Step ➊ : Introduce.

It is argued whether people prefer to buy from large firms or small firms. Several points need to be considered before coming to a conclusion.


Step ➋ : Discuss why people would prefer to buy from a small firm rather than a large firm.

There are several reasons people would prefer to buy from a small firm:

➤ 2.1 Small firms may be flexible and quick to respond to changes in consumer demand.

This is because they do not have to consult others. For example, a small, independently run, magazine shop will order titles for individual customers.

➤ 2.2 Small firms may provide a personal service and can adapt to particular customer requirements.

Smaller shops can adapt quickly to changing consumer tastes: for example, a small bakery may make more brown bread to cater for an increase in demand.

➤ 2.3 Small firms may be specialised and produce high-quality products.

For example, small shops can provide made-to-measure clothing and custom-made furniture. They tend to focus on smaller markets and may cater to specific tastes and for people with higher incomes.

➤ 2.4 Small firms may receive government subsidies enabling them to keep the price low and quality high.

Subsidies may help small firms lower their prices in order to compete with large firms.

➤ 2.5 Furthermore these firms are unlikely to experience diseconomies of scale

Small firms will not experience diseconomies of scale such as lack of communication, managerial diseconomies of scale or technical diseconomies of scale.


Step ➌ : Discuss why people would prefer to buy from a large firm rather than a small firm.

There are several reasons people would prefer to buy from a large firm:

➤ 3.1 Large firms may provide lower prices to consumers due to lower costs. This is because of economies of scale. For example, purchasing or bulk-buying economics of scale occur when the cost of raw materials falls as they are bought in large qualities.

➤ 3.2 Large firms may have better-known brands due to advertising encouraging customers to buy from them. Large firms tend to benefit from marketing economies of scale. Big firms tend to have a large advertising budget and therefore can spend large amounts of money on promoting their products.

➤ 3.3 Large firms may provide a wider variety of products. They may also provide better quality products and better after-sales service.


Step ➍ : Conclude

To conclude, consumers will more likely to buy from small firms for local and personalised services. For example, consumers may prefer to go to a local barbershop to receive individual service. However, consumers may be attracted by advertising and low prices of large firms in order to buy other types of products. For example, consumers would prefer to purchase from a supermarket rather than a local store because of lower prices and greater variety.