CH 19 Large & Small firms

Question 1

What are the advantages of being a small firm?

Answer 1

-More flexibility
-They can provide personal service
-Lower wage costs
-Better communication
-Innovation

Question 2

What are the disadvantages of being a small firm?

Answer 2

-Higher costs
-Lack of finance
-Difficulty in attracting quality staff
-Vulnerability

Question 3

What are the advantages of being a large firm?

Answer 3

-Enjoying Economies of scale
-Market Domination
-Large scale contracts

Question 4

What are the disadvantages of being a large firm?

Answer 4

-Diseconomies of scale
-Miscommunication
-Poor motivation

Question 5

Why would firms want to grow?

Answer 5

-Better access to finance
-Access to Economies of scale
-To spread out risks

Question 6

Why would firms want to stay small?

Answer 6

-Due to the nature of the market
-Due to the size of the market
-To serve a particular niche
-The aims of the entrepeneur
-Lack of finance

Question 7

What is a niche market?

Answer 7

A smaller market, usually within a larger market or industry