1. The digital economy and Small business

2. Task
Discussion points pg 16

3. The impact of the internet
eCommerce is the fastest growing retail market in Europe, sales grew by 15.8% during 2014!
eCommerce has provided many opportunities for businesses
But also many threats to established businesses, who have had to adapt in order to survive, and some have not, e.g. Blockbusters

4. Market information
The internet has rapidly increased awareness of consumers, as information in much more readily available
In the past buyers tended to know less about a market than the sellers, there was asymmetric information.
But the internet is changing this, in many ways
Search engines
Comparison sites
Consumer review sites

5. Internet can help with marketing
Viral marketing – encourages the spread of information and opinions about a product or service from person to person, particularly effective using online media.
Micro-marketing – A marketing strategy in which marketing efforts are focused on a group of highly- targeted consumers.

6. The role of small businesses
Numbers of large businesses are counted in the thousands, even in large countries
Numbers of small businesses are commonly counted in millions
Approximately half of UK output is produced by small and medium sized firms (employing less than 250 people)

7. Why do you think some businesses decide not to grow?
Why stay small?
On your whiteboard write down reasons you think that businesses may chose to stay small
Why do you think some businesses decide not to grow?
Extension Task:
Are there any disadvantages to staying as a small business?

8. Choosing to stay small
Entrepreneurs will sometimes choose to stay small
Reasons for choosing to stay small:
Be closely involved in all aspects of business – dealing with customers, suppliers, employees – better customer service
Small firm differentiation – niche markets – by focussing on a particular niche, there may not be sufficient demand to grow the business – there may be demand limits
Some satisficers are simply content as things are and feel no urge to change
Satisficer: people who are not attempting to maximise income, growth or any other individual objective. Satisficers target ‘good enough’ or satisfactory performance and lifestyle.

9. Technology
Many changes in technology favour large scale operations, but others can work to the advantage of small businesses.
The internet offers low-cost access to the marketplace for firms of any size
Small businesses can thrive e.g. ebay

10. Why has E-tailing become so popular?
E-tailing (less frequently: etailing) is the selling of retail goods on the Internet. Short for "electronic retailing”.

11. The Long Tail – what does this show?

12. Technology
In “The Long Tail” there are many markets where some consumers prefer to move away from mass produced items to something which more precisely meet their needs
Especially where technology reduces cost differential
Cost Differential = a difference in cost compared to rivals. Can be a lower cost advantage, due to efficiency of better technology
So modern technology can work in favour of small businesses through personalisation