3.1.1 Sizes and Types of Firms

How do Small Firms survive?

• They can act as the supplier, often in areas such as tech

• They can specialise in niche/bespoke products

• Most look to satisfice not maximise profits

• Online markets can be used to reach a broader range of customers

Why do firms stay small?

• Product differentiation and having a unique selling point

• Flexibility for customers needs

• Higher standard of customer service and products

What is the principle agent problem?

• Principle - owner, someone who has large stake equity

• Hires an agent - Such as a sales manager

• Managers may have different objectives than the owners, such as revenue maximisation

What are public sectoe organisations?

• Owned by the government either partly or fully

• Example - Met office ad British Nuclear Fuel Plc

Examples of Privitisations

• British Airways

• British Gas

What is privitisation?

Its the transfer of assets from the public to private sector

What are not-for-profit Organisations?

• Producer co-ops are owned and run by their members (eg/. the supermaket co-op)

• Social enterprises are not-just-for-profit, ad aim to help a social problem eg/. Big Issue and Eden Project in Cornwall