ZIMSEC A Level · Business Studies · Form 5
Legal structures
- Sole trader and partnership: unlimited liability, easy to set up, limited finance.
- Private limited company (Pvt) Ltd and public limited company (listed on the Zimbabwe Stock Exchange): limited liability, separate legal entity, more finance, but more regulation and possible loss of control.
- Cooperatives, franchises and joint ventures.
Measuring size
Number of employees, revenue, market share, capital employed or market capitalisation.
Growth
- Internal (organic) growth: new products, markets or branches – slower but less risky.
- External growth: mergers and takeovers.
- Horizontal integration: same industry, same stage (two banks merging) – economies of scale, more market share.
- Vertical integration: different stages – backward (towards suppliers) or forward (towards customers), securing supplies or outlets.
- Conglomerate integration: unrelated industries – spreads risk.
Economies and diseconomies of scale
- Economies: purchasing (bulk buying), technical, financial (cheaper borrowing), marketing and managerial.
- Diseconomies: poor communication, low motivation, coordination problems.
Small businesses
They provide jobs, competition, innovation and flexibility, but face finance and scale problems. Government and agencies such as SMEDCO support SMEs.
Exam tip: Link each type of integration to a clear benefit and risk for the specific business in the case.
Check yourself
- Give one example of backward vertical integration.
- Name two economies of scale.
- Why might a business choose organic growth rather than a takeover?
Show answers
- e.g. a dairy processor buying dairy farms (moving towards its suppliers).
- Any two: purchasing, technical, financial, marketing, managerial.
- It is less risky, keeps control and culture, and avoids integration problems (but is slower).
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