competitive environment

• What does operating within a competitive environment mean for a business?

  It means facing competition from other firms
• How does competition impact decision-making for business owners or managers?

  It influences their strategic choices and pricing
• What is a common feature of competitive environments?

  Presence of many small firms selling similar products
• What might a business be forced to do in a competitive environment regarding prices?

  Lower prices to retain customers
• What is a potential downside of lowering prices in a competitive environment?

  It may lead to less revenue
• How might a business improve its quality in a competitive environment?

  By using better raw materials or processes
• What might improving customer service require from a business?

  Hiring or training more staff
• What is a consequence of increasing quality or customer service in a competitive environment?

  Higher costs may lead to increased prices
• What is one way a business might provide convenience to customers?

  By offering more outlets or a website
• What is a potential risk of increasing fixed costs for a business?

  Reduced margin of safety and increased risk
• What might happen if a business targets a niche market?

  There may not be enough customers willing to pay
• What are the ways a competitive environment can impact business decision-making?

  • Lowering prices to retain customers
  • Improving quality or customer service
  • Providing more convenient locations
  • Targeting a niche market
• What are the potential consequences of lowering prices in a competitive environment?

  • Less revenue than expected
  • Increased competition for customers
  • Possible need to raise prices later
• What are the implications of improving quality or customer service in a competitive environment?

  • Higher costs due to better materials or training
  • Potential need to increase prices
  • Risk of reduced profit margins
• What are the risks associated with increasing fixed costs for a business?

  • Increased breakeven output
  • Reduced margin of safety
  • Higher overall business risk