2.5.3 competitive environment

Question 1

what are some factors affecting competitiveness in a market?

Answer 1

• growth rate of the market
• level of regulation within industry
• typical profit margin that businesses generate
• the number and size of competitors in the market
• seasonality of the product
• level of differentiations between competitors

Question 2

what are the impacts of competition on business

Answer 2

negative
- fall in prices 
- increased costs of promotion 
- businesses may act unethically 
benefit 
- improved efficiency 
- increased innovation 
- wider product ranges

Question 3

what are some benefits and drawbacks of operating in a big market

Answer 3

benefits 
- wider customer base
- less volatility small markets 
drawbacks 
- more regulation and scrutiny
- potential for international customers

Question 4

what are some benefits and drawbacks of operating in a small market

Answer 4

benefits 
- less competition 
- opportunities for expansion 
- easier to build brand loyalty 
drawbacks 
- threat of new entrants 
- few economies of scale