A specialized custom-tailoring enterprise in a commercial hub continues to operate profitably alongside multi-national garment factories that mass-produce ready-made clothing. Which factor primary explains why this small-scale enterprise retains a distinct competitive advantage over large-scale manufacturers?
- The nature of the product demands direct personal interaction and individual customization, which cannot be efficiently standardized through automated mass production.Answer
- BThe small enterprise achieves superior technical economies of scale by purchasing raw materials in small, frequent quantities.
- CWorkers in small custom-tailoring firms suffer from acute monotony and skill decline due to excessive division of labor.
- DSmall-scale firms are completely exempt from paying factor rewards such as wages to labor and interest on capital.
Answer
The nature of the product demands direct personal interaction and individual customization, which cannot be efficiently standardized through automated mass production.
Small-scale firms survive and maintain a competitive edge when the product or service requires personal attention, flexibility, and customization. Large-scale assembly plants cannot easily adapt automated machinery to satisfy bespoke individual client preferences without incurring high re-tooling costs.
Step-by-Step Solution
Key Concept
Survival factors of small-scale enterprises alongside large-scale firms
Estimated Time:1m 30s