ch1 pros & cons

Question 1

What are the reasons why markets become more competitive?

Answer 1

• When several enterprises offer the same goods and services that are aimed at the same market segmentation
• When cheaper foreign goods and services flood a domestic market
• Globalization
• Improvements in transportation
• E-commerce

Question 2

What can businesses do in a highly competitive market?

Answer 2

• Develop and maintain good customer relationships
• Improve existing products and develop new ones
• Control costs

Question 3

What are the benefits of a high market share?

Answer 3

• Employing aggressive business tactics
• Obtaining discounted raw materials and supplies due to greater negotiation power with suppliers
• Achieving the “First-Mover Advantage” by acquiring newly released and highly demanded goods/services.

Question 4

When does the market share of the business change?

Answer 4

• When competitors attempt to obtain a higher percentage of the market share by providing a more highly innovative good/service
• When an enterprise fail to set the most beneficial price or is confronted with quality control issues, thus damaging the reputation and sales of a business

Question 5

What are the advantages and disadvantages of increased competitions on businesses?

Answer 5

Advantages:
- Successful business maintain or increase sales and profit
- Small businesses that can respond more quickly to changing market conditions benefit from a higher market share
Disadvantages:
- Businesses that cannot compete successfully will lose their customers to competitors
- Businesses that fail to survive competition incur higher costs, make lower profits, and run a high risk of shutting down
- If businesses face foreign competition, locally based enterprises, which supply traditional products, may disappear

Question 6

What are the advantages and disadvantages of increased competitions on consumers?

Answer 6

Advantages:
- Wider choice of products, since suppliers are challenged by competitors to provide better products
- More affordable prices and better value for money
- New, improved, and more appealing products
Disadvantages:
- Some businesses might cut costs by reducing the quality of the materials used
- Small businesses that fail to survive shut down, leaving consumers with fewer choices

Question 7

What are the benefits of market segmentation?

Answer 7

• Helps the business increase its sales and profit by keeping marketing costs low because the products are closely aligned to meet the preferences or tastes of the target market
• Business can identify any gaps that may offer new market opportunities to increase sales. Once identified, the segments will have a more viable capacity of influencing product development, pricing, and marketing