3.2.4 Reasons for staying small

Question 1

What are the reasons for staying small?

4

Answer 1

• Product differentiation
• Flexibility in responding to customer needs
• Customer service
• Quality (batch production)

Question 2

Why is product differentiation a reason for staying small?

2

Answer 2

• Focused differentiation (Porter said most sustainable way of success)
• Perfect/protect 1 point of differentiation

Question 3

How will a smaller firm be more flexible at responding to customer needs?
2

Answer 3

• Small = fewer layers = decision makers closer to customers

- Reach managers faster, quicker response to changing taste

Question 4

How will a smaller firm have better customer service?

2

Answer 4

• Only delivered by ^motivated staff

- Staff part of close-knit workforce = understand their performance affects success of firm, ^motivating