Fill in the gaps in the text below. The first letter of each word has been provided.

Relationship between size, risk and profit

In the 1970's and 80's size was very important to the successful business. Lar e or anisations sou ht to benefit from economies of scale in order to be more e!!!!!!!!!!"1# than the competition. $oday size is still very important in lobal i!!!!!!!!!!"%# and companies li&e 'oca('ola) *estle) 'orus and 'adbury +chweppes are some of the bi est in the world. ,owever) these companies have to accept that to stay bi they have to act small - i.e. they have to be f!!!!!!!!!!".# and to build the sorts of relationships with customers that we traditionally associate with small companies. /very enterprise must aim for the scale of p!!!!!!!!!!"0# which suits the business best. $his level of output is achieved when unit costs are lowest for the output produced. /conomies of scale come from a number of sources1 $echnical economies relate to usin techni2ues and e2uipment more effectively to produce lar e outputs. 3or e4ample) by developin a hu e superfactory it is possible to produce very efficiently. Lar e r!!!!!!!!!!"5# are able to reduce costs such as rate and rental char es per s2uare foot by sellin from lar e retail units. Lar e companies are also able to benefit from employin specialist mana ers. 'ommercial economies relate to bein able to buy and sell in vast 2uantities so as to spread out costs per u!!!!!!!!!!"6#. 7!!!!!!!!!!"7# economies are concerned with bein able to mar&et to very lar e audiences. 3or e4ample companies li&e 7c8onald's and 'oca('ola benefit from launchin a!!!!!!!!!!"8# campai ns with a lobal messa e. 3inancial economies are concerned with the ease of borrowin money and low cost of raisin c!!!!!!!!!!"9# for lar e when compared with small companies. Lar e scale producers are also able to spread their ris&s by producin in lots of mar&ets) and producin a ran e of different products.

Economies of scale
,owever) despite the advanta es of lar e scale operation there are also some diseconomies which provide some advanta es of bein small. +mall companies often supply lar e companies with c!!!!!!!!!!"10# and have the ability to provide specialist oods at low overheads. +mall firms are also important in areas such as haula e) a riculture) retailin ) buildin and professional services. In these areas it is possible to start with a relatively small amount of capital) ma&e rapid d!!!!!!!!!!"11#) compete with firms of similar size and provide for the personal re2uirements of customers. Lar e or anisations are more difficult to mana e and these inefficiencies are &nown as diseconomies of scale. $hese disadvanta es of lar e(scale production are an important factor in e!!!!!!!!!!"1%# many businesses to remain small. /conomies of scale are the a!!!!!!!!!!"1.# of bein lar e which enable bi companies to produce lar e outputs at low unit costs. 8iseconomies of scale result from bein too lar e or e4pandin too 2uic&ly.

Word transformation
Complete the table with the correct forms of the words given.

Noun industry

Adjective advanta eous fle4ible

Verb ((((((((((((((((((((( ((((((((((((((((((((( "fle4#

Adverb advanta eously

Person ((((((((((((((((((((( ((((((((((((((((((((( (((((((((((((((((((((

mar&etin production decide efficient retail advert9 !!!!!!!!!!!9 advertisin encoura e operation9 operations (((((((((((((((((((((

((((((((((((((((((((( decision(ma&er ((((((((((((((((((((( ((((((((((((((((((((( ((((((((((((((((((((( retailer

((((((((((((((((((((( (((((((((((((((((((((

Provide the opposites of the words below, using prefixes.

advanta e fle4ible productive efficient encoura e successful important able

- !!!!!!!!!!!!! - !!!!!!!!!!!!! - !!!!!!!!!!!!! - !!!!!!!!!!!!! - !!!!!!!!!!!!! - !!!!!!!!!!!!! - !!!!!!!!!!!!! - !!!!!!!!!!!!!

Relationship between size, risk and profit

In the 1970's and 80's size was very important to the successful business. Lar e or anisations sou ht to benefit from economies of scale in order to be more efficient than the competition. $oday size is still very important in lobal industries and companies li&e 'oca('ola) *estle) 'orus and 'adbury +chweppes are some of the bi est in the world. ,owever) these companies have to accept that to stay bi they have to act small - i.e. they have to be fle4ible and to build the sorts of relationships with customers that we traditionally associate with small companies. /very enterprise must aim for the scale of production which suits the business best. $his level of output is achieved when unit costs are lowest for the output produced. /conomies of scale come from a number of sources1 $echnical economies relate to usin techni2ues and e2uipment more effectively to produce lar e outputs. 3or e4ample) by developin a hu e superfactory it is possible to produce very efficiently. Lar e retailers are able to reduce costs such as rate and rental char es per s2uare foot by sellin from lar e retail units. Lar e companies are also able to benefit from employin specialist mana ers. 'ommercial economies relate to bein able to buy and sell in vast 2uantities so as to spread out costs per unit. 7ar&etin economies are concerned with bein able to mar&et to very lar e audiences. 3or e4ample companies li&e 7c8onald's and 'oca('ola benefit from launchin advertisin campai ns with a lobal messa e. 3inancial economies are concerned with the ease of borrowin money and low cost of raisin capital for lar e when compared with small companies. Lar e scale producers are also able to spread their ris&s by producin in lots of mar&ets) and producin a ran e of different products.

Economies of scale
,owever) despite the advanta es of lar e scale operation there are also some diseconomies which provide some advanta es of bein small. +mall companies often supply lar e companies with components and have the ability to provide specialist oods at low overheads. +mall firms are also important in areas such as haula e) a riculture) retailin ) buildin and professional services. In these areas it is possible to start with a relatively small amount of capital) ma&e rapid decisions) compete with firms of similar size and provide for the personal re2uirements of customers. Lar e or anisations are more difficult to mana e and these inefficiencies are &nown as diseconomies of scale. $hese disadvanta es of lar e(scale production are an important factor in encoura in many businesses to remain small. /conomies of scale are the advanta es of bein lar e which enable bi companies to produce lar e outputs at low unit costs. 8iseconomies of scale result from bein too lar e or e4pandin too 2uic&ly.

Word transformation answers

Noun advanta e industry fle4ibility mar&etin production decision efficiency retail advert9 advertisement9 advertisin encoura ement operation9 operations Adjective advanta eous industrial fle4ible mar&etin productive decisive efficient retail advertisin Verb ((((((((((((((((((((( ((((((((((((((((((((( "fle4# mar&et produce decide ((((((((((((((((((((( retail advertise Adverb advanta eously industrially fle4ibly ((((((((((((((((((((( productively decisively efficiently ((((((((((((((((((((( ((((((((((((((((((((( Person ((((((((((((((((((((( ((((((((((((((((((((( ((((((((((((((((((((( mar&eter producer decision(ma&er ((((((((((((((((((((( retailer advertiser

encoura in operatin

encoura e operate

encoura in ly (((((((((((((((((((((

((((((((((((((((((((( operator

Provide the opposites of the words below, using prefixes.

advanta e fle4ible productive efficient encoura e successful important able

- disadvanta e - infle4ible - unproductive - inefficient - discoura e - unsuccessful - unimportant - unable