the competitive environment Flashcards
what are the two types of market structure?
competitive and monopoly
3 characteristics of perfect competition
large number of firms in market
similar products
low prices due to competition
how could businesses in a competitive market compete?
advertising
branding
location
example of a competitive market
fast food outlets
what is a competitive market?
where a large number of businesses compete to sell similar products
what is a pure monopoly?
when there is just one business in the market
example of a pure monopoly market
railway companies
3 characteristics of a pure monopoly
just one firm in market
one product available
high price due to lack of competition
how can a business dominating a market stop competition? 4
advertising
patents (no-one can make the same product as them)
economies of scale (their large output = lower average cost)
high start up cost of opening
how does a business get monopoly position?
has over 25% of market share
what are the two firms that investigate the business environment?
the Office of Fair Trading
Competition and Markets authority
what does the office of fair trading do?
investigates noncompetitive power
what does the competition and markets authority do?
investigates firms that may have monopoly position and proposed merges/take overs
how is this relevant to case study?
GG Toys and Tom’s Toys both plan to expand by selling online. The market report (see section 2) already states that this is a growing business, showing they are now competitors in an already competitive market
how can GG Toys differentiate?
they can offer lower prices for their products because they produce them themselves
