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Unlock This CourseLarge businesses are the giants of the business world - think of companies like Tesco, Apple, or McDonald's. These businesses employ hundreds or thousands of people and have huge turnovers. Understanding how they work is crucial for your iGCSE Business exam, especially the short answer questions in Paper 2.
Key Definitions:
Large businesses typically have complex organisational structures with many departments, employ hundreds or thousands of people, operate across multiple locations and have significant market power. They often dominate their industries and can influence market prices.
Large businesses can take different forms, each with unique features that affect how they operate and make decisions.
Most large businesses in the UK are PLCs. These companies sell shares to the public through the stock exchange, allowing anyone to become a part-owner of the business.
Can raise large amounts of capital by selling shares, limited liability for shareholders and easier to expand through acquisitions.
Loss of control by original owners, pressure from shareholders for short-term profits and expensive legal requirements.
Tesco PLC, Marks & Spencer PLC, British Airways PLC and Vodafone Group PLC.
Tesco started as a small market stall in 1919 but became a PLC in 1947. Today, it's the UK's largest retailer with over 300,000 employees worldwide. It operates in multiple countries and has diversified into banking, insurance and online services. This shows how PLCs can use their size and capital to expand into new markets.
Size brings many benefits that small businesses simply can't achieve. Understanding these advantages is essential for exam success.
This is probably the biggest advantage large businesses have. As they produce more, the cost per unit falls, making them more competitive.
Purchasing: Large businesses can buy raw materials in bulk at discounted prices. Technical: They can afford expensive, efficient machinery. Financial: Banks offer better loan rates to large, established businesses. Managerial: They can employ specialist managers for different departments.
Large businesses often dominate their markets, giving them significant power over suppliers, customers and even competitors.
However, being big isn't always better. Large businesses face unique challenges that can make them less efficient than smaller competitors.
When businesses become too large, costs can actually start to increase per unit produced.
Messages get lost or distorted as they pass through many management layers, leading to mistakes and delays.
Employees may feel like small cogs in a big machine, reducing their motivation and productivity.
Complex approval processes mean decisions take longer, making the business less responsive to market changes.
Kodak was once a photography giant but failed to adapt quickly to digital cameras. Despite inventing the digital camera in 1975, the company was too large and bureaucratic to change its business model fast enough. This shows how large businesses can struggle with innovation and flexibility, leading to their downfall when markets change rapidly.
Large businesses affect many different groups of people, known as stakeholders. Understanding these impacts is crucial for exam questions.
Employment: Create thousands of jobs with good career prospects. Tax Revenue: Pay significant corporation tax to fund public services. Innovation: Invest heavily in research and development. Supply Chain: Support many smaller supplier businesses.
Paper 2 short answer questions about large businesses typically ask you to explain, analyse, or evaluate specific aspects. Here's how to tackle them effectively.
Use the PEE structure: Point, Explain, Example. Make 2-3 clear points, explain each one fully and use relevant business examples. Always link back to large businesses specifically.
Use business terminology: Words like "economies of scale," "market share," and "stakeholders" show understanding. Give specific examples: Name real businesses like Amazon, Google, or Unilever. Consider context: Think about the industry, country, or time period mentioned in the question. Structure answers clearly: Use paragraphs and logical flow to make your points easy to follow.
The best way to prepare for Paper 2 is through regular practice with past papers and mark schemes. Focus on understanding what examiners are looking for in each type of question.
Create mind maps linking large business concepts, practice explaining advantages and disadvantages in your own words, learn specific examples of large businesses in different industries and time yourself answering past paper questions to build exam confidence.