Identify the Difficulties of Defining a Small Firm

Identify the difficulty in defining a sharp upstanding. Discuss the reasons for and against withstanding the down in the mouth firm sector. I depart begin this essay by discussing the problems with defining a small firm and exit indeed go on to respect the advantages and disadvantages of the government supporting the small firm over the gigantic firm. The first term that I will be discussing is prospect Cost, this is the thing that you cant have in establish to have something else, in context it is that you cannot support a large firm if you support a smaller firm. My second rendering is Economies Of Scale; this is the theory that if you buy in bulk then the price per unit will be little. My third interpretation is the theory of circular give ear of income, this is that the money paid by a personal line of credit to its workers in wages will then be put back into local business by the purchase of goods and services, see fig 1. My final commentary is trade deficit; this is when a countries imports are higher in value than that of its exports. [pic] Fig 1: Showing the circular flow of income (Sloman, J, 2004, Essentials Of Economics) When looking at the question of whether the government should primarily support small firms over their larger counterparts we must first be clear about exactly what a small firm is.

There are various different definitions of small firms yet they are all very different which can incur problems. One definition is in the Dictionary Of Business and states that to do as a small business you must look the following criteria; A balance sheet total of less than £1.4m, a annual turnover of less than £2m and an average material body of employees of less than 50 (Oxford Dictionary Of Business, 2003). Another is from the Companies Act, 1985 that states that to qualify as a small business you must satisfy devil of the three criteria; Balance sheet total of less than £2.8m, swage less than £5.6m and less than 50 employees (http://sbs.gov.uk, accessed on 14th work on 05). From... If you want to get a full essay, order it on our website: Orderessay

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