new branches, shops, or factories
Organic/ Internal growth
Eliminates one competitor and increases market share and power.
Advantages of horizontal integration
OCED defines micro- sized business size as this
less than 10 employees
agreement between two organizations to commit resources to achieving a specific objective while remaining independent.
Strategic alliance
Only measuring businesses by number of employees
Disadvantage for automated companies with little employees
Business expansion achieved by integrating with another business by either merger or takeover
External Growth
There may be varied career opportunities
Impact on stakeholders for Vertical Integration
employ few people
Have low turnover rate
creates many jobs
Small and Micro Business benefits
The whole is greater than the sum of parts
Synergy
This comparison may give a misleading comparison between firms
Capital Employed
increased profits
increased market share
increased economies of scale
The business may now control supplies of materials to competitors
Total sales of business
-------------------------- x100
Total sales of industry
Market Share
Integration with a business in a different industry
Conglomerate Integration
According to the book this is the medium business size
51-250
these 4 types of growth can lead to various effects on a stakeholder groups.
External
Merger
Takeover
A university providing finance to provide new specialist training courses that will increase the supply of suitably trained employees for the business
Examples of business alliances