The Market And Competitive Environment In The UK

Question 1

Markets

Answer 1

places where buyers and sellers come together to exchange goods and services.

Question 2

Competitive environment

Answer 2

the degree of competition and buying and selling power of customers and suppliers in a market

Question 3

Car manufacturers

Answer 3

Businesses in the secondary sector that take inputs e.g., car components and turn them into an output i.e., a car.

Question 4

Car dealers

Answer 4

Businesses in the tertiary sector that sell cars to the public or other businesses.

Question 5

Car servicing businesses

Answer 5

Businesses in the tertiary sector that provide car maintenance e.g., MOT testing, tyre and exhausts, servicing, repairs and body work.

Question 6

What is the spectrum of competition?

Answer 6

From Zero (or little competition) <-
- Monopoly - one firm dominates the market
- Oligopoly- a small number of large firms dominate the market

——- (Middle)———
- Monopolistic competition- many firms compete in the market selling differentiated products

High degree of competition->
- Perfect competition- many buyers and sellers in the market with no influence on market price.

Question 7

Facts about the UK car market in 2021?

Answer 7

• £67 billion in turnover
• 705,826 cars exported
• 7 major premium and sports car manufacturers
• 9 design centres
• 8 bus and coach manufacturers
• 5 commercial vehicle manufacturers
• 10 engine manufacturers
• 20 R&D centres

Question 8

What is a turnover ?

Answer 8

Also known as income or gross revenue, turnover is the total amount of sales you make over a set period. This could be weekly, monthly, quarterly or annual turnover - whatever time period you choose to measure.

Question 9

What is a commercial vehicle

Answer 9

-usually refers to a vehicle (either a car or a van) whose primary purpose is to transport materials or goods as opposed to passengers

Question 10

In 2021 who were the top fives in production?

Answer 10

1. Jaguar Land Rover- 220,554
2. Nissan - 204,522
3. Mini - 186,762
4. Toyota - 124,918

Question 11

What are the trends in UK car manufacturing from 1972 to 2021?

Answer 11

There is a causal decrease from 2,000,000 in 1972 to around 800,000 in 2021

Question 12

In 2014 who was reported by the global real estate firm Cushman & Wakefield as the most popular location for manufacturing?

Answer 12

1. Malaysia
2. Taiwan
3. South Korea
4. Thailand
5. China
   - The UK was ranked 18th

Question 13

Why is it good to have a low cost of production

Answer 13

• Many businesses locate factories in countries that have low production costs. By keeping these low , a business may gain a competitive edge in the market
• some of the main production costs , such as labour , energy , raw materials and land are lot lower in Asia than other parts of the world

Question 14

Why are low wage costs an important factor in attracting business

Answer 14

For example , Dyson moved production of their bagless vacuum cleaners from the Uk to Malaysia in 2003 where production costs were 30 percent lower. Dyson said that wages in Malaysia were £3 per hour compared with £9 per hour in the UK. As a result profits more than doubled from £18 million in 2002 to £40 million in 2003

Question 15

What are the advantages of operating as a franchise?

Answer 15

1. Advantages
   - Franchises are lower risk , as they use an idea that has already been tried and tested
   - Franchisees get support from the franchisor
   - The set up costs of a franchise are predictable.
   - Franchisees can benefit from national marketing campaigns organised by the franchisor.

Question 16

What are the disadvantages operating as a franchise?

Answer 16

• A franchisees profits is shared with franchisor
• Franchisees have sign constructs with franchisors which can reduce independence.
• Setting up a franchise can be an expensive way to start a business
• Franchisees lack independence and must abide by strict operating rules.

Question 17

What other measurements of size could be used to rank car dealerships?

Answer 17

• ranks the top car dealers by revenue.
• ranked by digital health.
• ranked in order for performance based on industry-standard metrics and best practices

Question 18

What is digital health? For car industry

Answer 18

With the UK Car Industry moving quickly to eCommerce, car buyers spending more time researching their potential purchases online, and new entrants moving into the UK market (e.g. Cazoo, Carzam, Cinch and Roadster), car dealerships must move with this trend to remain viable.

Question 19

How would you describe the competitive environment for car dealers?

Answer 19

• The best car dealers are those which give a good impression right the way through the ownership experience.
• the best brands’ dealership networks will be those that offer support, good workmanship and friendly customer service.

Question 20

Assess the extent to which car dealers operate in a dynamic market?

Answer 20

Car dealerships operate in a dynamic market with constantly changing conditions. The car industry is affected by a range of factors, including economic conditions, consumer preferences, technological advances, government regulations, and competition from other dealerships.

Economic conditions play a significant role in the car dealership industry. During times of economic growth, people are more likely to purchase cars and dealerships may see an increase in sales. However, during economic downturns, people may be less likely to make large purchases like a new car, and dealerships may struggle to maintain sales levels.

Consumer preferences are another important factor in the car dealership industry. As technology and design trends change, dealerships must adapt to meet the needs of their customers. For example, as electric vehicles become more popular, dealerships may need to shift their focus towards selling more electric or hybrid cars.

Government regulations also impact the car dealership industry. Dealerships must comply with safety and environmental regulations, and changes in these regulations can affect the types of cars that dealerships can sell.

Finally, competition from other dealerships can also affect the dynamic nature of the car dealership industry. With the rise of online car buying and direct-to-consumer sales, traditional dealerships are facing increased competition from non-traditional players.

In conclusion, car dealerships operate in a highly dynamic market with a range of factors influencing their operations. Dealerships must adapt to changing economic conditions, consumer preferences, technological advances, government regulations, and competition to remain competitive and successful.

Question 21

What is the automotive aftermarket?

Answer 21

This refers to the whole automotive, aftermarket, including franchised businesses, and independents, comprising service, and repair workshops, retailers, wholesalers, parts, manufacturers, importers, and distributors

Question 22

Facts about the UK car aftermarket?

Answer 22

• The UK car aftermarket provides consumers with choice.
• It is made up of franchise networks and independents (IAM).
• Annual turnover £21.1 billion.
• More than 30 million cars serviced annually.

Question 23

Benefits to the size and range of businesses operating in UK car aftermarket?

Answer 23

✔ Choice
✔ Convenience
✔ Competitive costs