External Influences

Question 1

Define Competition

Answer 1

Rivalry amongst sellers.

Question 2

Define Market

Answer 2

Anywhere where buyers and sellers come into contact.

Question 3

Define Mark Up

Answer 3

The difference between the cost of producing an item and the price at which it’s sold.

Question 4

Define Competitive Market

Answer 4

A market in which there are many sellers; competition is mainly price based.

Question 5

Define Monopoly

Answer 5

A market dominated by one seller, usually with a market share of over 25%.

Question 6

Features of a Competitive Market

Answer 6

• many firms

- a range of low prices

Question 7

Features of a Monopoly

Answer 7

• one firm dominating

- high prices (usually)

Question 8

Define Oligopoly

Answer 8

Where a market is dominated by a few firms (e.g. phone companies).

Question 9

Features of an Oligopoly

Answer 9

• products and prices are similar

- competition based on non price differences

Question 10

Define Collusion

Answer 10

When rival companies cooperate for a mutual benefit, preventing fair competition.

Question 11

Define Anti-competitiveness

Answer 11

When a business does something to prevent fair competition within the market.

Question 12

Define Monopolistic Competition

Answer 12

A market structure with many competing firms who sell slightly differentiated products.

Question 13

Features of a Monopolistic Market

Answer 13

• few different firms
• similar but low prices
• e.g. taxi drivers or hair salons

Question 14

Define Market Size

Answer 14

The number of individuals in a a,fleet who are potential buyers of a good/ service.

Question 15

Define Market Growth

Answer 15

The percentage growth in the size of the market, measured over a specific period of time.

Question 16

Define Market Share

Answer 16

The share of the total market that is owned by a particular business.

Question 17

Define Market Dominance

Answer 17

A measure of market compared to competitors.

Question 18

Define Market Power

Answer 18

Ability of a firm to influence or control the Way goods are bought and sold.

Question 19

Define Market Share

Answer 19

Percentage of total sales a business has in a specific market.

Question 20

How to Increase Market Share

Answer 20

• be aware of customer needs and meet them
• sell more to existing customers
• have a clear market plan
• merge with competitor

Question 21

Define Barriers to Entry

Answer 21

Factors that could prevent a firm from entering the market.

Question 22

Examples of Barriers to Entry

Answer 22

• large set up costs
• inability to gain EOS
• legal restrictions
• existing businesses may start a price war

Question 23

Define Barriers to Exit

Answer 23

Factors that could prevent a business from leaving a market.

Question 24

Examples of Barriers to Exit

Answer 24

• difficult to sell capital
• high redundancy costs
• contracts with suppliers

Question 25

Define CMA (competitions and markets authority)

Answer 25

A regulatory company that can stop mergers and takeovers happening.

Question 26

What sanctions can CMA apply?

Answer 26

- fined up to 10% of their global turnover | - customers can sue for damages as a result of anti-competitive behaviours

Question 27

Define Demand

Answer 27

The amount of goods a customer is willing and able to buy.

Question 28

Define Supply

Answer 28

The amount of goods a seller is willing and able to sell at any given time.

Question 29

Define Equilibrium Price

Answer 29

A situation in the market where demand equals supply.

Question 30

Define Subsidy

Answer 30

Payment from government for every unit supplied.

Question 31

Define Price Elasticity

Answer 31

How sensitive quantity demanded is to a change in price.

Question 32

Define Elastic Demand

Answer 32

Quantity demanded is sensitive to a change in price.

Question 33

Define Inelastic Demand

Answer 33

Quantity demanded isn’t sensitive to a change in demand.

Question 34

Define Excess Supply

Answer 34

If price is set too high, excess supply is created.

Question 35

Define Excess Demand

Answer 35

When the price is set below the equilibrium price.

Question 36

Define Globalisation

Answer 36

The increased integration and interdependence of national economies.

Question 37

Advantages of Globalisation

Answer 37

- brings investment, jobs and training | - news and ideas can be spread quickly

Question 38

Disadvantages of Globalisation

Answer 38

- mostly seen in developed countries | - jobs may be lost to Less Developed Countries (LDC)

Question 39

Advantages of being Multinational

Answer 39

- employment opportunities in LEDC’s - equips these people with skills - investment in infrastructure - Utilisation of local resources to supply factories

Question 40

Disadvantages of being Multinational

Answer 40

- use of child labour - very low wages - unskilled work so won’t help get out of poverty - local businesses forced out

Question 41

Define Global Strategy

Answer 41

Where businesses consider how to build a competitive global advantage.

Question 42

Define Global Brand

Answer 42

Brand recognised throughout the world.