Stakeholder Pros and Cons
What is a business stakeholder？
A group of people who have a special interest in the life of a firm.
What is another name for a small firm?
Micro enterprise
A bearded Canadian lumberjack cutting down trees in the forest is an example of activity in this sector
primary sector
Define the term ‘internal growth’.
A firm's revenue and market share increases through maximizing and expanding the use of its own factors of production
A firm owned by one individual is called
sole trader
Name two internal and one external stakeholders
Int: Workers, Managers, Directors, Shareholders Ext: Banks, Gov't, Customers, Community
Give two reasons why some firms prefer to stay small?
Lack of external finance, specialized market or customer base, home-based operation, limited time commitment, etc.
Businesses that are owned by individuals are part of this sector
private sector
What is another name for external growth?
merger or integration
What is the main advantage of a limited company?
Owners risk their investment but are not responsible for debts and other firm losses.
Describe one reason workers might benefit from a vertical merger.
It might lead to more employment opportunity and job security across different economic sectors.
Name two ways to measure the size of a firm.
Number of employees, market share, capital employed, and total revenue.
Government owned organizations make up this sector
public sector
Name the three basic types of external growth.
horizontal, vertical, and conglomerate
A firm that sells shares on the stock market is called
Public limited company
Describe one possible drawback of horizontal integration for management
It might lead to the loss of leadership jobs as separate business departments merge into one.
Name two types of large firms.
sole ownership, public limited, private limited, partnership, limited partnership, charity, non-profit
The government of Japan recently sold their postal service to a private company. This is an example of
privatization
A mining company taking over a company supplying mining equipment is an example of:
forward vertical integration
a firm sells the rights to use it's name and methods and sell it's products, the firm provides advice and training in exchange for a fee this is an example of a
Franchise
Describe one advantage and disadvantage of conglomeration for government
Pro: May lead to higher rates of employment and tax revenue Con: May lead to monopoly which eliminates choice and competition
Provide two reasons why small firms can't survive in some industries.
High expenditure on research and development, diseconomies of scale at low output levels, high start-up costs, need for bulk buying
If a country is moving from primary sector activities to secondary sector activities, it is going through
industrialization
Name one similarity and one difference between vertical and horizontal growth?
Both involve firms in related industries. Horizontal joins firms in the same economic sector, while vertical combines companies in different sectors.
When two companies cooperate on a project and share in it's expenses and profits, this is called a
Joint venture or strategic alliance