The competitive environment

• Competition:

  A business operates in a local, national or global market but there are other businesses providing similar goods/services
• strengths/weaknesses of rivals:

  .charge lower prices(-revenue)

  .Higher quality products(+costs)

  .wide product range(-EOS/+storage costs)

  . better customer service(+training costs)
• Impact of more competition:

  .Reduce prices= less revenue

  .increase marketing=retain customers

  .increase quality= higher costs

  .Improve customer service= higher training costs
• Impact of less competition:

  
  

  .Higher sales = fewer options for consumers

  
  

  .raise prices= there are less competitors meaning business can charge high prices as consumers are loyal

  
  

  .Higher profits= increase in investments, and dividends that are paid to shareholders
• Opportunities of increased profits from less competition:

  .Higher investment=

  -new capital or machinery to improve overall production

  -Gaining technical EOS can reduce average costs per unit meaning that business produce more stock at a lower costs
• Dangers of increased profits from less competition:

  
  

  .Business will become lazy due to no competition

  
  

  .less investments into the business=

  -barriers of entry into the market will reduce, allowing new entrants into the market increasing competition