CAIE IGCSE Business Studies 1.3.2 measuring business size
Practise business-size questions by naming valid measures and explaining why some measures mislead in different industries.
- Syllabus
- 2027–2029
- Course
- Business 0264
Exam points
- Identify valid size measures such as sales value, output volume or capital employed.
- Explain why employee numbers can mislead when firms use machines or part-time staff.
- Avoid using profit as a business-size measure when the syllabus excludes it.
1.3.2—The methods and problems of measuring business size question 1
[Maximum number: 2]
DNG provides electricity to 16 million customers. It is a limited company which means DNG's shareholders benefit from limited liability. DNG is planning to stop using coal to produce its electricity. Pressure groups had an influence on this decision. The Managing Director knows there will be an opportunity cost to making this change. She is considering the best way to communicate this important information to DNG's 6500 employees.
Identify two limitations of using the number of employees to measure the size of a business.
Limitation 1:
Limitation 2:
Award 1 mark per limitation.
Points could include:
- Does not account for capital intensive business / depends on method of production used
- Could have many part-time employees
- May give a different indicator of size to other measures used.
Other appropriate responses should also be credited.
Only award the first two responses given.
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