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Homework answers / question archive / What would the macroeconomic effect be if most companies adopted the policy of selling only to companies as large or larger then them and buying from only from ones that are as small or smaller?
What would the macroeconomic effect be if most companies adopted the policy of selling only to companies as large or larger then them and buying from only from ones that are as small or smaller?
What would the small companies do? Not being able to buy from anyone bigger means that they have to make everything by themselves which is an awkward situation.
Actually, even larger companies would not be able to buy goods from capital intensive companies like fuel, flight tickets and cellphones connections. Companies like Chevron, Delta, and AT&T are bigger than all other companies. Would one then pick smaller of the lot? Sprint vs. AT&T, Delta vs. Virgin. The smaller one does not have the coverage, so most of the companies would have to deal with multiple providers which are more management work. The smaller companies are smaller because sometimes they are less efficient. Why would anyone want to encourage that? Why would one pick based on size? Cost is much better proxy for efficiency.