theme 3 : size of firms

0.0(0)
studied byStudied by 0 people
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/8

encourage image

There's no tags or description

Looks like no tags are added yet.

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

9 Terms

1
New cards

what are the 2 reasons large firms exist

  • economies of scale - drive down cost per unit as you get bigger

  • barriers to entry - brand recognition of businesses e.g. hoover is a brand but it’s become synoptic with the action

2
New cards

3 reasons small firms survive

  • average costs of production for a large scale producer may be higher than for a small company

  • barriers to entry may be low

  • small firms can be monopolists

3
New cards

lower costs explanation

  • a small business is likely to have a small number of employees

  • more flexible employees with general ‘learn on the job’ training

  • no HR, just talk to each other to discuss the jobs that need to be done each day

  • large companies need more departments e.g. HR, finance, training which increases costs

4
New cards

low barriers to entry explanation

  • may not be a dominant brand in that particular entry

  • so no barriers to entry

5
New cards

small firms can be monopolist explanation

  • no local competition

  • particularly if you good is more niche e.g. window glazing

6
New cards

why can small firms survive successfully in the hotel industry

  • location - they are often in better locations than hotels due to being smaller, also hotels will build on cheaper land (worse location)

  • parking - town houses have parking, hotels don’t always have parking

  • customer experience - unique, friendly experience

  • food - quality, home cooked breakfast

  • better local knowledge of the area

7
New cards

what factors have favoured hotel chains recently and will continue into the future

  • price - more likely to be cheaper, dynamic prices (price may change based on busyness e.g. cheaper on a weekday)

  • availability - more rooms so better availability

  • technology - more likely to use big technology, easier to book online, more popular for younger people

  • reviews - will have more online reviews you can read

  • consistent - you know wha you’re getting within the brand

  • customer experience - not everyone wants a more hands on experience, some prefer keeping to themselves

8
New cards

efficiency and size

  • is no direct correlation between the size of a firm and economic efficiency

9
New cards

how many businesses fail annually in the uk

  • 60% of new businesses fail after 3 years