Measuring Success
Business: Edexcel IGCSE, topic 1.8.1
Measures of a Business' Success
A business' success can be measured in various ways. These include:
Revenue and market share
- Higher levels of revenue can be used to measure success.
- This means that overall income is higher.
- Gaining greater market share can also be used to gauge success.
- Market share means the proportion of the potential market which a single business holds.
- E.g. if 20% of the market consumes a certain company's products. That company will have 20% market share.
Profit
- Rather than focus on revenue, a company may look at profitability to gauge success.
- This is because considering revenues ignores considering costs.
- Profit considers both revenue and costs. It measures how much money shareholders take home.
Growth
- Growth is usually measured by increased revenue and market share.
- A company can grow in several ways.
- Launching new products.
- Opening new stores.
- Acquiring or merging with another company.
- Increasing production capacity.
Satisfaction
- The success of a company could be measured through:
- Customer satisfaction - how happy customers are with the product they receive and their interactions with the company.
- Owner satisfaction - how happy the principal shareholders are in the company's performance.
- Employee satisfaction - how happy employees are when working for their employer.
Test yourself on Measuring Success
What signifies that the overall income of a business has increased?