Enterprise, Business Size and Growth
What is an enterprise?
It is a business which is owned and controlled by entrepreneurs whose objective is to makea profit and take decisions.
What is an entrepreneur?
It is someone who takes risk and makes decisions in order to expect profit.
| Advantages | Disadvantages |
| Independent to implement his or her new ideas and knowledge. | Risky due to high start-up and uncertainty to succeed |
| Profitable | Opportunity cost |
Characteristics of a successful entreprise
- Risktaker
- Hardworker
- Creative
- Innovation
The entrepreneur first set up a Business Plan
A business plan refers to a legal document that contains all important details about a business, such as financial and operational details.
Why governments should support small start-ups?
- Creates Jobs
- Increase competitions
- Benefit the society
How to support Start-ups?
- Business idea
- Grants
- University reaserches
how is small firms defined?
It is defined as a privately owned corporation that has few employees, a limited size and low revenue.
Why small firms remain smalls?
- owner’s objective
- act as a supplier to bigger industries
- Personal attention
| Advantages | Disadvantages |
| Concentrate on niche markets | Poor brand awareness |
| Unique selling point | Unable to have the Economies of Scale |
| Difficulty to raise huge capital through loan |
Methods of measuring business size
- Value of product
- Value of sales
- Number of employees
- market share
What is Business growth?
The objective of some businesses might be to grow faster rather than enjoying profit or to maximise market share
| Advantages | Disadvantages |
| Attracting new customers | Diseconomies of scale |
| Economies of Scale | Lack of finance |
Types of growth
- Internal growth – Growing through its own resources by opening many outlets
- External growth – Growing through mergers or takeovers
Why businesses wants to explain?
- Greater market share
- More profits
- Economies of scale
Types of External Growth
- Horizontal Growth – Merging or taking over businesses same stage of production and same industry.
| Advantages | Disadvantages |
| Less competition | Diseconomies of scale |
| economies of scale |
2. Forward Vertical growth – Merging or taking over a later stage of production but in the same industry.
| Advantages | Disadvantages |
| Assured Supply | Diseconomies of Scale |
3. Backward Vertical Growth -Merging or taking over business at an earlier stage of production but in the same industry.
| Advantages | Disadvantages |
| Contact with customers | Diseconomies of scale |
4.Conglomerate Growth – Merging or taking over another business in a different stage of production and different industry
| Advantages | Disadvantages |
| Greater market share | Diseconomies of scale |