It is the most common question being asked by the students of IGCSE, O/A Level Business Students that How to measure Business Size? As far as the course books of Business Studies (IGCSE/O Levels) are concerned, there are some different approaches and some of the students find themselves confused that which measure to use and how to answer the question in CAIE Examinations especially when the question is of 4+ marks where a little explanation with application is desired too. Let us first see how many options of measuring business size do we have:
Options to Measure Business Size
- Number of Employees
- Revenue
- Capital Employed
- Market Capitalization
- Market Share
- Additional Measures:Number of Beds (In a Hotel)
- Number of Guests (Wedding Marquee)
- Number of Shops (Retailer)
Which measure of business size to choose?
To be honest, one size never fits all and same is the case with Business Size too. In order to give an accurate comparison, it is suggested to use the combination of 2 to 3 measures. One Measure is good for 1 mark identification type questions but if there is an explanation desired, we have to dig into the detail. This is the method which will give you 100% Marks in Cambridge Examinations of IGCSE & O/A Levels. Lets solve this problem with few simple examples:
Steps to Measure Business Size (Detailed Approach):
- Step 1: The easy way is to allocate 100 marks to each measure
- Step 2: Convert all data into percentages.
- For example, in case of revenue add revenues of all companies.
- Now divide the Revenue of Company A with Total Revenue x 100 to get answer in Percentage
- Repeat the Steps for all companies and Wallah, you got the Marks out of 100.
- You can convert any data into percentage for Capital Employed, No of workers, Area of Business etc.
- Step 3: Once you have got the percentage answer for all companies, get the total points of each company as given below:
Best Technique – How to measure Business Size?
If you are attempting Business Paper 2 in A Levels OR Business Studies Paper 2 in IGCSE/O-Levels, this technique will help you out in attempting 4-12 marks question related to measuring business size very easily. In the Case Study of Business, there are mostly 2 or more than two variables mentioned which can be used as an option to measure business size. If the examiner is asking question of 4-12 marks, it will have such details available as it will be required in getting “Application” marks by the students.
Now, find out the 2-3 available options which can be used as measuring size of the business, see if you can convert that into the Percentage Point System. If yes, just start making table as mentioned above, place your options and convert them into percentages. Don’t forget to show the workings to the examiner plus this table both. This will be an addon for your explanation and application. Only table can make your job easy to elaborate, explain and get Application marks for Free, as you have already derived the figures from the Question.
If you are still facing any problem in defining, explaining and applying the knowledge in a particular question. Feel free to share the question.
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Sir Afzal Shad
