SMALL FIRMS Flashcards
(5 cards)
1
Q
What is the definition of Small firms?
A
This is one in which there is no middle management personnel. This means that there are hardly any supervisors or managers. The owner himself performs many of these duties. There may be few employees and a small asset base.
2
Q
What are the functions of a small firm?
A
- They supply goods and services that satisfy some demand.
- They provide employment in the community particularly in rural areas.
- They provide services that large firms are not willing to provide.
- They ensure that competition exists in the market, even to the larger firms.
- They identify niche markets that does not interest large businesses, e.g. nail care, beauty services, etc.
3
Q
What are the advantages of a small firm?
A
- There is less need for consultation when making decisions because the manager
or owner performs all the important functions. - They create employment and income especially in rural areas.
- They introduce new products and ideas in the market.
- They create competition to large firms which help keep prices down.
- Close communication exists between the owner and employees and among employees.
- It is easier to have good working relationship.
- Employees feel a personal involvement in the business.
- There is a closer relationship between employees and customers.
- They stay open for long hours and provide personal services.
- Without the small firm, many new ideas would not be tried out
4
Q
What are the disadvantages of a small firm?
A
- They usually lack experts or specialist workers to help them grow.
- The owners often find it difficult to get money from financial institutions.
- They are unable to serve their customers fully because of limited resources.
- They do not buy in bulk so they cannot enjoy paying lower prices. This affect the price they charge their own customers.
- The owner requires a wider range of management skills than his counterpart in a large organization.
5
Q
A
