Size Of Firms

Question 1

Why do small firms survive (5)

Answer 1

Barriers to entry = low
Small firms can be monopolists = niche market
Keep costs low
Avoid DoS
Remain exclusive (BETTYS)

Question 2

Why do firms want to grow (2)

Answer 2

Exploit EoS
Increase market power and control

Question 3

Issues of growth (4)

Answer 3

DoS
Signal to others to enter = abnormal profits
Reduced quality and exclusivity
PAP = divorce of ownership from control

Question 4

Example of PAP (2)

Answer 4

Amazon = fraud
10m was stolen by a manager

Question 5

What is divorce of ownership from control (2)

Answer 5

Larger firm = owners will instead appoint directors and managers to run it for them
PAP

Question 6

Non profit org (2)

Answer 6

Do not have profit making as a goal = use surplus profits to achieve their social aims
Run by individuals or companies

Question 7

Profit org what (2+)

Answer 7

Aim to make a profit
They are owned by shareholders that want to max their personal returns from the activities of the business