Economics and the 2008 crisis: a Keynesian view
Economics and the 2008 crisis: a Keynesian view

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Butchers, bakers and candlestick makers

In earlier sections, firms were grouped together as one part of the circular flow of income model. But this begs the question, what is a firm?

Figure 27 Different types of firm: Greggs (top left); GlaxoSmithKline (top right); First Milk milk lorry (bottom left); Amazon (bottom right).

Activity 18

Think about the goods and services you use each week – what types of firm produce them? You may also work for a firm. Make a quick list of at least five different firms that you have a connection with, for instance, as a customer, employee, investor or owner. What are the similarities between firms on your list?

To use this interactive functionality a free OU account is required. Sign in or register.
Interactive feature not available in single page view (see it in standard view).


Your list may show a bewildering variety of different firms, a mixture of well recognised national names, other local suppliers, and some that may appear to have only a virtual presence.

The diversity of firms in the economy is enormous: from the local corner shop, bakery or other food producers such as dairy farmers, to vast enterprises like Microsoft or Apple producing consumer goods, or GlaxoSmithKline or Pfizer producing pharmaceutical and health care products. Major multi-product firms are bigger on most measures of size than the economies of many whole countries, and also operate from sites across different countries, giving them the term Multi-National Corporations (MNCs). Not all firms produce goods, but some instead provide services, or a mixture of both goods and services. Services firms offer a range of activities, from the professional services, such as tax, legal and financial advice offered by ‘The Big Four’ audit firms (PWC, Ernst & Young, Deloitte and KPMG), or caring and social services provided by a local childminder or nursery.

Some firms are particularly well-known, capturing the attention of the media by developing innovative products to challenge the status quo. In fact, firms like Microsoft, Apple and, more recently, Amazon and Google began as small enterprises before growing to become large corporations known to households internationally. Aside from these high-profile firms with customers all over the world, there are many firms that sell directly to other businesses and provide intermediate goods and services as inputs into other firms’ production processes.

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371