Session (1.3.4) Measuring the Size of a Business

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Objectives

By the end of this session, you should be able to:

explain the methods of measuring the size of a business;
understand why profit is not a measure of the size of a business;
explain the problems associated with measuring the size of a business.

Engage

Measuring the size of a business can be difficult. Some businesses may be famous and hence thought to be big, such as the English football club, Manchester United, who are worth about $3billion, but other businesses may not be known by many people at all, such as Ingersol Rand which is considerably bigger, being worth $34billion.

Look up three well-known businesses. Now put them in order of size. How did you order them? By the profit made last year? By the number of employees? What factors should we consider when measuring the size of any business?

Learn

Watch this video and make notes.

WATCH – Measuring and Comparing Business Size (YouTube)

Read this summary file on how to measure the size of a business.

READ AND MAKE NOTES – Summary file 1.3.4

Read pages 44 to 46 of your coursebook and add to your notes on the ways to measure business size. Make sure you include the problems that arise when measuring business size.

Apply

Complete Activity 3.3 on page 46 of your coursebook.

Consolidate

Complete the activity.

Then update your glossary with the term capital employed.

Complete row four in the check your progress box on page 55 of your coursebook.