FACTORS THAT DETERMINE THE TYPE OF BUSINESS UNIT

FACTORS THAT DETERMINE THE TYPE OF BUSINESS UNIT Availability of capital. The ownership of the business outfit whether private or public ownership.The nature of the business the proposed business unit is to carry out.

The objective of the proposed business whether to maximise profit or to ret social services. The pay back period. The return on investment.

FACTORS THAT DETERMINE THE SIZE OF A FIRM The market: The size of the market a firm’s product influences its size, market is small in terms of effect demand, the operation of the firm is bound to be small.

Capital: When it is difficult to obtain the necessary capital for the formation of a large firm or expansion of existing one, the firm is bound to remain small,

Entrepreneurial ability: Ability to undertake risk and to manage large scale business is an important factor that determines the size of a firm. The size of such firm depends on the knowledge and experience needed for planning the operation.Technical nature of product or service: Firms producing perishable agricultural goods tend to produce to satisfy only local markets. They therefore tend be small scale producers.Stages of development: Some firms are because they have just been shed. Given time, they may grow expand.Government policy: When government is ready to assist firms, it helps to determine the size of operation.Available technology: Available technology is another key determinant of the size of a firm.

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