Grade 8A
Discuss whether a firm will always benefit from
an increase in its size.
Time Duration for submitting the Article is:
October 15th to October 20th, 2013
Write here your answer in 500 Words.
Write here your answer in 500 Words.
Firm means the members of a business organization that owns or operates one or more estabilishment and by measuring their profit, growth ability, and market share we can measure a size of a firm. Firm also have different objectives like business expansion by increasing their profit and market control welfare by increasing their sales. Firm also can increase their profit by reducing cost of production, increasing productivity, minimising wastes and the most important is increase their selling price and increase their production or total output reucing cost ofptoduction including decreasing wages of worker, increase economic of scale or large scale production reduces the average cost, and reducing the prices of raw material needed for production.
ReplyDeleteThe advantage of a big firm are that they can control their selling price most people use that brand the firm can increase their price how high they wanted and increase their profit also being a well known brand also good because many people will buy your product instead of other product because they are less well known product. They have economic of scale because of their high output and capacity give them cost advantages compare to other companies. They also have greater human resources or greater number of employee accomplish the work . Larger companies also have easier market entry as they have bigger capital than the small companies.
The disadvantage of a big firm that they are difficult to control and maintaining to make profit also in a big firm there’s some people who are lazy and dishonest which make business hard to develop. It also have difficullity to adapt quickly compared to small business, usually when something is discovered it’s a little bit to late to catch the error or another company has beat them in the market. They also have to pay tax to government and if the working condition is bad for the worker they can do a strike.
But there’s also some benefit if we make a small business. Like it’s easy to setup if we are a soletrader and there’s working flexibility because you aren’t controlled by your boss and you can do your own ideas. And being a soletrader we can take all the profit we make.
The disatvantage of a small business is thatthey have limited capital and it requier skills to start
the business. And when they have unlimited liability or the bank will take their personal assets if they can’t pay their debt and that’s why they must be very responsible in every decisions they make. Lack of ideas also can be a problem if we want to start our own business.
A business organization will need to earn profit and to earn profit is by decreasing the cost of production and increase the selling price or the firm can find other raw materials that cost cheaper and firm can grow in size. By growing in size it can be beneficial and it also not beneficial to some firm. Some business organization choose not to grow in size because when they grow in size they may have some difficulties to manage the business but some firm is needed to grow because of the increasing in demand and if they don't increase their size they may lose the demand for their product. The advantages for business to grow in size is will can have more time because if they need that product the business has grown and open a branch all around. The conclusion is it can sometimes be beneficial to firm that grow in size but there is also some firm that doesn't grow in size because it's for their own good to not grow in size.
ReplyDeleteThe size of firms can be measure in a number of way and this also provide useful clue about the reason why some firm grow into very large organization while other remain small. There are number of ways to measure and compare the size of firms;
ReplyDelete1. Number of employee. Firms with less than 50 employees are often class as small. However, not all large firms employ many hundreds or thousands of workers. They can replace human with machine and computer controlled equipment to automate their production process.
2. Organization. In small firms, the owner and employee tend to carried all the varies function between them. Larger firm may also have many department and difference layer of management and different office and factory.
3. Capital employed. Is money invested in productive asset. The more capital employ in firm the more it can produce and therefore the greater it size of production and therefore the greater its size of production
4. Market share. The size of the market for a good or service is measure by the total amount spend by the consumer. The bigger the market demand, the sales also increase. But, not at all market are so large
There are some benefits for company who expand their size of business:
A. Large firms are often able to buy the good materials, components they need because of their large scale of production. So, the supplier usually will offer price discount for bulk purchase because it is cheaper for them to make one large delivery.
B. Large business may hire their own vehicle to distribute their good and service rather than rely on other firms to do so. In this way large firm can reduce it cost because it does not have to pay profit margin of another supply. It may also increase the efficiency of distribution
C. Large firms can often borrow more money and at lower interest rate than smaller business bank often consider lending to big organization as less risky than lending to a smaller one. This is because large firms more financially secure and can over more assets
D. Large businesses often have the financial resources available to invest in machinery and equipment. They also train and recruit highly skill worker and to research and developed new product and increase their efficiency.
E. Large firms may have more customer and sell into more market at home and overseas and over a larger range of product than a smaller business in this way large firms is able to reduce the risk to its business of losing a mayor customer or a fall in demand for one its product of its market
F. Large business also get brand image so when the people want to buy a some kind of product they will think about our brand example: when we want to buy chocolate, we remember about Cadbury; when we want to buy soccer shoes, we remember about the brand Nike or Adidas
So, in conclusion there are some benefits if business can expand their size.
Generally, most firms have the same main objective: profitability. Other objectives include growth in size, increase in market share, and increase in total sales or scale of production. Generally when firms have enough money, they will expand, both to increase market share, and to make more profits. There are two main ways a firm can grow in size and expand its scale of production, internal growth and external growth. Internal growth involves a firm expanding its scale of production through the purchase of additional equipment, increasing the size of its premises, and hiring more labour if needed. External growth can happen in two main ways, takeover and merge. Takeover is when a firm sold more than 50% of their shares to one firm which means that other firm will have control in the company. Merger is when 2 companies agree to join or merge to become a bigger firm.
ReplyDeleteInternal economies of scale will reduce the average cost of producing each unit of output as the scale of production is expanded in a firm. When a firm successfully grew internally they can enjoy several benefits. Large firms are often able to buy the materials and other resources in bulk, so generally suppliers can give discounts as it is cheaper for them to deliver one big purchase rather than many small deliveries. Large firms can buy or hire their own vehicles to deliver goods, rather than depending on other delivery services. In this way firms won’t have to pay the profit margin of the delivery company, like JNE and UPS. Large firms can often borrow more money from the bank with lower interest rates than smaller firms which have high interest. This is because banks can trust large firms on paying back because they have more financial security and more assets, such as premises, for the bank to use as collateral against loans, while smaller firms are not as easily trusted because there are risks of the firm getting bankrupt or not being able to pay the loan back with interest. Large firms also can sell shares to raise permanent capital which doesn’t have to be paid. Large firms often have more financial resources available to invest in cutting edge technology for machinery and equipment, to train and recruit highly skilled workers, and to research and develop new products to increase the efficiency in production, while smaller firms may not be able to do so because of insufficient funds. A large firm may have more customers in different countries which can reduce the risks of losing a major customer or a failure in the sales of a product, because most large firms do diversification. Diversification is to produce a variety of products while expanding into different markets, for example, Samsung mainly built televisions, but now they are producing, hand phones, smartphones, washing machines, and other home appliances.
But although there are many benefits of firms expanding, there are disadvantages when the firms grow too much, firms can expand into very large companies, but they will face consequences. Growing too large can produce problems because of diseconomies of scale. Diseconomies of scales are the force that causes larger firms and governments to produce goods and services at increased per-unit costs, which is the opposite of economies of scale. Managing a large firm can be difficult, especially if the firm has factories spread across many regions, while producing a very wide range of products, and with many different layers of management. This can cause inefficiency in making decisions and can take a longer time for it to be acted on by employees. Some very large firms require a variety of materials, components, and use a lot of power consumption, which can cause shortages and may hold up production. Some very large firms have difficulties in attracting enough workers with the right skills, so they may have to spend more money in training and increasing wages to avoid the employees from working for other companies. Very large firms generally use highly automated machines and equipment for production so the workers working on the machine can become bored, demotivated, or even uncooperative, which can cause strikes if the worker thinks he/she is being treated badly. Large firms also may outgrow their market or find their product too standardized, which can cause difficulties in constantly attracting new customers. Some owners of large firms need to increase capital by selling parts of their ownership, and powerful shareholders can disagree with the owner, which can potentially lead to disputes and may harm the company. Agglomeration diseconomies may occur if a firm merges with too many firms which produce many different products at many different stages of production. The business owners and managers may find it difficult to coordinate all the different activities of the merged firms.
ReplyDeleteTo summarize what we have discussed, firms can benefit by economies of scale from growing either internally or externally, but too much growth can lead to many diseconomies of scale like management diseconomies, labour diseconomies, and agglomeration diseconomies. So it is best for a firm to grow but just up to the right limit, while avoiding accidentally growing too much and cause many problems.
Ivan Alexander
8A
All firms have certain objectives they wanted to achieve,one of those objective is to grow in size, firms can grow in size internally and by merge.If a firm chooses to grow in size internally,it means that they would grow in size naturally,but if a firm decides to merge,it means that they are going to buy other firm's 50% share and take control of that firm.
ReplyDeleteWhen a firm decides to grow internally,it would surely take a long time for them to grow in size,but if they have less capital to buy and take control of another firm,then they have no choice but to grow internally.There are also benefits when a firm grows internally,they can keep the capital they would have used to buy another firm and use it for something better.If a firm decides to grow by buying other firm's shares then they would also surely get lots of advantages,they can use up all the raw materials the other firm has and you can freely control that other firm to benefit your firm.If a firm is considered a large firm,you would also get benefits.If you're a large firm then people would trust you and they would buy your shares,banks could also easily lend you money without any doubts and regrets.Investors would easily come to invest on your firm if you needed capital,the public would surely know you firm as a good and large firm.Also,if a firm decides to grow in size,that means that the firm has a larger scale of production,they would need more raw materials,and if a firm buys more amount of raw materials they could get certain discounts from the suppliers.They would also certainly get more profit coming.
But when a firm grows too large in size,it can cause them problems.If a firm is not careful,they could end up having a higher cost than revenue which could result in having a loss.It's very critical that a firm needs to know where to stop to grow.They should realize that the size of the market is too small for them to grow big and it would be useless for them even if they were to grow in size.Very large firms would also need a lot of workers and more new technologies,this can increase your cost of production and your firm can result in having a loss.Taking control of other firms can also create disadvantages,the firm that they took control still have 50% shares,if they would rebel they could take back their own firm and you would end up shrinking in size because of this,you need to be very careful.You also should not try to grow in size too much because you could end up owing too much to the banks,because if you would decide to grow internally,you will need a lot of capital,you can only get that certain amount of capital from the bank.If you would start getting greedy and borrow a lot from the bank you could end up in the debt trap,and your firm would go bankrupt.
All this concludes that it could give firms benefits if they grow in size, but if they were to start growing to be a very large firm,it would be unpleasant.
Jovan Pan
8A
Firm is a business organization, it can be a corporation, limited liability company or partnership. Some firms stay small while others want to expand their business; it is measured by 4 numbers of ways. The first is number of employees, it means that how many workers they use, firms with more than fifty workers are considered as big while firms with less than that number often classified as small. Secondly, it is measured by organization; large firms are divided into different specialization such as purchasing, selling and production. Aside from that, there is capital employed. Capital employed is money invested in productive assets in a firm that helps to generate the revenue. Firm that has more capital than worker is called capital-intensive while firm that has fewer capital is labor intensive. Lastly it can be measured by market share. Market share is the share of the total market sales any one firm is able to capture.
ReplyDeleteThere are some benefits that a firm will get by increasing their size. Firstly, the firm will have stronger brand recognition; this means that the firm is well-known by other people. In this way, some firms like franchisers will attract more people to use their brands. Economy of scale can be one of the advantages; economy of scale is a large-scale of production that reduces the average cost. When more consumers consume their products, they will have an increase of production and the unit cost may be decreased compare to the cost of producing less units. If firm increase their size, people trust them because people usually think of their business first instead of other small firms when they are making a decision of purchasing the goods and services as the effect, they will earn more profit, which it is the main goal of creating a business. A firm can increase their profit in many factors: lower the cost of production, increase in productivity, minimizing wastes, increase selling price and increase in production. Large firms can also have a market control of other companies.
The point against having an increase in size of firm is that they can have difficulties in handling the business because they have an excess number of employees and capitals which may cause the business not to run properly. Aside from that, they don’t adapt quickly or discover quickly compared to small firms such as sold trader and partnership when there is some problems because there are more chain command. If a firm keeps on increasing the size of firm, it may cause diseconomies of scale as very large firms need large quantities of materials, components and power of production, they may have an insufficient amount of resources therefore it holds up the production. The firm may be unable to attract the workers with the right specialization because they will need to spend more money for training the workers.
In conclusion, a firm will not always get benefits by increasing its size. There are some factors and causes that may affect in increasing their firms such as difficulties of controlling their workforce, diseconomies of scale, adaptation in their firms, insufficient amount of resources and less attraction of workers.
Felicia Angeline
8A
A firm’s efficiency is affected by its size. Large firms are often more efficient than small ones because they can gain from economies of scale, but firms can become too large and suffer from diseconomies of scale. As a firm expands its scale of operations, it is said to move into its long run.
ReplyDeleteMany small business owners aspire to grow their business. However daunting these aspirations may seem, there are clear advantages to expanding a small business. While there are potential disadvantages to expansion, the advantages and benefits received from expanding a business may far outweigh them.
Some owners are reluctant to take the risk of growing the business and opt to stay small. As a business grows it gains two major advantages over its smaller rivals. Large firms have more influence over market price. They're big enough to be price setters.
One clear benefit to expanding a business is the opportunity to staff the firm with new, qualified people. Since people are often recognized as the most important asset of a company, acquiring new and talented personnel is a clear-cut advantage to business expansion. These people can help streamline processes, bring fresh ideas to the organization and bring a sense of camaraderie to the organization.
Another benefit of business expansion is that expanding your business widens your customer base. When you operate in one business location, the number of potential customers to your store is limited by that one location and your product. For example, customers that live in Houston, Texas, will not travel hundreds of miles to Dallas, Texas, for a slice of pizza. However, if you expand your pizza business so that you have a location in both cities, your customer base increases dramatically.
However there is a cost. If a business decides to increase their size of firm, then that means they need to hire in more staff to work for your large business, which costs on wages. The more staff you hire, the more wages you have to pay, thus increasing your price of expense. Another disadvantage is that business owners will lose focus on customers as individuals, in other words, as a business grows and tries to encourage new business it might lose focus on its loyal customers as a result. Also, the business will have increased customer care needs since bigger business means dealing with more people and the possibility of more complaints and the need for more time spent on customer care
Large firms also often enjoy economies of scale. This means that a business has lower unit costs because of its large size. They can buy raw materials cheaply in bulk and also spread the high cost of marketing campaigns and overheads across larger sales. For example, if a large firm can produce a given type of sunglasses for £20 while it costs its smaller rival an average of £30, then the larger firm has a £10 per unit cost advantage. Larger firms can charge lower prices or enjoy a higher profit margin.
Jonathan Santoso
8A
Entrepreneur combines and organizes resources in a firm. Firm is also known as business organizations. The firm goal is profit, growth in business, and increase the market share of the business but the number 1 business goal is profit and the other two is ignored because some business want to remain small. There are some ways to say that the business is big and there are some ways to expand the business. There are some benefit to the business if the business is increase in size. There are many types of firm like sole trader, partnership ,joint stock company have to types private limited company and public limited company, multinational corporations, cooperatives, and the last public sector organizations. The public sector organization is divided into 4 types like central government authorities, local government authorities, government agencies, and public corporations . The benefit are bank can lend us money because we have a capital and many assets. because a sole trader or partnership is relatively small business and there are many competitor. If the business is private limited, the shareholders don’t have a responsibility on the business. Large firms can buy their own capital for the business too like the buy a car for deliveries and they buy computer for the office use. A big business have more employees and they can save more time because the owner no need to work harder because they have employee to trust. The other is they have a skilled employee so the boss no need to do the hard job and leave it to the skilled employee. If the company is multinational, they can reduce the cost of transport because they have a office in that area. The product will be famous because the product is bought by the other country like nike, wonka, and adidas.
ReplyDeleteThere are some disadvantage if the business is large because it have a risk to open a large business. For example if the business fail or bankrupt, all the money that the business invest will gone and they need to pay the debt. If they want to expand the business they need a large capital to expand the business. The other is the employee can be dishonest because there are too many employee work in the business or company. The owner require a lot of knowledge and education to build the business because it is not easy to open a large company. They must pay more wage because there are many employee. They must pay taxes in different countries .
The conclusion is that the firm can have different benefit from expanding their business according to their business organization. But the growth of business can lead to disadvantage that’s why some business remain small but some smart business can control their business growth.
Some factors of increasing size of the business could make it benefit and it also could make it having a disadvantage or loss in increasing or expanding the size of the business. Most businesses plans to expand their business but some businesses or firms don't want to expand their business. And most firms have objectives of profitability which some firms or businesses, differently choose to to expand or to stay the same of the business or company's size. So that means that by expanding the firm or business it doesn't mean that they would always gain more profit.
ReplyDeleteBy expanding the firm or business it would increase the productivity of the business because there would have capital expansion which makes them to produce goods or services easier or faster. Usually firms that that expands their business would have more workers or labour, so there are division of labour that would make production of goods or services faster. By also expanding the size of the business, the business would be more famous or well-known because of the fame of the quality of the goods and services produced by the firm. Because the business is famous, the product would be more trustable because it is in good quality and well-known which makes more sales and gain more profit. For example, Aqua, because Aqua is a well-known mineral water company that are trusted by many people, there would be more customers and the Aqua company would receive more profit because of the large sales of the product. Also by not expanding the business or staying in the same size or not going forward, could also gain profit, because the business would have less risks of bankrupt and they could have less liability on the bank or other firms. If they stay the same and earn profit, they could have less chance of bankrupt because they don't have expenses for capital expansion and the expenses on running the business would be the same. Some firms or business stays the same because they don't want to increase the risks and responsibility on running the business, and some other factors are because of too much work burden. Because by increasing the size or expanding the business's size, there would be more work on production and selling because they need to have an increase in the productivity of the business and because there are more product that are produced, they need to sell more of their product. And some firms don't have the finance of expanding their business because sometimes banks don't lend or give loans because of too much competition with other firms or the risks are too high.
By expanding the business, the risks are too high which could make the business in loss if they are not successful. By expanding the business the expenses to run the business would be higher which if the business is not successful, they could earn loss because of high expenses in running the business. By having a larger business, it would be harder to control the business which it could increase the work burden of the firm because they would increase the productivity of the business. And because they have insufficient funds for the capital expansion, they would receive loans from the bank which makes the business to have unlimited loans from the bank and if they only gained a little amount of profit, they could have loss because of having not enough amount of money to pay their liabilities. But, by not expanding the business, they would be not well-known and people couldn't trust the product they are producing because of having only little amount of production which makes less sales because people couldn't trust the product. And because they are not moving forward, competitors could move ahead from them and competitors could have more sales and profit which could make the business unprofitable.
So in conclusion, by expanding the business could not always make profit because there are some disadvantage factors that if expanding the business, it could increase the risks which could make the firm to have loss rather than profit.
Brian.A
8A
A firm is a business organization, such as a corporation, limited liability company or partnership. Firms are typically associated with business organizations that practice law, but the term can be used for a wide variety or business operation units. Their main objectives are profitability, grow in size, and grow in market share. And now I’m going to discuss about grow in size.
ReplyDeleteIt is useful to group firms together according to whether they are large enterprises or small and medium-sized enterprises (SMEs). There are number of ways to measure and compare the size of firms, such as how many workers they employ, how they are organized, how much capital they employ, and their market share.
How many workers they employ. This is a straightforward measure. Firms with less than 50 workers are often considered small and firms with more than 50 workers are often considered big, but it is not always true. Some firms are capital-intensive which means that it needs more capital than workers (labour).
How they are organized. Larger firms are often divided up into different departments specializing in particular functions, such as purchasing, sales and marketing, finance and production. In smaller firms the owners and employees tend to carry out all the various functions between them.
How much capital they employ. Capital employed is money invested in those productive assets in a firm that help it generate revenue. They are assets used to produce and sell goods and services. The more capital employed in a firm the more it can produce and therefore the greater its size or scale of production. However, some large firms may be labour intensive. This means their production process requires the employment of a lot of workers but relatively little capital.
Market share. The market for any good or service consists of all those consumers willing and able to buy it no matter where they might be located. The share of the total market sales any one fir is able to capture is its market share.
Entrepreneurs often want their firms to grow in size and increase the volume and value of their outputs. Producing more output means increasing the scale of production in a firm. There are two main ways a firm can grow in size and expand its scale of production, which is by internal growth and external growth.
Internal growth expands the scale of production of firms through purchase of additional equipment. To finance the growth, owners will need to use the profits of the business, and loans from bank.
External growth is more common. It involves one or more firms joining together to form a larger enterprise. This is known as integration through merger or takeover.
Points in favor or benefits of firms to grow in size are it can be more popular/well-known, economies of scale, increase customers, more profit, and increase the trust of the peoples. People will buy goods and services if many people or buying it, or if the brand is well-know/popular ( Gucci, Salvatore Ferragamo ). It will have an increase in profit too because more customers are gonna buy it because the business is getting bigger. And also people will trust the business more.
Points against or disadvantages of firms to grow in size are difficulties, loss, diseconomies o sales, bankrupt, and less demand. It will be difficult to run a big business, that’s why some business remains small. Or instead of getting more profit, we can get a loss. If customers aren’t willing to consume the business goods, the business will have a loss, and it will cause bankrupt to the business.
So in conclusion, a firm are not always benefit from growing in size. It’s good for a firm to grow in size but better not too big for safety.
Audrey 8A
There are number ways to measure and compare the size of the firms :
ReplyDeleteA. Number of employees
B. Organization
C. Capital employed
D. Market share
More employee shows how big is the firm. Firm with less than 50 employees are often classed as small firm. But sometimes a lot of firms have less workers because large firm use a lot of machines and computers controlled equiptment to automate ther production process. A firm do this thing to make more output. Organization of the large firm also more complicated than a small firms. A large firm have department to do different task, specializing in particular function. A firm do these thing to avoid the fraud happens. More the equiptment and machinary that business has , usually that business is catalogued as a big business. The more capital employed in a firm the more it can produce and therefore the greater size of production. For the bigger firm market share that they have also getting bigger
Firm can grow in size between two ways :
A. Internal growth, buy more machine, equiptmen, buildings, and make more factory
B. External growth, it can happens in two ways, merger and acquisition.
There are some benefit if firm expand in size:
1. Easier to have a loan, bank or other financial institution trusting more in a bigger company. Because bigger company has less risky than the smaller company, bigger company has more assets to become guarantee of loan. Bank can sell these assets in the event a firm fail and can’t repay there debts. Large public company are also able to sell shares to rise permanent capital that never has to be repaid
2. Large business often have the finantial resources available to invest in specialized machines and equipments, to required highly skilled workers, increase efficiency of their production
3. Large business may buy new vehicle to distribute their goods and services rather than rely on other firm to do so. In these way a large firm can reduce costs, also can reduce expense adfertising.
4. A large firm can buy materials, supply, components in a large amount, so sometimes the supplier will give more discount or special prize for them. So the expense of a large firm can be smaller than a small firm.
5. A large firm may have more loyalty costumer, can sell their product at home and overseas. In this way a large firm be able to reduce the risk of business in losing a major costumer or a fall demand of 1 product in 1 market.
6. A large firm can access a skilled workforce because they can recruit workers trained by other firm in their industry.
IN CONCLUSION , a banefit that business have if their expand or increase their size is easiness to get fund for operating their activities, also can increase their sales and profit, also can have brand image. Examples of brand images , if we want to buy fastfood, we directly think for KFC, Mc donalds. But sometimes there are some disadvantages to grow in size because business have to share their financial report, large firm is not simple and more risky
First of all, most of the business organization run their busines in order to make profit, they want to make their business profitability. There are few ways to increase the size of firms, and with this, they can bring many benefits. We will discuss more in the next paragraph.
ReplyDeleteThere are few ways to increase the size of firms, which is by lower the cost to buy the raw materials and increase the price of the selling price, in order to make that business profitability. Second, to grow in size because business owners and managers may want to increase the size of their business, to increase sales, market share and profits. Grow in size will be easier if demand for goods is rising, if not, the business can only expand by attracting customer for it’s competitor. Third, by increasing market share, increasing market share will achieve higher sale and in the future, increase the price to gain more profit. There are two ways to increase market share. First, by increase the uses, it means that increase the uses of that product, because the more useful of that product, the more people will be attracted to buy. Second, by increase the user, it means that we increase the number of the consumer, but, to attract consumer to buy our product is not easy. It is benefit for us if we make more profit, that means that we will get more income, more salary to buy goods and services. It will bring benefit also if our business grow in size, because if we ship worldwide and if our product getting very famous, we can get many benefit from this, because it can increase the sales of our product and the profit. By increasing market share will also bring benefit for us, because to measure the proportion of total sales revenue is attributable to the firms. Usually, new business entrants initially lower their price and spend more on advertisement to gain market share. And by increasing market share, we will achieve higher sale and in the future increase the price to gain more profit.
Against the statement above, we can see with this few ways to increase the size of firms, there are always benefit for the business. It will bring benefit if they earn more profit because they can get more money from their business. They need the money to buy goods and services, to fulfill their needs and wants. Business growth also can increase the sales of a business where business can earn more profit. And increasing market share also will result in higher sale and increase the price of the product to gain more profit.
In conclusion, there are several ways to increase the size of a business. And by doing this, it always bring profit for the business, which they can earn more profit to buy their goods and services to fulfill their needs and wants, they also can ship worldwide in order to increase the sales, market share and profits, and increasing market share to achieve higher sale and increase the price of the product to gain more profit.
Vienetta christina
8A
Business organization is group of person with similar interest. Business organization also can be defined as economic activities to earn profit. Business builds because they have objectives. Usually, most of the firms have the same objective that is really well known. It is profitability. Other objectives are including business expansion, higher sales, market control, satisfaction maximation, and welfare. I will discuss more on increase the size of firm.
ReplyDeleteThere are some advantages of having big market share. First, a large scale of production reduces the average cost. Because of many people that buy that product, they will make the production more and also as usual. And as they buy product, the supplier for buying raw material always make the price lower if we buy their product more. It can make higher productivity. It is because more efficient. Second, for big firms if they want to borrow money from bank is easier for them, because they have assets, like premises, machines, etc., so if they cannot pay their debt, bank can confiscate their assets. And small firms can’t as easy as that. Small firms can’t borrow money from bank because bank doesn’t believe that if they get bankrupt, they can change the money. And also for big business, the brand makes them in higher level, means well known.
And there are points against of having big market share. It’s hard to control and maintain the big firm, like their profit, output and input, etc. If the firm can’t manage well, they can’t control their cost and revenue, and it might be loss. Also people sometimes dishonest in working, hard for us to believe one another. People that are not quieting diligent also affect the whole business. Also, it’s hard for them to divide their profits because the owners are more than one. The technologies, like machines, controller, etc. or maybe workers that needed also many, so in the first, we need to have money in a quiet big amount.
So on conclusion, a firm will always benefit from an increase in its size. However, there are some points where it we can know becomes disadvantages.