The competitive environment

Question 1

Define THE COMPETITIVE ENVIRONMENT

Answer 1

The competitive environment is the degree of competition that exists in a market and the buying and selling power of customers and suppliers within that market.

Question 2

Define a COMPETITIVE ADVANTAGE

Answer 2

A competitive advantage is a feature of a business that allows it to perform more successfully than others in the market. A business in this position can offer better quality, value and/or service.

Question 3

Define COMPETITIVENESS

Answer 3

Competitiveness is the ability of a business to sell its products more successfully than other businesses in the same market. Usually determined by a competitive advantage.

Question 4

What are the 4 types of market structure?

Answer 4

Oligopoly
Monopoly
Imperfect competition
Perfect competition

Question 5

Describe an oligopoly market

Answer 5

There are only a few businesses, barriers to entry are high, products are all slightly differentiated. Examples: EE, Virgin, 3.

Question 6

Describe a monopoly market

Answer 6

There is one main business, barriers to entry are high, there is only one product to choose from. Example: Thames Water.

Question 7

Describe imperfect competition

Answer 7

There are lots of businesses, barriers to entry are low, products are all slightly different. Examples: small restaurants, corner shops.

Question 8

Describe perfect competition

Answer 8

There are lots of businesses, barriers to entry are low, products are all the same. Example: fruit and vegetables.

Question 9

Define the GLOBAL MARKET

Answer 9

The global market is where businesses sell worldwide with a large presence in several different countries.

Question 10

What are the impacts on the business when operating in a large market (e.g. global)?

Answer 10

• Lots of large firms competing
• Difficult to co-ordinate business activities
• Vital that rivals are monitored
• Particular focus is on their marketing mix.

Question 11

What are the impacts on the business whe operating in a small market (e.g. local)?

Answer 11

• Lack of competitors
• Possible difficulty in achieving required level of return
• Possibility that larger rivals may move into their market space.

Question 12

Define a UNIQUE SELLING POINT

Answer 12

A unique selling point is something that sets a product apart from its competitors in the eyes of customers, both new and existing. It is a way to differentiate, meaning the business does not only have to compete on price.

Question 13

What factors are needed for a business to be competitive?

Answer 13

• Products with USPs
• Efficient production
• High quality customer service.