2.6 Competitive environment

• A monopoly is a market structure with many small sellers.

  False
• Match the market structure with its definition:

  Monopoly ↔️ Single seller

  Oligopoly ↔️ Few large sellers

  Perfect Competition ↔️ Many small sellers

  Monopolistic Competition ↔️ Many sellers with differentiated products
• Perfect competition involves sellers competing fiercely on quality.

  False
• Match the market structure with its key characteristic:

  Monopoly ↔️ Single firm controls market

  Oligopoly ↔️ Few large firms dominate

  Perfect Competition ↔️ Many small sellers, identical products

  Monopolistic Competition ↔️ Many sellers with differentiated products
• Perfect competition involves many small sellers with homogeneous products.


  True
• Perfect competition features very high competitive pressures due to many small sellers with identical products.
• Match the strategy with its description:

  Price Competition ↔️ Lowering prices to attract customers

  Product Differentiation ↔️ Making unique products

  Marketing ↔️ Promoting brand and products

  Cost Efficiency ↔️ Lowering production costs
• Higher bargaining power of buyers reduces prices and profits for a business.


  True
• What influences the level of competitive pressures in a market?

  Market structure
• How does market structure impact a business's strategic options?

  Determines intensity of competition
• In an oligopoly, a few large firms dominate the market.
• What level of competitive pressures does a monopoly face?

  Very low
• What are the four strategies businesses can use to handle competition?

  Price competition, product differentiation, marketing, cost efficiency
• What does high bargaining power of suppliers lead to for a business?

  Higher input costs
• What is the primary goal of analyzing Porter's Five Forces for a business?

  Develop competitive strategies
• The competitive environment refers to the market conditions and competitive forces
• In a monopoly, a single seller controls the market
• In monopolistic competition, sellers compete on product differentiation
• What is the defining characteristic of a monopoly market structure?

  One seller controls the market
• Match the market structure with its key characteristic:

  Monopoly ↔️ Single seller

  Oligopoly ↔️ Few large firms

  Perfect Competition ↔️ Many small sellers, homogeneous products

  Monopolistic Competition ↔️ Many sellers with differentiated products
• Monopolies have no competitive pressure to improve their offerings.


  True
• The threat of new entrants is higher when there are lower barriers to entry.
• Order the steps in analyzing Porter's Five Forces:

  1️⃣ Identify the industry and its competitive landscape

  2️⃣ Assess the threat of new entrants

  3️⃣ Evaluate the bargaining power of suppliers

  4️⃣ Analyze the bargaining power of buyers

  5️⃣ Examine the threat of substitutes

  6️⃣ Determine the rivalry among existing competitors