Bussiness competition Flashcards
Wallahi this deck is too long (16 cards)
What are the characteristics of No Competition?
One type of product available
High Barriers to Entry
Complete control over price
Characteristics of a High Competition
Lots of Similar products
Lower Barriers to Entry
Small control over price
Different products available at different prices
Competition
The rivalry that exists between firms when trying to sell goods to the same group of consumer.
What is a Barrier to entry
Obstacle(s) that may discourage a firm from entering the market
What are the 4Ps a market will compete on?
-> Price
-> Product
-> Promotion
-> Placement
What is the correlation between price and a highly competitive market.
Businesses in competitive markers will look to sell products at lower prices than competitors so they can attract more customer.
What is the correlation between products and a highly competitive market.
Business in highly competitive markets will look to INNOVATE in order to differentiate their products from competitors.
Often focusing on quality
What is the correlation between promotion and a highly competitive market.
Businesses in competitive markets make use of sponsorships, advertisements and branding to encourage customers to buy.
What is the correlation between placement and a highly competitive market.
Businesses in competitive markets focus on ensuring their products are in the right location and on sale at best times.
e.g ( Product on Sale in Christmas or easter. Firms selling products in a densely populated area)
Innovation
The commercial exploitation of a new invention
Advantages of competition on a firm
-> Forces innovation
-> They want to gain more
consumers to buy their
products so they
INCREASE the quality
of products
Disadvantages of competition on a firm
No control over price
-> Little to no profit
therefore less
investments in
innovation.
Less innovation = Lower product quality, therefore a decrease in profit :(((
Advantages of competition on a customer
Lower Price
-> Firms CANNOT OVERCHARGE consumers in a competitive market
More Choice
-> Alternative suppliers to choose from, each supplier is likely to differentiate with lower prices
Better Quality
-> Increased quality.
I-> Consumers will look value for
money.
Disadvantages on the consumer in a highly competitive market
Lack Of Innovation
-> Firms make less profit therefore they
cannot invest a high amount of profit i
in PRODUCT RESEARCH AND
DEVELOPMENT
(R&D)
Advantages of Large firms
Exploit EOS:
-> Average cost is lower than those of
small firms.
-> Therefore, firms can operate in large scale plans
Increased Innovation in processes and products:
-> Higher profits therefore more money to invest in (R&D)
-> Increased efficiency due to innovations in systems such as technology
Market Domination:
-> small firms are NOT competing with larger firms.
-> Large firms have high brand recognition so they can control prices which leads to higher profit
Small Firms advantages
-> Lower Wage costs
-> More Flexibility
I-> Can adapt to changes such as
customer trends quickly
-> Better communication due less
employees, therefore less chains of
communication therefore improved
efficiency
