Author Question: Identify and describe two opportunities and two threats to the success of small ... (Read 107 times)

RODY.ELKHALIL · **on:** Jul 14, 2018

Identify and describe two opportunities and two threats to the success of small businesses.

Question 2

What is the significance of the name preferred stock?
A) It is the type of stock that most investors would rather have.
B) Its claims on dividends are paid before those of common stock.
C) The overall return on preferred stock is higher than that on common stock.
D) This stock is available only to select individuals associated with the company.
E) This stock provides the most powerful voting rights.

akemokai · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

Most small businesses enjoy a number of advantages as they compete for customers. But they also must defuse a range of daunting potential threats in order to succeed long term.
Opportunities:

Market Niches: Many small firms are uniquely positioned to exploit small but profitable market niches. These sparsely occupied spaces in the market tend to have fewer competitors because they simply aren't big enough-or high enough profile-for large firms. They nonetheless offer more than enough potential for small, specialized companies.

Personal Customer Service: With a smaller customer base, small firms can develop much more personal relationships with individual customers. The personal touch can be especially beneficial in some foreign markets, where clients prize the chance to deal directly with top management.

Threats:

High Risk of Failure: Starting a new business involves risk-a lot of risk-but the odds improve significantly if one makes it past the first five years.

Lack of Knowledge and Experience: People typically launch businesses because they either have expertise in a particular area-like designing websites or cooking Vietnamese food-or because they have a breakthrough idea-like a new way to develop computer chips or run an airline. But in-depth knowledge in a specific area doesn't necessarily mean expertise in running a business. Successful business owners must know everything from finance to human resources to marketing.

Answer to Question 2

B