2.6 - The Competitive Environment Flashcards
Markets
Exist where there are buyers and sellers
Competition
Exists when more than one business is attempting to attract the same customers
Monopoly
Exists when a business does not face any competiton in a particular market
Market Share
The percentage of sales in a particular market recorded by a business
An uncertainty in business
Occurs where there is a lack of information about a situation. This means the outcome or consequences are very difficult to predict.
A Business Plan
Is a document setting out what a business does and what it hopes to achieve in the future
Diversification
Occurs when a business starts selling new products in new markets
A recession
Occurs when the value of an economy’s output of goods and services falls for six months or longer
An entrepreneur
Is someone who is willing to take the risks involved in starting a new business
What is Price Competition?
Business may wish to avoid competing too strongly on price (lowering prices on one product in order for customers to prefer it over others) as they may wish to avoid a price war (businesses aggressively lower prices) as this would lead to less profit for all players involved
Competing by developing new products
In many markets, businesses will compete by introducing new products regularly to win customers. This is very common in technology or fashion markets.
Competing through advertising
Common in markets where consumers can switch between competitors easily, such as gas suppliers.
