3.1.4 The Stucture Of Markets 🏪 Flashcards
Define competition
The rivalry between firms that into increase market share
What is a competitive market?
Where there are Numerous business that compete with each other
What are uncompetitive markets?
Markets with little to no Businesses competing with each other
What is a monopoly?
a single business with 25% of market share dominating a market
what is a Oligopoly?
When a market is a few large businesses (Had 25% market share)
What are the three impacts on the business of changing competitive environment?
What is consolidation? how may they be a threat ?
What happens if we fail to respond?
New entrants - competition get stronger - business has to consider position -different services ? have to offer services otherwise fail to survive
New product -Business forced to change their own
Have to adapt and products lower price to survive
consolidation - the number of business fall but they get bigger - may be a threat because they are lower cost -If you fail to respond you become obsolete
Give a few examples of changing competitive environmenta
Supermarkets
retailers
What are Porters five forces?
identifies key pressures of an industry That affects the businesses ability to compete with rivals
Discuss the porters five forces diagram?
Threat of new entry
Bargaining power of Buyer
Industry rivalry
Bargaining power of Supplier 
Threat of Substitution
What are low industry profits associated press on the porters five forces?
strong suppliers
strong customers
Low entry barriers
Many opportunities
intense rivalry
What are high industry profits associated with?
Weak suppliers
weak customers
High entry barriers
Little rivalry 
What happens if a new entrant were to enter a new industry ?
Gain market share
rivalry will intensify
What is the position of existing firms there are barriers?
Will be stronger
What are the six barriers to entry under porters five forces?
Investment cost - Cost will be higher to deter entry
High capital requirements required so only big businesses can compete
Economies of scale available to existing firms - Lower unit cost makes it difficult for small comers to break into market
Regulatory and legal restrictions -Each restriction can act as a barrier
Product differentiation- Existing products with a strong US please make it difficult with newcomers to gain market share
Access to suppliers- Lack of access will make it difficult for newcomers into into markets
Retaliation from established products - Price war discourages new entrance
what makes an industry easy to enter under porters five forces?
Common tech
access to distribution channels
low capital requirements
No need for high-capacity if output
Absence of strong brands 
What makes an industry difficult to enter under porters porters five forces threat to new entrance?
well established brands
High capital requirements
Restricted distribution channels
If you need to achieve economies of scale
What will firms exercise if they havebargaining power under the porters five forces? 
Exercise power
sell products at higher price
squeeze industry profits
when was suppliers find themselves in powerful positions?
When there are a few suppliers
Switching into an altentative is high
Little resources
Customers are small or unimportant
What are the factors that determine how much power as a supplier has? 4
uniqueness of inputs applied - resource is essential nuclear substitutes are available
Number of size supplying resources - large suppliers can exert more power than small ones
What is it a competition of the input from other industries - If the greater supplied will be stronger
Cost of switching to alternative resources - Businesses may be locked in - Business is used to the production process and timings of raw materials
what are powerful customers able to do under porters five forces?
Exert pressure to drive prices down and
increase of quality requires for same price
reduced profits in the industry
What are the five factors that affect the bargaining power of customers on the porters five forces?
Number of customers- The smaller number of customers the greater the power
Size of their orders - Larger volume the greater the power
Number of firms supplying the product- The smaller alternative is less opportunity for customers
Threat of integrating backwards - Increased power
Cost of switching- Customers tied supplier because of the cost of searching
When do customers enjoy bargaining powers? (porters five forces)
When there’s a few of them - suppliers
When they can choose from a wide range of firms 
When customers purchase a large proportion
What is a substitute product?
Something that meets the same need
What does the threat of substitute products on the porters five forces depend on?
The extent to which the products can match the performance of the real product
willingness for customers switch
Consumer loyalty
