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Advantages and Disadvantages of Small and Large Businesses

  • Date Submitted: 09/14/2016 09:14 AM
  • Flesch-Kincaid Score: 47.4 
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Chapter 3 Size of businesses
Measuring business size: customers may prefer to deal only with law firms assuming that they are more stable and less likely to sees production of smaller ones
Different measures of size:
  1) Number of employees’: simplest measure easy to understand for example it is obvious to everyone that shops for just the owner or the family are small.it is also clear that a firm employing many staff is likely to be longer but there are problems how about a business that needs to employee only a few people such has a highly automated chip maker with expensive capital equipment.
  2) Sales turnover: total value of sales made by a business in a giving time period. Is often used as a measure of size especially when comparing firms in the same industry it is less effective when comparing firms in different industries because some might be engaged with high value production such as precious jewels and another might be in low value production such as cleaning services.
  3) Capital employee: total value of all long term finance invested in a business. Generally, the log of the business enterprise the greater the value of capital leading for long term investment will the greater the amount of capital employee.
  4) Market capitalization: total value of a companies issued shares. Can be used only for businesses that have shares quoted on their stock exchange there is a formula o figure out market capitalization = current share price x shares issued.
  5) Market share: sale of the business
Formula market share = total share of business / total shares of industries x 100
  6) Small firms are very important to all economies encouraging the development of small business units can have benefits: many jobs are created by small firms and even though each one doesn’t employee many staff collectively the small business sector employs a significant proportion of the working population in most countries. Small business are often run by dynamic...

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