Reasons for staying small (3.2.4)

Question 1

While some firms grow what do others do intentionally?

Answer 1

Some firms intentionally choose to remain small

Question 2

What are some reasons why businesses stay small?

Answer 2

-More personalised service
-Respond quickly to changing customer needs/ preferences
-Unable to access finance for expansion
-Rapid growth can cause Diseconomies of scale which can be difficult to deal with
-Niche market can make very profitable
-Goal not profit maximisation but rather acceptable quality of life (satisficing)