1.2.4 The competitive environment

• A larger market size indicates more competition for limited demand.

  False
• What is the competitive strategy of focusing on being the lowest-cost producer called?

  Cost leadership
• What is driven by competition in product development?

  Innovation
• Barriers to entry make it difficult for new competitors to enter the market
• Barriers to entry influence the threat of new entrants.

  True
• Differentiation involves offering products or services that are perceived as superior to competitors.


  True
• Supermarket chains often use price discounts to compete for customers.


  True
• What does the competitive environment refer to?

  Market conditions and competitors
• What is the intensity of competition between existing businesses called?

  Rivalry among competitors
• The bargaining power of suppliers refers to their ability to influence prices
• Businesses lower prices in highly competitive markets to maintain share
• Fast-food restaurants use loyalty programs to retain customers