This coursework I will look at whether large supermarkets are more competitive than a small corner shop. A large supermarket is judged by the size of its labour force, turnover and capital employed. Large supermarkets are usually more successful because of the economies of scale. Some of the economies of scale a firm can gain, as it grows larger. These internal economies of scale are called Technical, financial, managerial, marketing, buying and risk-bearing economies. Large firms can buy larger and more efficient machinery and equipment and this means a firm can produce more at a lower price.
Large firms can take advantage of production lines and divisions of labour. It’s cheaper for a large firm to store and transport goods in large warehouses and lorry’s that hold twice as much as smaller firms. Large firms can get larger loans at lower rates of interest because they have more assets that they can use in security. Large firms can afford to pay for specialised staff to manage different parts of their firm but smaller firms may have to do these tasks themselves. To advertise large number of products and bring the average cost down you have to have effective advertising.
Bulk buying is when a large firm can buy in large quantities and at lower prices. If there is a drop in demand larger firms suffer less than smaller firms because they sell a wider range of products in more areas. The reasons people go to large supermarkets like Tesco is that they have car parks for customers that travel by car to be able to park easily and use the facilities that supermarkets like Tesco have like toilets and cafes for customers who need a break from shopping. Home delivery is a service run by the supermarket for people who can’t get to a supermarket but can still be able to buy goods from them.
Also they have access for the disabled to make shopping as easy as possible. At the supermarket you can withdraw money from your account by using the cash machines that are provided. In the supermarket you can use your credit card to pay for your goods at the checkout instead of using cash. Supermarkets have a large variety and selection of goods for customers to choose from. The large turnovers that supermarkets have go towards advertisement on television, in the newspaper and magazines to attract customers to shop at their stores. Also some supermarkets are open 24 hours a day.
The disadvantages of supermarkets are that they can be very busy. Customers that don’t have a car find it to far away to travel to go to the supermarket. The advantages of a corner shop there is easier management because in a large supermarket communication between workers and management, can be very difficult. In a smaller firm people work harder because small firms are more likely to go bankrupt and so it is important that every worker knows how important it is. Smaller firms are much closer to each other so problems can be sorted sooner and this means fewer strikes.
Smaller firms can respond to a change in demand quicker than a larger firm. Some other advantages of smaller firms are they are a lot closer than supermarkets are. Corner shops are friendlier because you get to know the people who work there, so you could be able to keep a tab. Corner shops are convenient for elderly people who can’t get to a supermarket. Most corner shops specialize in certain products that you can’t get in the supermarket this is good if you need any specialized products you don’t need to far to get them. The disadvantages of corner shops are they don’t have a large variety of goods like a larger firm does.
They also don’t have facilities like a car park or toilets and you can’t pay by credit cards so if you don’t have any cash you wouldn’t be able to use a smaller firm. The prices of their goods are higher in price than in supermarkets. From the result of my questionnaire I have found out that: People prefer to go to the supermarket. People go to the supermarket for the value of the products The main advantage of a corner shop is the distance you have to travel. The disadvantage of a corner shop is the price of products. The disadvantage of a supermarket is the distance you have to travel.