2.4a Competition BA v Virgin

Question 1

What is a direct competitor?

Answer 1

• business that sell the same type of product or service

- for example McDonald’s and Burger King

Question 2

What is an indirect competitor?

Answer 2

• businesses that do not sell the same product or service
• they are still in competition with another
• for example ferry, airline flight, a train or a coach

Question 3

When is there strong of competition?

Answer 3

• if there are lots of competitors
• little difference in the product they offer
• this enables customers to shop around for best deals
• low start-up costs

Question 4

When is there weak competition?

Answer 4

• few businesses
• customers have few alternatives
• high start-up costs for business
• not many new entrants

Question 5

What is a price war?

Answer 5

• a period of fierce competition in which traders cut prices in an attempt to increase their share of the market.
• Where suppliers undercut each other price in an attempt to achieve higher market share

Question 6

What is SWOT analysis?

Answer 6

a study undertaken by a business to identify

• Strengths
• Weaknesses
• Opportunities
• Threats

Question 7

What are the positives to competition on business decision-making?

Answer 7

• make businesses more likely to innovate
• think of new product ideas
• keep costs under control to make profit even

Question 8

Explain one reason why it is important for a business to know the strengths of its competitors.

Answer 8

It is important because the company can now get ahead of its competitors by thinking of new ideas.

Question 9

How do you find out strengths and weaknesses of a company?

Answer 9

• price
• quality
• location
• product range
• customer service

Question 10

Give one example of location as a strength and location as a weakness.

Answer 10

• a location that has low footfall will be a disadvantage to the company as there will be a low amount of customers which means low sales
• a location that has high footfall will be an advantage to the company
  if it is located near a railway then it is an advantage to both the customer and business
  it is more convenient for commuters so more people will buy

Question 11

What is a competitive environment?

Answer 11

A competitive market is one where there are numerous producers that compete with one another in hopes to provide goods and services.

Question 12

What are 3 Characteristics of a Competitive Market?

Answer 12

Profit
Diminish ability
Rivalry

Question 13

What is rivalry?

Answer 13

The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other’s profit potential.

Question 14

What is profit?

Answer 14

profit is the surplus left from revenue after paying all costs.

Question 15

Define diminishable

Answer 15

To make smaller or reduce.

Question 16

SWAT analysis can be applied to many parts of a business. Give some examples.

Answer 16

It may lead a business to update its marketing, start developing a new type of product or change its prices.

Question 17

Define product range?

Answer 17

A product range is a set of variations on a specific product made to appeal to different market segments.

Question 18

How can a company improve customer service?

Answer 18

The company could do market research to find out what the customers think of their products or services and improve on them.

Question 19

How does location affect a business?

Answer 19

The location of a business needs to be convenient for both customers and staff.

Question 20

Give some examples of direct competitors.

Answer 20

McDonald’s and Burger King