Optimal Size Of A Firm :: essays research papers

Optimal Size Of A FirmThe optimum size of a firm is a very(prenominal) subjective idea. The ways in whichsize can help or hinder a firm vary from which angle you a looking at thesituation from. Size can have its benefits and its drawbacks, and each firm willhave its own benefits and drawbacks that come from either increasing in size, orstay weakened, and these will depend on the market in which the firm is in,the current economy, and in some cases the preferences of the manager(s).For example a small firm may be small for many reasons. It may be smallbecause it has just started out in clientele, and still has relatively littlefunds, so although the owner/manager may have aspirations of the businessgrowing, at the present time, his main concern would be keeping the businessafloat. Another small business may stay small due to the preference of themanager/owner, for example a corner newsagents shop may remain a small retailbusiness as the owner is making a profit from the business that he findsacceptable, and does not want the hassle of either expanding his currentbusiness, setting up new shops, or fetching over another business.The size of a business does however depend a great deal on the marketwhich it is in. For example a business which makes specialist goods, or catersto only a very small number of people, will not be able to grow beyond thecapacity of that market. This content that the optimum size for a business in amarket with little harvest-festival and only a small number of prospective customers wouldbe large enough to serve as many customers as it had market share for, but smallenough to ensure that they dont over produce.If there is a fairly large market for the product/service that a companyis providing, then there is likely to be a large amount of challenger in themarket. This means that it would be fairly hard for the company to grow in thatmarket unless they did one of three things. Firstly they could come up with abetter and cheaper pro duct then the rest of their competitors, if theircustomers noticed this then the customers would choose their product over theircompetitors, leading to growth in the company (although internal growth can beone of the slowest, and sometimes one of the most costly methods of growth).Secondly the company could invest money into giving themselves a recognisable punctuate name, although this can be a costly procedure, and can take a great deal