2.5.3 The Competitive Environment

Question 1

What is a competitive environment?

Answer 1

The degree to which a business is affected by rivals that operate in the same market

Question 2

What is market size?

Answer 2

The numbers of customers and sellers in a particular market

Question 3

How will a market size affect businesses who are entering a niche market?

Answer 3

• Businesses entering niche markets may struggle to support a high volume of of goods due to limited demand as the market size is small

Question 4

How will market size affect businesses who are entering large markets?

Answer 4

• They may face more competition from established businesses, higher costs of promotion and challenges in deciding their pricing strategy