The Competitive Envionment Flashcards
How do different Supermarkets in the UK try to compete against each other? (4)
Aldi = Cheaper
Waitrose = Expensive but tries to serve best service + better quality goods
Tesco = not expensive nor cheap so tries to keep a range of products
The Co-op = isn’t cheap, no wide range of products, no best service but try to be in the most convenient locations.
What are the main ways business compete through?
- Price
- Product range
- Quality of the good
- Location
- Service offered
Do customers want competition or not and why?
Yes because competition drives businesses to do better
What would it mean if there was no competition and only one supermarket, e.g. ASDA, was available?
- They would have no reason to deal with complaints or issues, as customers would have no where else to go.
- They could price their products however they wanted as food is an essential resource
What is a monopoly?
When one business has control of over at least 25% of the market leading to too much power
Why may monopolies naturally occur?
- Cost
- Availability to resources
Why is it difficult to compete against companies like Amazon when concerning costs?
The cost of entering the market is to high (would cost millions - billions to):
- make a world wide business with all their transport links and distribution centres
- promote the business so it had the same recognition as Amazon
Why is it difficult to compete against companies like BT when concerning availability to resources?
All of the phone lines in the Uk are owned by BT and supply the majority of our phone and internet services.
There are some alternatives like Virgin who try to produce their own network but it wouldn’t be possible to have a wired phone network across the whole country for each provider causing others to have more power like BT due to their access to so many phone lines.
What do businesses do about competition?
They do whatever they feel they need to by changinging price, product range, quality of goods, location and service offered.
What could BT do when aware that other businesses like Virgin are trying to compete over them and what are the results? (8)
- Use price incentives, deals and promotions to attract them away from Vrigin BUT may affect short term costs.
- Improve the product by investing in optic fibre cables for the best quality and loyal customers BUT may affect short term profits
- Promote your business, even if your not cheaper or better the them, as it can bring awareness to your company so customers may choose you instead BUT short term costs profits may be affected
- Try to reach more locations the. your competitors so they gain more coverage across the country provide=ing a wider customer base BUT this will incur higher costs.
