Firms
| English | Chinese | Pinyin |
|---|---|---|
| sole trader | 个体经营者 | gè tǐ jīng yíng zhě |
| partnership | 合伙企业 | hé huǒ qǐ yè |
| company | 公司 | gōng sī |
| shareholders | 股东 | gǔ dōng |
| limited liability | 有限责任 | yǒu xiàn zé rèn |
| economies of scale | 规模经济 | guī mó jīng jì |
| market share | 市场份额 | shì chǎng fèn é |
| merging | 合并 | hé bìng |
| niche | 利基 | lì jī |
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:
Their loss is limited to their investment.
A sole trader has unlimited liability for the business's debts.
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:
Larger scale spreads costs and lowers average cost.
When two firms join to form one, this is called a ______.
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:
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