IGCSE Economics Paper-2: Specimen Questions with Answers 7 - 7 of 100

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In an economy there are many large firms. But small firms remain small.

Question 7 (2 of 5 Based on Passage)


Describe in Detail


Why small firms cannot become large firms?


A company՚s fundamental objective is to grow and maximum profit. But growing and prospering requires an intensive dedication and focus such change is not easy to acquire and to build a business requires a lot of things.

Reasons Why a Small Business Can Never Grow Are –

  • Lack of capital. If a businessman does not have sufficient capital to invest the business will either fail to grow or grow at a very slow pace.
  • If a business has competitors in the market and the sales team of small businesses is not a strong one then a business finds it hard to prosper.
  • Most businesses fail to understand what their customers want. Lack of knowledge of customers want. Unfortunately, most businesses fail that fails to understand what and why people want to buy.
  • Poor administration and management of production and marketing techniques lead to the slow growth or no growth of the small business.
  • The product that a firm is selling may be outdated or out of fashion for which at present there is no demand in the market. Change must be done by the businessmen in the product to meet the current needs of the customers.
  • When a firm doesn՚t have a picture of where it wants to be in the future might affect the future growth of the firm. Having a vision is very important for the growth of the firm.

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