11 BS 1.3 Size of Business

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

(i) number of employees

(ii) capital employed

(iii) sales turnover

(iv) market capitalisation

• (i) and (ii) only

• (i) and (iii) only

• all of them

• (i), (iii) and (iv) only

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:

• many jobs are created by small firms

• small firms are often dynamic

• small firms create competition

• small firms are less likely to become insolvent

Which one of the following best explains why there might be a conflict between short-term profit and business growth.

• small firms typically have little security to offer banks in exchange for loans

• small firms do not have a separate legal identity

• small firms are typically unprofitable

• small firms face higher rates of corporation tax

Which one of the following is not considered to be an advantage of small businesses?

• can adapt quickly to meet changing customer needs

• can employ specialist professional managers

• can offer personal services to customers

• can be managed and controlled by the owner(s)

Which one of the following is not considered to be an advantage of large businesses?

• benefits from the cost reductions associated with

  large-scale production

• workers less likely to feel alienated

• may be diversified in several markets

• can access more forms of finance

Aldi, a German supermarket chain, has pursued a policy of growth through opening new stores in towns and cities where it previously had none. This is an example of:

• external growth

• vertical expansion

• integration

• internal growth

One of the advantages of a business remaining small is:

• small businesses are able to raise capital more easily than larger businesses

• small businesses will have lower average costs than large businesses due to economies of scale

• it can be easier for a small business to adapt to market changes than a large business

• the owner of a small business is often a specialist manager

One of the claimed strengths of family businesses is:

• the family members are likely to be trained in specialist business functions

• it is always easy to find good managers to replace those who are retiring

• the family members tend to be committed to the success of the business

• the family will have sufficient finance to pay for the expansion plans of the business

Which one of the following is a most likely weakness of family businesses?

• They are often operated informally so can lack clear aims and objectives.

• The family members do not care about the success of the business.

• There is never any transfer of knowledge or experience between generations.

• Younger members of the family do not want to take over the family business as they do not share pride in it.