Effects of competition on the market

• What is the primary goal of businesses in a competitive market?

  To increase market share
• Competition refers to rivalry between sellers in a market
• Competition in a market can only be direct between businesses selling the same product.

  False
• Match the type of competition with an example:

  Direct ↔️ Pizza delivery businesses

  Indirect ↔️ Pizza vs. curry house
• Businesses in a market compete for their share of customer demand
• Stages in a price war between businesses in a competitive market:

  1️⃣ Businesses lower prices

  2️⃣ Market share increases

  3️⃣ Profits may decrease
• What is one way businesses can gain a competitive advantage without lowering prices?

  Innovation
• Competitive advantage means adding more value to customers than rivals.
• Match the competitive advantage with an example:

  Distinctive design ↔️ Apple products

  High efficiency ↔️ Aldi and Lidl
• Investing in automation can lead to greater efficiency and lower unit costs for a business.
• What is one example of how businesses can achieve competitive advantage through quality?

  Phenomenal reliability