Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business > External Influences- Market Structure > Flashcards

External Influences- Market Structure Flashcards

1
Q

define competition?

A

rivalry amongst sellers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is a market?

A

any situation where buyers and sellers are in contact to establish a price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

market facts? (not memory tested just facts to know)

A
  • can be physical and non-physical
  • non-physical markets have grown rapidly because of the convenience that they offer
  • physical markets still exist because of the personalisation they bring
  • non-physical can be classified as being either online or digital
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what is online shopping?

A

buying tangible goods and having them delivered

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is Digital shopping?

A

buying goods online to be used immediately through downloading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what is a competitive market?

A

a market in which there are a larger number of sellers. these businesses mainly compete through price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what is a monopoly (theory answer)?

A

a market dominated by one seller

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is a monopoly (CMA definition)

A

a firm with 25% or more of its industry’s market share

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what is the CMA?

A

competition and market authority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

who can block mergers?

A

CMA because monopolies aren’t good for customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

features of a monopoly?

A
  • high prices
  • low quality
  • bad service
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what is an oligopoly?

A

an oligopoly exists where a market is dominated by a few firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what are the products and price like between oligopolies?

A

very similar

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what do oligopolies compete with?

A

non-price differences

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what are examples of non-price differences

A
  • customer service
  • opening hours
  • reliability
  • reputation
  • warranty
  • add-ons
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

define colluding

A

when businesses secretly agree to raise prices or fix prices and to reduce output to increase profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

barriers to entry of an oligopoly

A

very high barriers to entry:
- large start up costs
- hard to break customer loyalty

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

barriers to entry of a competitive market?

A

low

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

barriers to entry of a monopoly

A

high

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

define monopolistic competition

A

a market structure with many competing firms each of whom supplies a slightly differentiated product

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

barriers to entry of monopolistic competition

A

low barriers to entry:
- low market power of competitors
- easy to enter market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

number of firms in monopolistic competition

A

many firms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

number of firms in an oligopoly

A

few firms

24
Q

prices of monopolistic competition

A

fair prices but similar

25
Q

prices in oligopolies

A

higher prices but similar

26
Q

equation for market growth

A

market growth= difference/ original x 100

27
Q

define market share

A

expressed as the collective value of goods/ services that buyers purchase

28
Q

define market growth

A

the percentage change in the size of the market, measured over a specific period

29
Q

methods to increase market share

A
  • sponsor campaigns or events
  • focus on trends and target market
  • celebrity advertise
  • decrease price
  • improve quality
  • payment systems like klarna
  • range of products
30
Q

define barriers to entry

A

the factors that could prevent a firm from entering and competing in a market

31
Q

barriers to entry examples

A
  • large start up costs (cap total costs like premise and machinery)
  • having the marketing budget to break customer loyalty
  • inability to gain economies of scale
  • possibility of existing businesses starting a price war
  • legal restrictions such as patents
32
Q

define patents

A

a government authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using or selling an invention

33
Q

define economies of scale

A

when output increases, cost per unit decreases (bulk buy)

34
Q

define barriers to exit

A

the factors that could prevent a firm from leaving a market, even if it wanted to

35
Q

examples of barriers to exit

A
  • the difficulty of selling off capital
  • high redundancy costs
  • contracts with suppliers
  • leases with landlords
36
Q

define overheads

A

costs not directly related to cost of making a product (eg rent)

37
Q

what are the differences between market structures

A
  • prices
  • quality of products
  • choice of products for customers
38
Q

define market power

A

the ability of a firm to influence or control the terms and conditions on which goods are bought and sold

39
Q

define market dominance

A

a measure of market share compared to competitors

40
Q

define merger

A

where two companies join together to form a new larger business

41
Q

define acquisition/ takeover

A

where control of another company is achieved by buying the majority of its shares

42
Q

benefits of external growth (for the business)

A
  • may gain new management with different skills
  • will result in an increase in revenue and therefore market share (if in the same industry)
  • may be able to meet customer needs more effectively with combination of resources
43
Q

disadvantages of external growth

A
  • may suffer from diseconomies of scale size (eg. communication problems)
  • may take on extra debts that the business could struggle to repay if the strategy isn’t successful
  • could result in redundancies
  • could result in higher prices
  • could result in dominant businesses dictating terms and conditions of market
44
Q

define organic/ internal growth

A

involved expansion from within a business

45
Q

examples of organic growth

A
  • opening new stores
  • launching new products
  • employing more workers
  • increasing productive capacity (eg new factories)
  • investing in new technology
  • launching existing products into new markets (international markets such as asia)
  • having a franchise strategy
  • lower prices
46
Q

advantages of organic growth

A
  • less riskier than external growth as you don’t need as much capital, smaller loans, if any are used, less chance of debt
  • growth can be financed through internal funds ( retained profit)
  • growth rate is much more sensible rate
47
Q

disadvantages of organic growth

A
  • growth rate is much slower, shareholders prefer more rapid growth in profits and revenue
  • it may be difficult to grow in the current market because there might already be existing leaders
  • if the market is shrinking growth may be difficult to occur compared to a growing market
48
Q

what is the CMAs main aim

A

to promote competition for the benefit of its consumers

49
Q

what does the CMA do

A
  • investigates mergers and acquisitions which could restrict competition
  • investigates where there may be abuses of dominant positions
  • bring criminal proceeding against individuals who commit the cartel offence
  • enforces legislations to tackle prices that make it difficult for consumers to exercise choice
50
Q

define cartel

A

an agreement between businesses not to compete

51
Q

what are the three cartel offences

A
  • market sharing
  • price fixing
  • bid rigging
52
Q

define market sharing (cartel)

A

when rival businesses agree to divide a market so participants are sheltered from competition (eg location)

53
Q

what is price fixing (cartel)

A

when rival businesses agree what prices they’re going to charge (colluding)

54
Q

define bid rigging (cartel)

A

when rival businesses communicate before lodging their bids and agree among themselves who will win and at what price

55
Q

what sanctions can the CMA apply

A
  • the business can be fined up to 10% of its global turnover
  • the individuals can be disqualified from being a company director
  • customers affected can sue the businesses that were anticompetitive
  • the CMA can fine individuals if they fail to provide information following the CMA’s request
56
Q

impacts of regulations on businesses and it’s stakeholders

A
  • encourages businesses to compete to gain customers
  • more choice for customers
  • better value for customers
  • more businesses operating within a given market
  • better terms for suppliers
  • less abuse of dominant positions
57
Q

STEEPLE

A

Social
Technological
Economic
Environmental
Political
Legal
Ethical

Business (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions