Ch.3 Enterprise, Business Growth and Size

Which one of the following are commonly used to measure business size?

• number of employees

• capital employed

• dividen

• market share

Market capitalisation is defined as

• the total value of market sales made by a business in a given time period

• the total value of all long-term finance invested in the business

• the total value of a company's issued shares

• the difference between a firm's revenue and costs

Governments in most countries are keen to encourage the development of small business units. This may be explained by all of the following except:

• job opportunities

• its dynamic

• less likely to fail

• create competition

Business buys more that 50% of the shares of another company and become its controlling owner.

• organic growth

• merger

• take over

• joint venture

A supermarket chain, has pursued a policy of growth through opening new stores in towns and cities where it previously had none.

• organic growth

• merger

• take over

• franchise

integration with a business in the same industry at the same stage of production

• conglomerate

• forward vertical integration

• backward vertical integration

• horizontal integration

Integration with a business in a different industry.

• horizontal integration

• forward vertical integration

• backward vertical integration

• conglomerate integration

A manufacturer business take over its supplier.

• horizontal integration

• forward vertical integration

• backward vertical integration

• conglomerate integration

The advantages of horizontal integration except:

• Eliminates one competitor

• Secure outlet for the products of the business

• Economies of Scale

• Production could be more efficient

The disadvantage of forward vertical integration:

• Lack of experience

• Customer opposition to less competition and less choice

• Bigger market share

• Diversifies the business away from its original industry