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Business revision - Coggle Diagram
Business revision
Ways to measure business size
Value of output
Value of sales
Number of employes
Value of capital employed
Method and explanation with limitations
Number of people employed
Calculate and compare with other businesses. Compare with a company with high output levels that employ fewer people and a firm that produces less output but more workers
Some firms use production methods that employ very few people but produce high output levels
Value of output
The market vale of all goods and services produced by an enterprise/business during a year
A high level of output does not mean that a busniess is large when using the other methods of measurement
Value of sales
A market stall selling sweets and a retailer selling luxury bags and perfume. This is an example and is used to compare sized of retiling businesses
It could be misleading to use this measure when comparing the size of a business that sell very different products
Value of capital employed
This is the toal value of capital invested into the business
This has a similar problem to that of the 'number of people employed' measure
Internal growth and External growth
Occurs when a business expands its existing operations
When a business takes over or merges with another business
Integration
Different examples of Enternal growth
Horizontal: when one business merges or takes over another one in the same industry at the same stage in production
Vertical: When one business merges with or takes over another one ini the same industry but at a different stage of production
Conglomerate: When one business merges with or takes over a business in a completely different industry