c) Constraints

c) constraints on business growth: size of the market, access to finance, owner objectives, regulation

constraints to business growth

market size

• less marketing

• weaker branding

• low product diversification → less consumers

access to finance

• greater perceived risk

  • owners have less financial literacy

  • less predictable profit flow

• limited access to finance

  • lack the asset requirements to receive loans

  • loans received typically have higher interest rates

owner objectives

• satisficing

  • satisfaction → profit < PML

  • comfortable/low-stress working environment

  • low risk-taking/stable market position

regulation

• restricting monopolies

  • predatory pricing + tying agreements + exclusive dealing = illegal

• restricting the sale of demerit goods

  • minimum price + indirect tax