2.6 Competitive environment

Key terms
1. Markets share
  1. The percentage of sales in a particular market recorded by a business
2. Recession
  1. When the value of an economy's output of goods and services falls for six months or longer
3. Monopoly
  1. When a business does not face any competition in a particular market
4. Diversification
  1. When a business starts selling in new markets
5. Market
  1. Exists where buyers and sellers exchange goods and services for a price
How to compete in different ways
1. Price
  1. Business avoid competing strongly on price with larger rivals as it will cause lower profits
2. New products
  1. Attract customers from competetors
3. Advertising
  1. Where consumers in the market switch brands regularly so may be attracted by a large amount of advertising
Uncertainty and Risk
1. Internal risks
  1. They come from in the business like: employees refusing to work-Fire or theft-bad publicity-loss of employees to competitors
2. External risks
  1. New competitors-natural disasters-new laws
3. Economic Uncertainty
  1. All businesses are affected by changes in economy like the UK leaving the EU
4. Competitor uncertainty
  1. When you dont know what your competitors will do (e.g. a new product
5. social uncertainty
  1. When a business cant predict social trends in the public and how it will effect sales
6. How to reduce risk
  1. Business plan
  2. Invest in training for employees for hazards or customers
  3. Use experts and consultants
    1. Reduce decision making errors or effects of bad publicity
  4. Selling in different markets
    1. If sales fall in one market due to issues other markets are profitable (diversification)

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2.6 Competitive environment

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