IGCSE Business Studies

1.3.2 The methods and problems of measuring

size
 Learning Outcomes
• Students know the different methods of measuring a
businesses size
• Students are aware of possible problems when classifying a
businesses size
• Students understand the limitations of measuring business
size.
 Measuring business size
• Which is the biggest car Global Turn- Market
company in the world? vehicle over capitalisation
sales (m) ($bn) * ($bn)
• Business size can be
measured in many ways General Motors 8.5 185 16.6
Toyota 7 150 227.9
– Sales turnover
– Output Ford 6.5 165 13.4

– Employees Volkswagen 5 98 39.2

– Factories DaimlerChrysler 4.5 170 62.5

– Market capitalisation PSA/Peugeot Citröen 3.5 60 15.0

Hyundai Automotive 3.1 40 1.0

Nissan 3 65 54.0
Honda 2.9 77 67.7

Renault 2.4 42 34.0

* Stock market value on 18/12/06. Data from www.bloomberg.com

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 Task – motorcycle report
• You are a business consultant asked by the motorcycle manufacturer
Hanbo to write a brief report to the Managing Director comparing the
company’s size with three others in the same industry:
– Place the four companies in order of size for each of the three measures.
– Give an overall order for the four companies. Explain your reasoning
– Conclude by explaining why is it difficult to state a definite order of size

Workers Capital employed Sales

employed (£ million) (£ million)
Hanbo 20,000 50 100
Triumf 5,000 150 200
Dukati 3,000 60 150
BWM 15,000 180 150
* Note: The data is of course completely fictional!
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So…What Are the Problems When
Trying to Measure Business Size?
 Research Task
• Choose a Market
• Identify the 3 largest companies in that market
• How did you measure them?
• Did you have any problems?
 Limitations
Method Limitation
Number of • Machines can replace employees
Employees • Level of skill not accounted for

Sales • Does not account for promotions

Market Share

Land Size Technological developments allow for

virtual business

Market Share prices vary daily

Capitilsation
 Quiz
• Which is the larger business:

• Google or Toyota?
• BSM or ISM?
• Globe or Smart?
• Amazon or WallMart?