chapter 5 - small firm competition

Question 1

x - inefficiency

Answer 1

the waste of resources incurred when a firm has little incentive to control costs. Due to the lack of competition or a low PED

Question 2

5 reasons why forms remain small

Answer 2

1. lifestyle choice of owners
2. desire to keep overhead costs to a minimum
3. avoiding the costs involved in meeting regulatory burdens associated with bigger businesses
4. maintaining quality control
5. keep a high level of flexibility and adaptability

Question 3

8 ways to differentiate

Answer 3

1. branding
2. USP
3. pricing
4. quality
5. product mix
6. location
7. R and D / design
8. customer service

Question 4

8 benefits of being small

Answer 4

1. niche markets
2. charge higher prices and gain more contribution per unit
3. establish relationships with consumers
4. satisficing objectives and social objectives more likely
5. flexibility in meeting consumer needs
6. focused differentiation and competitive advantage
7. exploits smaller marjet needs
8. more focused customer service