Firms
Introduced| English | Meaning |
|---|---|
| sole trader/səʊl ˈtreɪdə/ | A business owned and operated by one person, usually without a legal separation between the owner and the business. |
| partnership/ˈpɑːtnəʃɪp/ | A business owned by two or more people who share its management, profits and responsibilities under an agreement. |
| company/ˈkʌmpəni/ | company |
| shareholders/ˈʃeəhəʊldəz/ | People or organisations that own shares in a company. |
| limited liability/ˈlɪmɪtɪd ˌlaɪəˈbɪlɪti/ | A legal arrangement limiting owners' responsibility for business debts to their investment or another specified amount. |
| economies of scale/ɪˈkɒnəmiz ɒv skeɪl/ | Falls in average production cost as the scale of output increases. |
| market share/ˈmɑːkɪt ʃeə/ | A business's sales as a proportion of total sales in its market, measured by value or volume. |
| merging/ˈmɜːdʒɪŋ/ | merging |
| niche/niːʃ/ | niche |
From market stall to multinational
- Some businesses are one person with a van; others employ a hundred thousand people across the globe.
- Their legal form and their size shape what they can do.
Firm objective lab
Classify real firm decisions by the objective they reveal.
Limited liability means that, if a company fails, shareholders:
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Their loss is limited to their investment.
A sole trader has unlimited liability for the business's debts.
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A sole trader is personally liable, unlike a company shareholder.
Types of business
- Sole trader 个体经营者: one owner, easy to set up, unlimited liability.
- Partnership 合伙企业: a few owners share capital and risk.
- Company 公司: owned by shareholders 股东, with limited liability 有限责任 (they can lose only what they invested).
In a competitive market many firms sell similar goods, so each must keep prices low and quality high to win customers
A main reason firms grow larger is to gain:
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Larger scale spreads costs and lowers average cost.
When two firms join to form one, this is called a ______.
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A merger (or takeover) is external growth.
Why firms grow
- Bigger firms gain economies of scale 规模经济 — lower average cost — and a larger market share 市场份额.
- They grow internally (more output) or by merging 合并 with / taking over other firms.
The three types of integration: horizontal (same stage), vertical (supplier or customer), conglomerate (unrelated)
Small firms are most likely to survive where:
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Local, niche or personal-service markets favour small firms.
Why some stay small
- Small firms survive where markets are local, demand is niche 利基, or personal service matters.
- Some industries simply don't reward size.
Limited liability protects owners, not the firm. If a company fails, shareholders lose only their investment — their personal homes are safe. A sole trader has no such shield.
You've got it
- business forms: sole trader, partnership, company (with limited liability)
- firms grow for economies of scale and market share, internally or by merger
- small firms survive in local, niche or personal-service markets