Classifications of businesses

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  • Clasification of businesses
    • Stages of production
      • Primary
        • Involves extracting raw materials eg farmers
      • Secondary
        • Uses raw materials to manufacture goods eg factories
      • Tertiary
        • Provides a service for its customers e.g. tescos
    • How can the size of a business be measured?
      • Sales turnover/ sales income/ sales revenue
      • Gross profit
      • Net profit
      • Number of employees
        • Why can this be misleading?
          • Capital intensive businesses have less employees
          • Labour intensive businesses have more employees
    • What are the two types of business growth?
      • Internal
        • More staff are hired and equipment
      • External
        • Where a business merges with or takes over another organisation
    • Economies of scale
      • The advantages gained from a business getting bigger. The cost of producing each product fails
    • Diseconomies of scale
      • The disadvantages gained from a business getting bigger. The cost of producing each product rises
    • Types of economies of scale
      • Technical
      • Managerial
      • Financial
      • Purchasing
      • Marketing
      • Risk bearing
    • Types of diseconomies of scale
      • Coordination diseconomies
      • Communication diseconomies
      • Motivation diseconomies

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