Title 1. AS Marathon Sheet.pdf ✅

AS Business | Marathon Sheet [2024] | PAPER 1 & PAPER 2 AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | 0304 1122845 4 Topic 3: Size of a Business (1) Methods to measure business size 1. Number of employees 2. Revenue 3. Capital Employed 4. Market share 5. Market Capitalization = Value of the company's shares (2) Small Business > Less employees, low revenue, less capital employed. Advantages: (1) Easier to control (2) Flexible with customer preference Disadvantages: (1) Limited sources of finance (2) Difficult to gain economies of scale (3) Family-Owned business: (2) A business that is owned and managed by the at least two members of the same family. Advantages: (1) Family members are more committed (2) Willing to provide finance and expertise Disadvantages: (1) New generations might not be competent (2) Follow traditional methods (4) Internal Growth > (1) Internal growth refers to the expansion of business by expanding operations through opening new branches, shops or factories. (2) This happens when the existing firm grows without joining hands with any other firm and usually reinvests profits to achieve this. This is also called organic growth. Advantages: (1) More power of suppliers and customers (2) More branches = more sales Disadvantages: (1) Difficult to manage (2) Slow growth + extra cost to grow. (5) External Growth > (1) External growth is regarded as the expansion of a business by means to merge or takeover another firm from (2) either the same or a different industry. (6) Horizontal Growth > (1) Integration with a business in the same industry and the same stage of production. (2) Car manufacturer mergers with a car manufacturer. Advantages: (1) Removes competition (2) Gain economies of scale due to the large size. Disadvantages: (1) Workers might be fired to due to duplication of jobs (2) Govt. intervention if it becomes a monopoly. (7) Forward Vertical Growth > (1) Integration with a business in the same industry, but with the customer. (2) Example: Car manufacturer buys a showroom company. Advantages: (1) More control over promotion + price (2) Secures outlet = competitors product eliminated Disadvantages: (1) Lack of experience and expertise. (2) Competitors might perceive it as uncompetitive (8) Backward Vertical Growth > (1) Integration within the same industry, but with the supplier. (2) Example: Car manufacturer buys a spare parts company. Advantages: (1) More control over supplies + improves quality (2) Improves quality due to joint research. Disadvantages: (1) Lack of experience and expertise. (2) Problem of guaranteed customers = poor quality. (9) Conglomerate > (1) Integration with a business in a different industry. (2) Example: Car manufacture buys a shoe factory Advantages: (1) Risk spread (2) Attract new customers by entering new markets. Disadvantages: (1) Lack of experience and expertise. (2) Difficult to maintain brand identity. (10) Strategic Alliances > (1) These are agreements between firms that agree to commit resources to achieve an agreed objective. It might be formed on a local, national or global scale. (2) It is usually done to enter new markets and build a competitive advantage in combined territories. These can be formed with a university, competitor or a supplier. [ADV + DIS same as joint-venture]