Business SizeBusiness Size

DO NOW - QuizDO NOW - Quiz

1.1. Name the three sectors of the economy?Name the three sectors of the economy?Primary, Secondary and TertiaryPrimary, Secondary and Tertiary2.2. Name the sector of the economy that is owned or Name the sector of the economy that is owned or

controlled by the Government?controlled by the Government?Public SectorPublic Sector3.3. Provide two Advantages of being a Sole Trader?Provide two Advantages of being a Sole Trader?Easy to set upEasy to set upKeep all the profitsKeep all the profits4.4. Define limited liability?Define limited liability?The owners or shareholders will not lose there personal The owners or shareholders will not lose there personal

assets if the business fails.assets if the business fails.

How Do we MeasureHow Do we Measure

What is a big Business?What is a big Business?What is a Small Business?What is a Small Business?How do you think we measure business How do you think we measure business

size? size? Class DiscussionClass Discussion

Business SizeBusiness Size

We measure in may different ways the We measure in may different ways the most common are turnover (profit) and the most common are turnover (profit) and the number of employees. This can be number of employees. This can be misleading however as you can be misleading however as you can be consider a big business by turnover but consider a big business by turnover but only have 4 employeesonly have 4 employees

Number of EmployeesNumber of Employees

Obvious if an organization has 1 employee Obvious if an organization has 1 employee it would be small, and if like Google it had it would be small, and if like Google it had upwards of 14000 employees you would upwards of 14000 employees you would consider it big.consider it big.

Koves example (previous employer had 45 Koves example (previous employer had 45 staff being a manufacturing plant and staff being a manufacturing plant and turnover was low)turnover was low)

Sales TurnoverSales Turnover

Used mainly to compare businesses within Used mainly to compare businesses within the same industry. (market share the same industry. (market share purposes)purposes)

Would Michael hills sales turnover be less Would Michael hills sales turnover be less than Countdowns?than Countdowns?

Capital EmployedCapital Employed

The total value of all long term finance The total value of all long term finance invested in the business.invested in the business.

Problems – what if you work from home or Problems – what if you work from home or don’t have the same machinery don’t have the same machinery requirements requirements

Market CapitalizationMarket Capitalization

The total value of a companies issued The total value of a companies issued shares.shares.

Current share price x total number of Current share price x total number of shares issued.shares issued.

Share prices change everyday so it can be Share prices change everyday so it can be misleading.misleading.

Only used by public limited companies.Only used by public limited companies.

Market ShareMarket Share

Sales of a business as a proportion of total Sales of a business as a proportion of total market sales.market sales.

Different industries have different market Different industries have different market size’s ie Soft Drink industry compared with size’s ie Soft Drink industry compared with antiques industry.antiques industry.

Business SizeBusiness Size

No measure is the best will depend on the No measure is the best will depend on the industry that is the focus, often you should industry that is the focus, often you should compare businesses within industries on compare businesses within industries on at least two of the measures to get a more at least two of the measures to get a more accurate picture.accurate picture.

Small BusinessSmall Business

Are small businesses important to our Are small businesses important to our economy?economy?

What is a Small business in NZ’s What is a Small business in NZ’s economy?economy?

Benefits of Small Business to the Benefits of Small Business to the EconomyEconomy

NZ is predominantly a small to medium size NZ is predominantly a small to medium size business economy.business economy.

Many jobs are created by small businesses.Many jobs are created by small businesses. They are often run by entrepreneurs with new They are often run by entrepreneurs with new

ideas which creates greater choice for ideas which creates greater choice for consumers.consumers.

Increased competition within industries meaning Increased competition within industries meaning large businesses cant hike up prices to make large businesses cant hike up prices to make more money.more money.

Benefits of Small Business to the Benefits of Small Business to the EconomyEconomy

All Businesses start out small, the All Businesses start out small, the Warehouse started with one small shop, Warehouse started with one small shop, now one of NZ’s biggest retailers.now one of NZ’s biggest retailers.

Small firms often have lower overheads (ie Small firms often have lower overheads (ie less staff so less wages expense) less staff so less wages expense) meaning they don’t need to charge as meaning they don’t need to charge as much for goods and services.much for goods and services.

Small Business ActivitySmall Business Activity

Activity 3.1 page 44 questions 1,2,3Activity 3.1 page 44 questions 1,2,3

HomeworkHomework

Questions 5 and 6 page 52 Business Questions 5 and 6 page 52 Business Studies text book.Studies text book.

Blog Duty –Blog Duty –Student to discuss today's Student to discuss today's lesson, others to check and commentlesson, others to check and comment

DO NOWDO NOW

Explain three benefits small businesses Explain three benefits small businesses bring to the NZ Economy?bring to the NZ Economy?

Small Business - VideoSmall Business - Video

http://www.youtube.com/watch?v=O0j-p6Jhttp://www.youtube.com/watch?v=O0j-p6J4HAg4HAg

Group ActivityGroup Activity

In groups fill out the sheet on advantages In groups fill out the sheet on advantages and disadvantages of small and big and disadvantages of small and big businesses. (10-15 mins)businesses. (10-15 mins)

Advantages of Small BusinessAdvantages of Small Business

Can be managed and controlled by the Can be managed and controlled by the owner.owner.

Can adapt to the changing needs of Can adapt to the changing needs of customers.customers.

Offer personalized service to customersOffer personalized service to customersFind it easier to know each worker.Find it easier to know each worker.

Disadvantages of Small BusinessDisadvantages of Small Business

Limited access to sources of financeLimited access to sources of financeOwners often have large burden of Owners often have large burden of

responsibility, if cant employ managers.responsibility, if cant employ managers.Less diversification of products leading to Less diversification of products leading to

greater risk from external change (ie greater risk from external change (ie recession)recession)

Advantages – Large BusinessAdvantages – Large Business

Can employ specialist managers.Can employ specialist managers.Cost reductions as a result of large scale Cost reductions as a result of large scale

production.production.May set low prices that other firms have to May set low prices that other firms have to

follow.follow.Have access to different sources of Have access to different sources of

finance.finance.Can afford research and product Can afford research and product

developmentdevelopment

Disadvantages – Large BusinessDisadvantages – Large Business

Can be difficult to manage , especially if Can be difficult to manage , especially if geographically spread.geographically spread.

Could have cost increases as a result of Could have cost increases as a result of large scale production.large scale production.

Could suffer from slow decision making Could suffer from slow decision making and poor communication.and poor communication.

Question - IndividualQuestion - Individual

Using New Zealand examples compare Using New Zealand examples compare small and large business and their impact small and large business and their impact on our economy? (reference to the on our economy? (reference to the advantages and disadvantages is advantages and disadvantages is expected) (15 mins)expected) (15 mins)

Business GrowthBusiness Growth

There are reasons for and against There are reasons for and against business growth, some people want to business growth, some people want to remain in control, or don’t want to take to remain in control, or don’t want to take to many risks. While others would prefer to many risks. While others would prefer to see there business grow. Common see there business grow. Common reasons include.reasons include.

Business GrowthBusiness Growth

Increased profits – expand business more Increased profits – expand business more sales more profit.sales more profit.

Increased market share – higher market Increased market share – higher market profile and greater bargaining power.profile and greater bargaining power.

Increased power and status of owners – Increased power and status of owners – can influence the community.can influence the community.

Reduced risk of being taken over.Reduced risk of being taken over. Increased economies of scale Increased economies of scale

Internal GrowthInternal Growth

Expansion by opening new branches or Expansion by opening new branches or stores. I.e. JBHIFI – have opened stores stores. I.e. JBHIFI – have opened stores all around Auckland and new Zealand over all around Auckland and new Zealand over the past 3 years.the past 3 years.

External growth – taking over or merging External growth – taking over or merging with another organization.with another organization.

HomeworkHomework

Questions 3,4 and 5 page 52 Business Questions 3,4 and 5 page 52 Business studies text book.studies text book.

Blog Duty –Blog Duty –Student to discuss today's Student to discuss today's lesson, others to check and commentlesson, others to check and comment