The Competitive Environment Flashcards
All 11 cards in this deck
On which five factors does the specification say competitors' strengths and weaknesses should be judged?
Price, quality, location, product range and customer service.
How can a wide product range give a small business an advantage over competitors?
It can stock items no other shop has, attracting customers who want something different.
Give one way a small business could become more competitive.
Any one of: charge lower prices so customers switch to save money; improve product quality to build a better reputation than competitors.
How can customer service help a small business compete with large manufacturers?
It can offer personal help and advice and be flexible to individual customer requests, which large firms find hard to match.
Why do large competitors often find it easier to compete on price than a small business?
They benefit from economies of scale, so they have lower average costs and can also spend more on marketing.
How can increased competition affect a small business's pricing decision?
It may use a competitive pricing strategy, charging a similar or lower price, to maintain its market share.
How can increased competition affect a small business's location decision?
It may decide not to locate in an area with lots of competition because it would find it difficult to attract customers.
Give one advantage to customers of increased competition.
Any one of: lower prices as businesses cut prices to compete; more choice as more products become available.
What is market share?
The proportion of sales in a market made by one business.
True or false? Increased competition can force a business to lower its profit margins.
True. Cutting prices to keep customers reduces the profit made on each sale.
When is a market highly competitive?
When many rival businesses are chasing the same customers, especially if their products are hard to tell apart.