3.2.4 Reasons for Staying Small

One reason why small firms choose to remain small is that they offer a more personalised service and focus on building relationships with their customers.

• True

• False

What is the goal of many small firm owners?

• Profit maximisation

• Achieving a high volume of sales

• Satisficing - an acceptable quality of life

• Accessing finance for expansion

How can small firms thrive in niche markets?

• By achieving a high volume of sales

• By reducing overhead costs

• By focusing on mass production

• By accessing large-scale operations

What advantage does modern technology offer to small firms?

• Low cost access to market

• Access to finance for expansion

• Ability to achieve economies of scale

• Access to large market niches

What can be a disadvantage of rapid growth for small firms?

• Increased access to finance

• Diseconomies of scale

• Ability to respond quickly to changing customer needs

• Access to large market niches

What type of market does a niche product target?

• Mass market

• Small market

• Global market

• Emerging market

What is a characteristic of small firms that can work to their advantage?

• High volume of sales

• Access to large-scale operations

• Relatively small overheads

• Access to finance for expansion

What can technology do for small-scale and personalised products?

• Increase the cost differential

• Reduce the cost differential

• Increase the volume of sales

• Reduce the overhead costs