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1 Business Studies > Markets > Flashcards

Markets Flashcards

1
Q

What is competition?

A

Competition is rivalry amongst sellers

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2
Q

What is a market?

A

A market is a place where buyers and seller come together to agree on a price

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3
Q

What is market price?

A

It is a price range in a market which consumers are willing and able to pay for a product

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4
Q

What is markup?

A

It is the difference between the cost of producing a product and the price it is sold for

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5
Q

What is a competitive market?

A

A market where there is a large volume of sellers

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6
Q

What are the features of a competitive market

A

There is a large number of sellers with typically low prices

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7
Q

What is a monopoly?

A

A market dominated by one seller

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8
Q

What are the features of a monopoly?

A

There are few firms with often high prices

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9
Q

What are economies of scale?

A

They arise when unit cost falls as output rises

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10
Q

What are the aims of a business?

A

PIGSS

Profit, Increase market share, Growth, Survival, Services

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11
Q

Why might monopolies have low prices?

A

This is so they can price competitors out of the market so they can maintain market share

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12
Q

What is the market share required to hold a monopoly

A

A 25% market share

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13
Q

What is an oligopoly?

A

A market dominated by a few sellers

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14
Q

What are the features of an oligopoly?

A

The products and prices are similar (prices often high)

Businesses might compete on non-price differences

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15
Q

What might happen between firms in an oligopoly?

A

Collusion and anti-competitive behavior

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16
Q

What are the results of anti-competitive behavior?

A

It prevents fair competition

17
Q

What is monopolistic competition?

A

A market with many firms competing not on price but on additional offers, often with low prices

18
Q

What is market size?

A

The number of potential buyers in a market and is expressed as the total values of goods sold

19
Q

What is market growth?

A

The percentage growth in the size of the market, over a given time period

20
Q

What is market dominance?

A

A measure of the market share to its competitors

21
Q

What is market power?

A

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

22
Q

What is market share?

A

It is the percent of total sales that a business has in a specified market

23
Q

What are the 6 strategies to increase market share?

A
  1. Be aware of customer needs and meet them
  2. Sell more to existing customers
  3. Find out why old customers left
  4. Have a clear marketing plan
  5. Use a variety of marketing techniques
  6. Merge with another company
24
Q

What is organic (internal) growth?

A

It is when a business increases in size just by selling more products

25
Q

How can external growth be achieved?

A

Through mergers and acquisitions

26
Q

What are barriers to entry?

A

A barrier to entry is a factor that could prevent a firm entering and competing in a market

27
Q

What are some examples of barriers to entry?

A 
Large start-up cost 
Having the marketing budget to break customer loyalty 
Inability to gain economies of scale
Existing businesses starting a price war
Legal restrictions, patents
28
Q

What is a barrier to exit?

A

A factor which could prevent a firm from leaving a market even if it wanted to

29
Q

What are some examples of barriers to exit?

A

Difficulty selling off capital
High redundancy cost
Contracts with suppliers

30
Q

What is a merger?

A

When two companies join together to form a larger firm

31
Q

What is an acquisition?

A

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

32
Q

What are some disadvantages of mergers and acquisitions?

A 
Redundancies due to duplicated roles 
Lack of company knowledge
Break down in communications 
Diseconomies of scale
Can increase risk if entering a new market
33
Q

What does the CMA investigate?

A

Dominance and anti-competitive behavior

34
Q

What are the responsibilities of the CMA?

A

Investigate dominate positions
Investigate mergers
Completing market studies
Bringing criminal proceedings against individuals

35
Q

What sanctions can the CMA enforce?

A

Business fined up to 10% of global turnover
Sue for damages
Individuals disqualified from being a company director
Fine individuals if they fail to comply

1 Business Studies (9 decks)

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