Business Growth and Failure Overview
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Questions and Answers

Which of the following can be used to compare the size of different firms?

  • The volume or value of their output or sales (correct)
  • The number of workers they employ (correct)
  • Their market share (correct)
  • The amount of capital they employ (correct)

    • Why might different measures of size of firms give different results?

  • Different companies have different business models and priorities
  • The measures are based on different data sets and metrics
  • Some large firms may be capital-intensive but employ very few workers
  • All of the above (correct)

    • What is a potential disadvantage of using the number of workers employed as a measure of a firm's size?

  • It can be misleading if the firm is highly automated (correct)
  • It doesn't account for the capital invested in the business
  • It doesn't provide information about the firm's profitability
  • All of the above

    • What is meant by the term 'capital-intensive' as used in the context of the provided content?

    <p>A firm that invests heavily in machinery and equipment (D)</p> Signup and view all the answers

    Which of the following is NOT a measure of firm size mentioned in the content?

    <p>Number of patents held (A)</p> Signup and view all the answers

    Which of these is NOT a common threat to business survival?

    <p>Increased regulation (B)</p> Signup and view all the answers

    Which of these is NOT a cause of business failure?

    <p>Excess profits (A)</p> Signup and view all the answers

    What is the main purpose of human resources management within a business?

    <p>All of the above (E)</p> Signup and view all the answers

    Which recruitment method is typically considered to be cheaper and less time-consuming?

    <p>Internal recruitment (D)</p> Signup and view all the answers

    What is the main difference between on-the-job training and off-the-job training?

    <p>Both C and D (B)</p> Signup and view all the answers

    Which of these is NOT a reason for an employee to be dismissed from a job?

    <p>Lack of required qualifications (A)</p> Signup and view all the answers

    What is the primary purpose of marketing?

    <p>All of the above (E)</p> Signup and view all the answers

    Which of the following is NOT a type of communication method mentioned in the text?

    <p>Electronic communication (A)</p> Signup and view all the answers

    Which of the following is NOT a factor that contributes to communication breakdowns?

    <p>Clearly defined roles and responsibilities (B)</p> Signup and view all the answers

    What is the main advantage of internal recruitment over external recruitment?

    <p>Internal recruitment is more cost-effective and time-efficient. (A)</p> Signup and view all the answers

    Which of the following is NOT a potential outcome of a disciplinary procedure?

    <p>Promotion (B)</p> Signup and view all the answers

    Which of the following is NOT a type of redundancy?

    <p>Technological Redundancy (D)</p> Signup and view all the answers

    What is the main difference between an insolvent business and a bankrupt business?

    <p>An insolvent business has not yet been declared bankrupt, unlike a bankrupt business. (A)</p> Signup and view all the answers

    Which of the following is NOT a legal protection typically offered to employees in many countries?

    <p>Protection from unfair competition with other businesses. (B)</p> Signup and view all the answers

    Which of the following is NOT a benefit of training employees?

    <p>Increased costs associated with training programs. (E)</p> Signup and view all the answers

    Which of the following is NOT a potential factor that might cause a business operating at a loss?

    <p>Excessive profit margins. (B)</p> Signup and view all the answers

    Flashcards

    Business growth

    The increase in a firm's output, sales, or market presence over time.

    Measures of size

    Various criteria used to assess the size of a firm, such as employee count, capital employed, output value, and market share.

    Employee count

    The total number of workers employed by a firm.

    Capital employed

    The total amount of financial resources used by a firm to conduct its business.

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    Market share

    The portion of a market controlled by a particular firm, expressed as a percentage of total sales.

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    Labour-Intensive Firms

    Firms that require a lot of labor but minimal capital.

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    Internal Growth

    Expanding a business by increasing production or selling more products without merging or taking over.

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    External Growth

    Growing a business by merging with or acquiring another company.

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    Diseconomies of Scale

    Increased per-unit costs due to inefficiencies as a firm grows too large.

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    Business Failure Causes

    Factors such as recessions, competition, and poor management that lead businesses to fail.

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    Liquidation

    The process of converting a business's assets into cash, often during bankruptcy.

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    Human Resources Management

    The practice of recruiting, managing, and developing employees effectively.

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    Internal Recruitment

    Hiring from within the existing employee pool.

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    External Recruitment

    Hiring candidates from outside the organization.

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    Training Employees

    Activities aimed at improving employees' skills and increasing job satisfaction.

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    Induction Training

    Process of teaching new employees about the organization and their roles.

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    Disciplinary Procedures

    Steps taken to address poor employee performance, including warnings and possible dismissal.

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    Employment Laws

    Regulations protecting employee rights and ensuring fair treatment in the workplace.

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    Effective Communication

    The exchange of information accurately and timely within and outside the organization.

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    Communication Barriers

    Obstacles that hinder effective message delivery, such as misunderstandings or language differences.

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    Study Notes

    Business Growth

    • Firms are measured by workers employed, capital used, output/sales volume, and market share.
    • Different size measures yield varying results. Some firms are capital-intensive, employing few workers, while others are labor-intensive with little capital.
    • Firms expand through internal growth or external acquisitions/mergers.
    • Growth increases sales, market share, reduces costs, and boosts profits.
    • Diseconomies of scale can hinder growth if firms struggle with material acquisition.
    • Optimal firm size depends on market size.

    Business Failure

    • Business failure is common, especially for new businesses.
    • Factors threatening survival are economic downturns, shifting consumer preferences, major customer loss, increased competition, and emerging technologies.
    • Smaller businesses are more vulnerable due to owners' limited skills, finances, and decision-making capabilities.
    • Poor financial management, leading to unpaid debts (insolvency), is a major failure cause.
    • Profitable firms with debt issues may borrow more or sell assets quickly.
    • When assets can't cover debts, bankruptcy and liquidation occur.
    • Liquidation involves converting assets to cash through sales.
    • Many firms initially run at a loss, especially during startup or expansion phases/recessions.

    Human Resources

    • Business success hinges on a quality workforce.
    • Human resource management optimizes employee selection, utilization, and development.
    • Recruitment involves attracting and selecting suitable individuals.
    • Each job requires a description (tasks and responsibilities) and a person specification (needed skills/qualifications).
    • Recruitment types include internal (existing employees) and external (new hires).
    • Internal recruitment is faster and cheaper, leveraging existing knowledge.
    • External recruitment brings new skills, but is slower and more expensive.
    • Workers are categorized as full-time (35+ hours) or part-time (35 or fewer).
    • Employee training enhances satisfaction, motivation, and work quality.
    • Skills development enables adoption of modern equipment, reduces supervision, and boosts safety.
    • Multi-skilled workforces adapt to organizational changes.
    • Training methods vary by objectives and include induction, on-the-job training, and off-the-job courses (external training).
    • Disciplinary procedures include warnings, demotion, suspension, or dismissal.
    • Dismissal reasons include redundancy, gross misconduct (e.g., theft, harassment), voluntary redundancy (resignation/early retirement), and compulsory redundancy (layoffs due to automation or decreased demand).
    • Some employers act unfairly.
    • Employment laws protect employees' rights and responsibilities. This includes employment contracts, protection against unfair dismissal, discrimination, and wage deductions.
    • Health and safety laws ensure safe working environments.
    • Legal minimum wages prevent low pay.

    Marketing

    • Marketing identifies customer needs and fulfills them. It fosters customer loyalty and positive relationships.

    Communication

    • Effective communication is vital for business success.
    • Internal communication ensures everyone understands objectives and responsibilities.
    • External communication attracts customers and ensures suppliers deliver quality services on time.
    • Communication methods include verbal (meetings, calls), written (letters, emails), and visual (charts).
    • Factors like cost, speed, and audience dictate communication choice.
    • Communication breakdowns occur due to misunderstandings, incorrect targeting, or ineffective communication methods.

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    Description

    This quiz explores the concepts of business growth and failure, examining factors such as employee metrics, capital utilization, and market share. It also delves into the causes of business failure, highlighting vulnerabilities faced by smaller enterprises. Test your understanding of these pivotal business dynamics.

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