i. Size of market: where the market served is small, it can be best served by a small firm.
ii. Nature of the product: in some cases, nature of the product may limit mass production, for example if one is offering personal services like hair dressing, he/ she may attend to one person at a time.
iii. Flexibility of the firm: where the proprietor intends to maintain flexibility of the business so as to take advantage of any new opportunity, he may wish to maintain a small firm.
iv. Rising cost of production: where production cost rise too fast such that dis-economies of scale set in very early, the firm may continue being small.
v. Legal constraints: where the law restricts growth of a firm, the existing firms have to continue being small.
vi. Need to retain control: where the owner wishes to retain control and remain independent, he may wish to retain a small firm.
joseph rimiru answered the question on December 30, 2017 at 06:36
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