The Competitive Environment

• What does the competitive environment refer to?

  The number and strength of competitors
• Why are competitors important for business success?

  They can determine business success
• Do all industries have the same competitive environments?

  No, they have different competitive environments
• What does it mean for businesses to be competitive?

  They go against each other to dominate the market
• What are the characteristics of competitive markets?

  • Many businesses in the market
  • Easy to set up in the market
• How many businesses are typically in a competitive market?

  A lot of businesses
• How difficult is it to set up in a competitive market?

  It is very easy to set up
• What are factors determining competitiveness?

  Number/size of competitors, supplier power
• What is a competitive advantage?

  Making customers choose your business over others
• What are ways to achieve competitive advantage?

  • Better quality products
  • Stronger brand/reputation
  • Lower prices
  • Unique Selling Proposition (USP)
  • Loyalty points and schemes
  • Sponsorships/endorsements
  • Advertising
  • Customer service
  • Promotions (discounts/offers)
  • Community events
  • Wider product range
  • Better after-sales service
• How does a wider product range benefit a business?

  It broadens target demographic and increases repeat customers
• What is the impact of better after-sales service?

  It improves brand image and customer loyalty
• How does a stronger brand image attract customers?

  Through slogans, logos, and endorsements
• What are the positive effects of competition?

  Drives innovation and improves quality
• What are the negative effects of competition?

  Reduced market share and increased pressure to innovate
• What are the pros and cons of small markets?

  Pros:

  • Less competition
  • Easier to build relationships

  
  

  Cons:

  • Low barriers to entry
  • Less economies of scale
• What are the pros and cons of large markets?

  Pros:

  • More potential customers

  
  

  Cons:

  • More regulation
  • International competition