Measuring Business Success (Edexcel IGCSE Business)
Exam board Pearson Edexcel · IGCSEUpdated 2025-06-23
Ways to measure business success
Spec point —
1.8.1· Financial vs Non financial
-
A successful business is considered to be one that achieves its objectives
- Business success can be seen in both financial and non-financial measures
Financial and non-financial measures of success
Business success can be something as simple as making a profit and achieving customer satisfaction
Financial Measures of Success
Spec point —
1.8.1· Revenue, market share, profit
- Financial measures are often the key performance indicators of the business
Financial measures of success
| Financial measure | Explanation |
|---|---|
| Revenue | - Income received from selling goods and services is compared over time and against competitors - An increase in revenue suggests that a business is growing and its decision-making is effective |
| Market share | - Sales of the company are measured as the percentage of total sales in an industry - Growth in market share over time can help to improve a businesses market position and increase its competitiveness |
| Profitability | - The proportion of sales converted to profit is compared over time and against competitors - A high profit margin means that the business can cover its costs, reinvest profits to grow and reward investors |
| Business growth | - The opening of new outlets or production facilities or an increase in the size of the workforce suggests business growth - Growing businesses can take advantage of economies of scale and are likely to become better-known |
| Shareholder satisfaction | - Shareholders are most likely to be satisfied when share prices and dividends are increasing - A rising share price occurs when a business is increasing profits or is considered to have potential to grow - Businesses that generate healthy profits may choose to increase dividends for shareholders |
Exam Hint You may need to carry out calculations to compare the success of a business over a given period of time
Percentage change is one way to do this
To calculate percentage change, use the formula
Non-financial measures of success
Spec point —
1.8.1· Customer, Employee, shareholder satisfaction
- Businesses also measure their success on how well they have achieved non-financial objectives
- These objectives are often particularly important to public sector organisations, charities and other non-profit organisations
| Non-financial measure | Explanation | Example |
|---|---|---|
| Customer satisfaction | - Positive reviews and recommendations from customers indicate that a business is meeting this objective - The number of returning customers is an indication of customer satisfaction | - Last Ottoman Cafe & Restaurant in Istanbul is rated as one of the city's top five restaurants on Tripadvisor |
| Employee satisfaction | - Low levels of staff turnover, high labour productivity and large numbers of applications for job vacancies indicate that a business is meeting this objective | - In 2023, financial services business Groupe Hexagone was rated by employees as one of France's best places to work |
| Owner satisfaction | - Business owners often have personal objectives they want the business to achieve - If a business is providing a good service, allows an owner to earn a satisfactory income, or achieves recognition, these personal objectives may be met | - Save My Exams' founder, Jamie wanted to create a platform filled with reliable, high-quality resources so that students could revise effectively whilst building confidence |
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