Competitive Environment

• market:

  where those wishing to buy goods/services make contact with those who have them to sell
• competition:

  the rivalry between businesses looking to sell their goods/services in the same market
• competitive strategies:

  -unique selling points

  -product range

  -quality

  -customer service

  -convenience

  -location

  -price
• small/medium businesses selling to large numbers of customers:

  -prices will be generally low

  -compete through advertising, high quality service and convenient locations

  -e.g fish and chip shops
• small number of large businesses:

  -advertise the fact that there products are different

  -compete through unique selling points (loyalty schemes) and launching new products

  -prices may be high

  -e.g airlines
• monopoly:

  when one firm holds 25% or more of the market share, effectively controlling a particular industry
• monopoly market:

  -prices will be high

  -little/no direct competition

  -e.g royal mail (letters)
• risk:

  the possibility that the return on investment will be lower than expected
• businesses can face uncertainty around:

  -entering new markets (online/international)

  -economic uncertainty (recession)

  -competitor actions

  -changes in international trading relationships

  -developments in technology

  -social changes (tastes/fashions)
• internal business risks:

  -industrial employee action (strikes)

  -fire/theft

  -bad publicity

  -losing good employees to competitors
• external business risks:

  -new competitors

  -natural disasters

  -new laws
• ways for a business to manage risk:

  -write a business plan

  -invest in training for employees

  -use experts and consultants

  -sell in different markets