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Business Studies 🏢💴 > Market Characteristics (Miss Blackwell) > Flashcards

Market Characteristics (Miss Blackwell) Flashcards

1
Q

Market Size

A

The collective value of the goods/services that buyers purchase.

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2
Q

Market Growth

A

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

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3
Q

Market Share

A

The percentage of total sales that a business has in a specific market.

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4
Q

Barriers To Entry

A

The factors that could prevent a firm entering and competing in a market.

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5
Q

Barriers To Exit

A

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

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6
Q

Name 3 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 other businesses will start a price war.
  • Legal restrictions such as patents.
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7
Q

Name two barriers to exit.

A
  • The difficulty of selling off capital.
  • High redundancy.
  • Contracts with suppliers
  • Leases with landlords.
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8
Q

Competition

A

Rivalry amongst sellers.

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9
Q

Market

A

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

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10
Q

Online Market

A

Where products are sold online and received as a physical product.

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11
Q

Digital Market

A

Where products are bought for online use only, downloadable.

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12
Q

How many firms in competitive markets?

A

Many

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13
Q

How many firms in monopoly’s?

A

1 (low)

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14
Q

What are the prices in competitive markets?

A

Low.

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15
Q

What are prices like in monopoly’s?

A

High (often)

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16
Q

Why are prices not always high for monopoly’s?

A

Due to price wars and economies of scale.

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17
Q

Competitive Market

A

A market in which there are a large number of sellers. Businesses mainly compete on price.

18
Q

Monopoly

A

A market dominated by one seller.

19
Q

CMA definition of a monopoly.

A

Any firm with more than 25% of the industry’s sales.

20
Q

Oligopoly

A

Where a market is dominated by a few firms.

21
Q

What do businesses in oligopolies compete on?

A

Non-price differences.

22
Q

Collusion

A

When rival companies cooperate for their mutual benefit. Prevents fair competition.

23
Q

Monopolistic Competition

A

A market structure with many competing firms supplying a slightly different product.

24
Q

How many firms with monopolistic competition?

A

Several.

25
Q

How many firms in oligopolies?

A

A few.

26
Q

What are the prices like with monopolistic competition?

A

Relatively low, non-price differences.

27
Q

What are prices like in oligopolies?

A

Relatively high, similar.

28
Q

Market Power

A

The ability of a firm to influence / control the terms and conditions on which goods are brought and sold.

29
Q

Market Dominance

A

A measure of market share compared to competitors.

30
Q

Merger

A

Where two companies join together to form a new larger business.

31
Q

Acquisition/takeover

A

Where control of another company is achieved by buying a majority of it’s shares.

32
Q

Name two benefits of external growth to the business.

A
  • May gain new management with different skills/talents.
  • Will result in an increase in revenue and therefore market share.
  • May be able to meet customer needs more effectively with combination of resources.
  • May experience economies of scale.
33
Q

Name two disadvantages of external growth.

A
  • May suffer from diseconomies of scale. (Business/shareholders)
  • May take on extra debts that the business could struggle to repay if the strategy is unsuccessful. (Business/shareholders)
  • Could result in redundancies (employees)
  • Could result in higher prices (customers)
  • Could result in a dominant business dictating terms and conditions (suppliers)
34
Q

Organic Growth

A

Involves expansion from within the business.

35
Q

Name 3 examples of organic growth.

A

Opening new stores, launching new products, employing more workers, increasing production capacity, investing in new technology, launching existing products into new markets.

36
Q

Name an advantage of organic growth.

A
  • Less risk than external growth, less financially damaging.
  • Able to use retained profit and not a need for a loan.
  • Sensible and steady growth rate.
37
Q

Name a disadvantage of organic growth.

A
  • Stakeholders might want sales immediately and it is a slower process.
  • The market size might be small/shrinking meaning a lack of opportunity.
  • If market leader, already high sales so it might be hard to gain more.
38
Q

What does the CMA stand for?

A

The competition and markets authority

39
Q

What’s the main aim of the CMA?

A

To promote competition for the benefit of consumers, both within and outside the UK.

40
Q

Cartel Offense

A

Where businesses agree not to compete, through market sharing, bid rigging and price fixing.

Business Studies 🏢💴 (10 decks)

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