AS Business Studies 9609

Business Studies – Size of Business

  • Factors used to measure the size of a business

Size of a Business

Businesses can be classified as small, medium or large. Some businesses are small and some are large. But how do we categorise these businesses as big or large? We can consider the number of employees. Small businesses employ fewer workers than large businesses since they operate on a small scale. According to European Classifications of business, based on employee numbers micro (10 or fewer), small (11 to 50) and large businesses (250 or more). Taking this measure alone does not provide an accurate means to measure the size of a business. This is because some businesses can be capital-intensive whilst others are labour-intensive.

Market Share

Large businesses will usually have a larger market share. Market share is measured as a percentage. Market share is the sales of a business as a proportion of total market sales. Market share = (total sales of a business/ total sales in the market) X 100

Factors used to measure the size of a business

We should use more than one method to measure the size of a business. The following methods provide a good idea of the true size of a business.

  • The number of employees
  • Value of sales turnover
  • Market capitalisation
  • Market share
  • Amount of capital employed
  • Value of assets
  • The amount of capital invested

Market capitalisation is the total value of shares issued by the company. Market capitalisation = current share price x total number of shares issued. This method will only be relevant to businesses that are Public Limited Companies (listed on the stock market)


Section A 1.3 Size of Business Practice for Paper One

 

Section B 1.3 Size of Business Practice for Paper One


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