3.2.4 - Reasons for Staying Small

Question 1

State the 4 points for Small Business Survival in Competitive Markets

Answer 1

• Product Differentiation and USPs
• Flexibility in Responding to Customer Needs
• Customer Service
• E-commerce

Question 2

Explain Small Business Survial in Competitive Markets - Product Differentiation & USP

Answer 2

• If a Business can Offer Customers something Larger Rivals Don’t, Survival is Possible
• people often Prefer to Buy Products that are Different from Majority of Others on Market ‘Stand Out’
• Adds Value to Product ; highlights QUality
• Brand Loyalty ; a Differentiation Strategy can Gain Customer Loyalty

Question 3

Explain Small Business Survival in Competitive Market - Flexibility in Responding to Customer Needs

Answer 3

• Small Businesses can Survive Alongside Larger Ones by Offering Customers Flexibility
• Small Nimble Business are Often Qucik in Identifying New Opportunities and Meeting Changing Needs of Customers
• Large Businesses are Hampered by Complex Organisational Structure Where Approval for a Business Decision can Take Days
• Small Firms aren’t constrained -> can Odten Make Changes to Customer Orders Even Though Start has been Made on Production
• Small Firms can often Respond to Changes in External Factors, e.g. Shifts in Customer Needs, Exchange Rates

Question 4

Explain Small Business Survival in Competitive Market - Customer Service

Answer 4

• High-Quality Customer Service -> Adds Value to Products –> allows Smaller Firms to Survive in Markets Dominated by Large Corporations
• a Lot Easier for Small Businesses to Offer Customers a Personal Service -> can Give Competitive Edge.
  because Customers Attach Value to Dealing Directly With Owner of Business, the Business can Charge Premium Prices
• Smaller Retailers have Geographical Advantage Over Larger Rivals , Local Businesses can Get to Know Customers

Question 5

Explain Small Business Survival in Competitive Market - E-commerce

Answer 5

• E-commerce helps Smaller Firms Compete More Easily with Larger Firms
• If Wesbite is Attractive and Professionally Presnted -> may Not be Possible to Distinguish Whether the Trader is Large or Small
• Barries to Entry are Small -> Possible to Set Up a Site for Little Cost
• Many Online Businesses Initially Run From Home –> Eliminates Need to Find Business Premises.