Size and growth of business
| English | Chinese | Pinyin |
|---|---|---|
| revenue | 营业收入 | yíng yè shōu rù |
| turnover | 营业额 | yíng yè é |
| capital employed | 所用资本 | suǒ yòng zī běn |
| market share | 市场份额 | shì chǎng fèn é |
| inorganic growth | 外延增长 | wài yán zēng zhǎng |
| merger | 合并 | hé bìng |
| takeover | 收购 | shōu gòu |
| economies of scale | 规模经济 | guī mó jīng jì |
| niche | 利基市场 | lì jī shì chǎng |
| diseconomies | 规模不经济 | guī mó bù jīng jì |
| organic growth | 有机增长 | yǒu jī zēng zhǎng |
How big is big?
- Is a firm with 10 staff but huge revenue 营业收入 bigger than one with 200 staff? "Size" has several meanings.
- And once a firm exists, a central question is whether — and how — to grow.
Business case lab
Classify real decisions so the main business concept becomes concrete.
Which are ways to measure the size of a business? (Select all that apply.)
Employees, revenue and capital employed are standard size measures.
Measuring size
- Common measures: number of employees, revenue (sales turnover 营业额), capital employed 所用资本, and market share 市场份额.
- Each can give a different ranking — so the "best" measure depends on the purpose.
Business activity moves from raw materials through manufacture to services
Growth by taking over another company is:
Mergers and takeovers are inorganic (external) growth.
Opening new branches using retained profit is an example of:
Expanding from within is organic growth.
Growth from within the business, without merging, is called ______ growth.
Organic growth is internal; inorganic is by merger/takeover.
Organic vs inorganic growth 外延增长
- Organic (internal) growth: expanding from within — more outlets, new products. Slower but lower-risk.
- Inorganic (external) growth: mergers 合并 and takeovers 收购. Faster, but riskier and often expensive.
Integration joins firms: horizontal (same stage), vertical (supplier or customer), or conglomerate (unrelated)
Shops competing on a high street: the market a business operates in
A firm may choose to stay small to serve a specialist niche market.
Niche focus, personal service and control are reasons to stay small.
Why grow — and why stay small?
- Grow: lower costs (economies of scale 规模经济), more market power, higher profit.
- Stay small: serve a niche 利基市场, keep personal service, retain control, avoid diseconomies 规模不经济.
Worked example. A restaurant chain can grow organically by opening new branches, or inorganically by buying a rival chain overnight — gaining its sites and customers at once, but taking on its debts and culture too.
You've got it
- size is measured by employees, revenue, capital employed or market share
- organic growth 有机增长 is internal and steady; inorganic growth is by merger/takeover
- firms grow for economies of scale and power, or stay small to serve a niche