Working in a Competitive Environment 2.5.3 Flashcards
what is competitiveness?
a business’s ability to deliver better value for customers compared to rival businesses
when is a business said to have a competitive advantage
if it is able to be more competitive than the rest of the market or industry over a sustained period of time
how would a business gain competitive advantage (give 2 reasons)
- added value/USP
- better quality
what is a market that has ‘perfect competition’
a market with many firms which all produce or sell the same goods (e.g. a farmers’ market)
what is a market that has ‘monopolistic competition’
a market with competition between many firms which all produce different goods (e.g. restaurants)
what is a market that has an oligopoly
a market with competition between a small number of suppliers (e.g. chocolate bars)
what is a market that has ‘perfect competition’ a pure monopoly
a market with a single supplier (e.g. water - severn trent)
3 reasons why monopolies are bad for consumers
- limited choice
- prices tend to be high
- dominant firm has little incentive to innovate because they don’t need to worry about survival
why does the competition and markets authority only allow certain business mergers to take place
it depends on the size of the business vs the market size:
2 small businesses in a large market can merge
2 dominant businesses cannot because it would vastly reduce competition in the market
