Initially, most entrepreneurial firms choose to compete within a narrow target market for the following reasons:

• Inadequate capital. Many firms lack adequate capital to operate in the international market in the earlier stages of their operations. Many financial institutions are not willing to fund startups. Thus this firm opts to act in a narrow market.
• Lack of specialized professional. Operating in a massive market, a company needs to have a team of skilled professionals with the right skills and experience. Most firms in the initial stages lack the capacity to higher professional as an attempt to keep their wage rate low.
• Inadequate knowledge of the market. Most entrepreneurs will venture into a business without full knowledge of the market. Therefore they opt to operate under a narrow target market as a way of testing the market.