Sign up to access the complete lesson and track your progress!
Unlock This CourseLarge businesses are the giants of the business world. They employ hundreds or thousands of people, have massive turnovers and often operate across multiple countries. Think of companies like Tesco, Apple, or Unilever - these are all examples of large businesses that have grown from small beginnings to become household names.
Understanding large businesses is crucial for your iGCSE Business Studies exam, especially for Paper 2 multiple choice questions. These questions often test your knowledge of how large businesses operate, their advantages and challenges and how they differ from smaller enterprises.
Key Definitions:
Large businesses typically have complex organisational structures with multiple departments, layers of management and specialised roles. They often have significant market power, substantial financial resources and the ability to influence entire industries through their decisions and innovations.
Large businesses can take several different legal forms, each with its own advantages and requirements. The most common types you'll encounter in your exam are Public Limited Companies (PLCs) and multinational corporations.
PLCs are the most common form of large business in the UK. They can raise capital by selling shares to the public through the stock exchange. Examples include Marks & Spencer PLC, British Airways PLC and Vodafone Group PLC.
Can raise large amounts of capital through share sales, limited liability for shareholders and enhanced credibility with customers and suppliers.
Complex legal requirements, expensive to set up and maintain and potential loss of control if shares are widely distributed.
Minimum share capital of £50,000, must publish annual accounts and subject to strict financial reporting regulations.
Tesco started as a small market stall in 1919 but grew to become one of the UK's largest retailers. As a PLC, Tesco has been able to raise billions of pounds through share issues to fund expansion into new markets and countries. However, being publicly owned also means Tesco faces constant scrutiny from shareholders and must prioritise profit-making decisions.
Large businesses need complex organisational structures to manage their operations effectively. These structures help coordinate activities across different departments and ensure clear lines of authority and responsibility.
Most large businesses use a hierarchical structure with multiple layers of management. This creates a clear chain of command from the board of directors at the top down to front-line employees at the bottom.
Large businesses typically have senior management (directors and executives), middle management (department heads and regional managers) and junior management (team leaders and supervisors). Each layer has specific responsibilities and authority levels.
Large businesses enjoy several significant advantages over their smaller competitors. These advantages often help them maintain their market position and continue growing.
Large businesses can reduce their average costs by producing in bulk, negotiating better deals with suppliers and spreading fixed costs over more units of output.
Large businesses often dominate their markets, allowing them to influence prices, control distribution channels and create barriers for new competitors.
Large businesses can invest heavily in research and development, creating new products and improving existing ones to stay ahead of competitors.
Despite their advantages, large businesses also face unique challenges that can make them less flexible and responsive than smaller competitors.
Large businesses often struggle with slow decision-making due to complex approval processes, poor communication across different departments and difficulty adapting quickly to market changes.
Large businesses can be slow to respond to market changes because decisions must pass through multiple management layers. This can result in missed opportunities and delayed responses to customer needs.
Kodak was once a dominant force in photography, but the large company failed to adapt quickly enough to digital photography. Despite inventing the digital camera, Kodak's size and focus on traditional film made it slow to embrace the new technology, ultimately leading to bankruptcy in 2012.
When tackling Paper 2 multiple choice questions about large businesses, remember these key strategies:
Read each question carefully and identify the key business concept being tested. Look for keywords like "advantage," "disadvantage," "characteristic," or "example" to understand what the question is asking.
If you're unsure of the correct answer, eliminate obviously wrong options first. This increases your chances of selecting the correct answer from the remaining choices.
Large businesses, especially multinational corporations, have significant impacts on the global economy, employment and society. Understanding these impacts is crucial for exam success.
Large businesses contribute significantly to GDP, create employment opportunities and drive innovation through substantial R&D investments.
Large businesses often face criticism for their environmental impact, but many are now leading sustainability initiatives and green technology development.
Large businesses are expected to act responsibly towards stakeholders including employees, customers, communities and shareholders.
Unilever, a large multinational corporation, launched its Sustainable Living Plan to reduce environmental impact while increasing business growth. The plan includes goals to improve health and well-being, reduce environmental impact and enhance livelihoods across the value chain. This demonstrates how large businesses can use their size and resources to drive positive change.