Our Chapter 6 discussions will focus on working capital and the financing decision, tell us your reaction to the following:

In addition to the companies' high public recognition, they have good sales, an excellent turnover growth year on year as well. Moreover, both companies' movement of the inventory and collection from credit sales should be decent. Staying over the good accumulated earnings over the years, the large firms are less reliant on the outside sources of funds or due to such accumulated reserves. Furthermore, the fund availability is always making a positive impact from banks and other financial institutions.

Nevertheless, due to the difference between large and small firms, there is still a possible competitive advantage with the large firms over the small once. Based on my observations of the market, small firms cannot attract customers because of the shortage of advertisement and customer coverage. In contrast, large firms have goodwill among the customer, and their presence exists everywhere, thereby providing extensive customer coverage to that of other firms.

As a large firm, there is a duplex advantage because of its ability to efficiently manage the working capital and taking financing decisions, thereby running a heavy competition to small firms and distracting customers away from these small firms. Without the mentioned above strategies, the growth rate of large firms would not merely keep on growing.

What do you think of the advantage a large firm (for example Wal-Mart) has over a small firm in terms of both working capital management as well as financing decisions. In particular please consider competitive advantage