IGCSE, A Level Business Student Forum

[KN] External growth might lead to cultural clashes
[APP] For example, a business which keeps good customer relations merges with a business that aims for maximum profit. This will lead to disagreements, worstening the relationship of management, making it difficult for the businesses to work ...

[KN] By selling online
[APP] For example, a small, local handmade jewellery business could set up an online store or sell through platforms like Instagram or Daraz, allowing it to reach customers outside its local area without needing to expand its business and open up shops in new areas.
[AN] This ...

[KN] Diversification means spreading the risk of failure.
[APP] For example, a chips producer like Lays could introduce a new product line such as fruit juices. This helps the business reduce dependence on a single product, since if sales of chips decline, revenue from drinks can still support to ...

[KN] Helps spread sales across different economies.
[APP] For example, a clothing retailer like Khaadi operates in many countries This reduces the risk of being affected by a recession, as a recession in one country would not impact Khaadi's sales in another, helping to keep overall revenue stable ...

[KN] Lack of customer trust
[APP] For example, a new mobile company launches its first ever smartphone, customers may hesitate to purchase from the new brand as they would prefer the well known brands like Samsung and Apple, making it difficult for the new business to sell its products as customers ...

[KN] Unable to achieve investment amount.
[APP] This is becasue banks are unwilling to lend big loans to small firms as the find it risky and believe that the business will be unable to pay back the loan. This makes it difficult for a small business to achieve its funds for investment, making it ...

[KN] A small coffee shop might be unable to compete with large chains because they achieve economies of scale.
[APP] for example, a small coffee shop with just one branch in a country will have very less demand if compared to a multi-national company like starbucks that has many branches in many ...

[KN] Less competition in niche market.
[APP] For example, a startup shoe producer could focus on producing special shoes e.g sizes that are not available in the general market which means it has less sellers and i.e less competition, allowing the business to easily survive and dominate the market ...

[KN] By measuring the number of employees
[APP] For instance, an automated, modern car manufacturing factory would have more advanced automated machinery (capital employed) than workers employed as these machines work automatically and require less labour, decreasing the number of employees hired by ...

[KN] High costs
[APP] For example, the business may spend heavily on advertising campaigns to boost sales, but if these expenses exceed the revenue earned in the short term, it could struggle to cover day-to-day expenses like wages or rent.
[AN] This means that despite strong sales performance, the ...

[KN] As all methods have limitations, giving inaccurate comparisons.
[APP] For example, using capital employed to compare business sizes makes the capital intensive business look larger as compared to a labour intensive business even if the labour intensive busienss is larger in size.
[AN] Therefore ...

[KN] A labour-intensive business requires employees to produce goods or services, while a capital-intensive business requires machinery.
[APP] For example, a hand-made jewellery workshop is labour-intensive because most of the work is done by skilled craftsmen, whereas a car manufacturer like Toyota ...

[KN] Value of sales might be a better measure of business size than value of output because sales reflect actual customer demand.
[APP] For example, a furniture manufacturer could produce thousands of chairs (high output), but if many remain unsold, its value of sales will be low. However, another ...

[KN] Market share only measures size in a specific market and ignores a business’s overall scale across other markets.
[APP] For example, a local clothing retailer in Swat might hold 60% of the market share in that area, while the well known national brand like Khadi might only hold 10% of the ...

[KN] A limitation of using capital employed is that a business may be less aggressive towards buying high end assets.
[APP] For example, a budget airline may choose to lease aircrafts instead of purchasing expensive new planes, so its capital employed looks smaller compared to a luxury airline, even ...