Reasons for staying small 3.2.4

Question 1

What are the main reasons for staying small?

Answer 1

• Personal service
• Owners preference, e.g happy with profits
• Flexibility and efficiency
• Lower costs
• Low barriers to entry

Question 2

How do small businesses survive in competitive markets?

Answer 2

• Product differentiation and USP
• Flexibility in responding to customer needs
• Customer service
• E-commerce

Question 3

Product differentiation and USP:

Answer 3

Small businesses can offer customers things that their larger rivals do not. People often buy products that are different from the majority of others on the market. Products that ‘stand out from the crowd’.

e.g

• Small specialists may be able to offer more product choices than larger rivals.

Question 4

Flexibility:

Answer 4

Small businesses= quick in identifying new opportunities and meeting the changing needs of customers. Large corporations are often hampered by complex organisational structure, where approval for a decision can take a long time.

Question 5

Customer service:

Answer 5

• Offering high-quality service = a way of adding value. A competitive edge in the market, allows survival in markets dominated by large corporations
• Personal service, dealing directly with the owner = add a premium price.

-Small retailers have a geographical advantage, local to customers = convenient.

• Communication may be more effective, easy to contact those in authority.
• Can build relationships with customers. usually closer, social media, customer feedback.

Question 6

E-commerce:

Answer 6

Developments in technology mean it is easy to set up an online business. Helps smaller firms to compete easily with larger firms. Small barriers to entry, set up the site for little cost. Eliminates the need to find business premises.

e.g

• Online shops, small retailers
• Social media consultants -specialists to operate social media accounts