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Business Size Measurement and Growth Strategies

The document outlines various metrics to measure business size, including capital employed, value of output, number of employees, and market share. It discusses reasons for business expansion such as survival and economies of scale, as well as growth strategies like internal and external growth. Additionally, it describes different types of business integrations and reasons a business may choose to remain small.

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reynandrenaldy
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7 views10 pages

Business Size Measurement and Growth Strategies

The document outlines various metrics to measure business size, including capital employed, value of output, number of employees, and market share. It discusses reasons for business expansion such as survival and economies of scale, as well as growth strategies like internal and external growth. Additionally, it describes different types of business integrations and reasons a business may choose to remain small.

Uploaded by

reynandrenaldy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

To measure the size of the business:

1. Capital employed
2. Value of output
3. Number of employers
4. Market share
Capital Employed

The money, the building, the


machines, raw materials etc.
Which business is bigger?

1. Capital employed Business A


Invests 50 million, has 5 sets of
machinery and has a many raw
materials

Business B
Invests 50 million, has 3 sets of
machinery and adequate raw materials
Value of Output

The total value of all goods and services


produced by a business — not the earnings or
profits.
Which business is bigger?

3. Numbers of employees Business A


Has 20 employees

Business B
has 15 employees
Market Share

the percentage of total sales a business has in a


particular market compared to its competitors.

If 100 ice creams are sold in your town this week, and your
shop sold 25 of them… Your market share is 25%.
Why expand your business?

Survival
Self explanatory

Economies of Scale
The benefits when business is growing or expanded (more money)
Business Can Grow

Internal Growth
Develop new products, increase level of output

External Growth
Take over, emerge
Business Integrations
01. Forward Vertical 02. Backward Vertical 03. Horizontal 04. Conglomerate
Integration Integration Integration Integration
■ a business takes ■ a business takes ■ a business takes ■ a business takes
over another later in over another earlier over another at the over another in a
the supply chain in the supply chain same level and in completely
(closer to the (closer to raw the same industry. different industry.
customer). materials). ■ Example: Facebook ■ Example: Amazon buys
■ Example: Coca-Cola ■ Example: Starbucks takes over Instagram Whole Foods (tech +
buys a chain of vending buys a coffee bean (both social media grocery retail).
machines or retail farm. companies).
stores.
Why a business remain small?

Owner’s choice

The availability of capital

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