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Business-Miss Blackwell > External Influences-markets > Flashcards

External Influences-markets Flashcards

1
Q

Define competition

A

Rivalry amongst sellers

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2
Q

Define a market

A

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

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3
Q

Why have non physical markets grown rapidly?

A

They’re more convenient

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4
Q

Why do physical markets continue to exist?

A

Due to personalisation offered

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5
Q

How are non physical markets classified?

A

Online or digital

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6
Q

Define a competitive market

A

A market where there are a large number of sellers and they complete mainly upon price

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7
Q

Define a monopoly market

A

A market dominated by one seller(in theory)

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8
Q

What are prices usually like in a competitive market?

A

Low

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9
Q

What are prices usually like in a monopoly market?

A

High(but not always)

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10
Q

Give an example of a competitive market

A

Dairy farming

Currency exchange

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11
Q

Give an example of a monopoly market

A

Tesco

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12
Q

Define economies of scale

A

They arise when unit costs fall as output rises

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13
Q

What are unit costs also known as?

A

The average cost per unit produced

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14
Q

How is unit costs calculated?

A

Total costs in a period(production) divided by Total output in a period

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15
Q

Why does unit costs fall as output increases?

A

Because of the fixed costs

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16
Q

As a result of unit costs decreasing what could the business choose to do?

A

Decrease the price of products

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17
Q

What % of a market should a monopoly have according to the CMA?

A

25%

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18
Q

What are 3 characteristics of a monopoly market?

A

Absence of competition
High prices
Inferior products

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19
Q

How can a monopoly be created?

What’s a consequence of this?

A

Through a merger

Reduces competition

20
Q

Define an oligopoly

A

Where a market is dominated by a few firms

21
Q

What sometimes occurs in an oligopoly?

Give an example

A

Collusion

Eg. Keeping prices higher to possibly force other firms out of the market

22
Q

Define monopolistic competition

A

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

23
Q

What are prices like in monopolistic competition?

A

Competitive prices that are similar but on the low side

Mainly compete on non price differences

24
Q

What are prices like in an oligopoly?

A

Competitive prices(for the customer)but on the high side

25
Q

Give an example of a monopolistic competition market

A

Taxi service

Cafes

26
Q

Give an example of an oligopoly market

A

Car manufacturers
Banking
Music

27
Q

What are non prices differences?

A

Methods the business puts in place other than price to attract customers

28
Q

Define market size

A

The collective value of the good/devices that buyers purchase

29
Q

Define market growth

A

The % change in the size of the market measured over a specific period

30
Q

Define market share

A

The % of total sales (by value) that a business has in a specified market

31
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

32
Q

Define market dominance

A

A measure of market share compared to competitors

33
Q

Define barriers to entry

A

The factors that could prevent a from from entering and competing in a market

34
Q

Give 5 examples of barriers to entry

A

Large start up costs
Having the marketing budget to break customer loyalty
The inability to gain economies of scale
The possibility that existing businesses will start a price war
Legal restrictions such as patents

35
Q

Which market types have low barriers to entry?

A

Pure competition

Monopolistic competition

36
Q

Which market types have high barriers to entry?

A

Oligopoly

Pure monopoly

37
Q

Define barriers to exit

A

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

38
Q

Give 4 examples of barriers to exit

A

Difficulty selling off capital
High redundancy costs
Contracts with suppliers-could face legal challenges if they aren’t honoured
Leases with landlords

39
Q

Define a merger

A

Where two or more companies join together to form a new larger business

40
Q

Define a takeover/acquisition

A

Where control of another company is achieved by buying a majority of its shares

41
Q

Give examples of some benefits of external growth

A

May gain new management with new skills
Increased market share, power and dominance
May be able to meet customer needs more effectively
May experience economies of scale

42
Q

Give examples of some negatives of external growth

A

May suffer from diseconomies of scale due to size
May take on extra debts
Redundancies
Higher prices for customers
May result in a dominant business dictating terms and conditions-suppliers

43
Q

Define organic/internal growth

A

Expansion from within a business

44
Q

Give some examples of organic growth in a business

A 
Opening new stores 
Launching new products 
Employing more workers 
Increasing production capacity 
Investing in new technology 
Launching existing products into new markets
45
Q

What are some advantages and disadvantages of organic growth?

A 
Less risky 
Can be financed by retained profits
Sensible/steady way of growth
...
Slow growth rate 
Difficult if market is shrinking 
Hard to increase market share if already market leader

Business-Miss Blackwell (14 decks)

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