Reasons for Staying Small (Edexcel A Level Business)

Small Business Survival in Competitive Markets

• Many firms start small & will grow into large companies or even multi-national corporations (Amazon started in a garage)

• While many firms grow, others do not or they intentionally choose to remain small

Reasons Why Small Firms Exist

• Many changes in technology favour large scale operations but others can work to the advantage of small firms

• The Internet offers low cost access to market for many firms

• With effective use of technology to cater for the precise needs of small market niches, small firms can thrive

• This is especially true where technology reduces the cost differential between the mass produced and the niche product

• Thus modern technology can work in favour of the small-scale and personalised rather than the mass produced and impersonal

• Niche markets can be targeted profitably by small firms that have relatively small overheads and do not need to achieve the volume of sales required by larger competitors