The Competitive Environment (Edexcel A Level Business)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Competition & Market Size
The Degree & Nature of Competition
The competitive environment concerns the degree to which a business is affected by rivals that operate in the same market (more fully discussed in 1.1.1 The Market)
The threat competition presents to businesses operating in a market will determine how quickly the business responds
The greater the threat, the quicker the response required - and vice versa
Operating in a competitive market can have significant impacts on the marketing and operational strategy (see "Marketing Stratregy in Different Types of Markets" in 1.3.5 Marketing Strategy)
An Example of the way an Independent Grocer can Adjust to the Arrival of a National Supermarket in the Neighbourhood
Response | Explanation |
|---|---|
Focus on their unique selling points |
|
Adjust their pricing strategy |
|
Enhance customer service |
|
Expand product range |
|
Collaborate with other local businesses |
|
The Market Size
Market size is essentially the number of customers and sellers in a particular market
Businesses entering niche markets may struggle to support a high volume of goods due to limited demand as the market size is small
For these businesses, the specialised knowledge or skills required may well limit the competition and the higher costs of production may well put off new businesses from launching
Businesses entering large markets may face more competition from established businesses, higher costs of promotion, and challenges in deciding their pricing strategy
Examiner Tips and Tricks
Whatever the market conditions a business faces, its best chance of success lies in determining and working to its strengths. A business with a clear competitive advantage such as outstanding customer service, a great product or technical expertise will be in an excellent position to stand out against even the most intense competition.
Look for these specific strengths in case study evidence and emphasise their importance when recommending solutions or strategies - and be sure to consider how they may be protected or extended to ensure future success. Each suggestion you make should clearly support and nurture these core strengths.
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