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 Form 3 Business Studies: Size and location of a firm lessons

Criteria of determining the size of the firm.

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Answer Text:
Criteria of determining the size of the firm.
- The size of the firm is determined by various factors:
- Volume of total output and sales – The larger the output and sales, the larger the size of a firm.
- The number of employees – The larger the number of
employees in terms of labour force and their level of skills, the larger the size of the firm.
- The types of technology used – Whether rudimentary, high-level or modern, labour intensive or capital intensive. The more capital intensive, the larger the size of a firm.
- The total capital invested – The greater the total capital outplays and inputs of other factors invested in the firm, the larger the size of the firm and vice versa.
- Type of product and the production process used e.g. mass production of motor vehicles and electronics equipment is carried out by large scale firms.
- The size of plant and premises – The larger the plant and premises, the larger the size of the firm.


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