Briefly explain why it might be difficult to compare the size of different businesses.

by romosqueira (student)

Rodrigo Mosqueira

Business Studies

1. Briefly explain why it might be difficult to compare the size of different businesses.

It might be difficult to compare size of businesses because the 4 types of factors, which can help you knowing the size of a business, may be very variable within different sectors of business. There are problems for each factor. The first factor is comparing business size by the number of employees. One of the problems with this is that some large businesses use a lot of machinery. The second sector is comparing business size by value of output and sales. The problem with this is that a firm which sells a small number of expensive goods, can have a higher turnover than another firm which sells a large number of inexpensive goods. The third factor is comparing business size by capital employed. The problem with this is that some businesses might have a lot of workers and very little machinery, like a supermarket company. The fourth and last factor is comparing business size by profit. The problem with this is that businesses that loose a lot of money within a determined time (like General Motors, which lost billions of dollars on 2011, but is still one of the biggest companies in the world) are not the smallest companies.

2. Explain how the objectives of a business may change as it grows.

Objectives of a business may change as it grows due to a number of reasons. Firstly, when a business starts out, its main objective is likely to be survival. As a business grows, it may focus more on the needs of its wider stakeholders and pursue objectives such as increasing profits or expanding overseas. Also, the competitive environment might change, with the launch of new products from competitors. Finally, technology might change product designs, so sales and production targets might need to change.

3. Discuss ...