BUSINNES U CAUSE WE BUSY

Capitalism

An economic system where companies are privately-owned and assume a purpose of creating economic value through innovation, driven by profit, with market-set prices.

Competition

The rivalry between companies selling similar products and services.

Direct Competition

When companies offer essentially the same product or service, such as Coke and Pepsi.

Indirect Competition

When products or services are different but could satisfy the same need, such as bicycles versus automobiles.

Monopolistic Competition

A market with many suppliers and low entry barriers, where suppliers differentiate their products and seek to gain price advantages.

Monopoly

A market controlled by one company, with limited alternatives for consumers and high barriers to entry for competitors.

Non-price Competition

Attracting customers based on factors other than price, such as features and attributes.

Oligopoly

A market dominated by a small number of companies, with high barriers to entry.

Price Competition

Using pricing strategies to attract customers.

Primary Data

Information collected directly from first-hand experience.

Pure Competition

A market with many companies offering essentially the same product at similar prices, with low barriers to entry.

Regulated Monopolies

Monopolies allowed under government supervision to provide services efficiently and cost-effectively.

Secondary Data

Information that has already been collected from other sources.

What were the consequences of the 2008 Financial Crisis?

Massive job losses, home foreclosures, government bailouts, stricter financial regulations, and long-term economic slowdown.

What happened during the 2008 Financial Crisis (from Inside Job)?

Triggered by a housing bubble collapse, risky mortgage lending, and financial derivatives (e.g., CDOs), leading to bank failures and a global recession.

What are barriers to entry, and what are examples that create higher or lower barriers?

• Definition: Obstacles that make it difficult for new firms to enter an industry.

• Examples from Lecture:

  • Financial (“start-up”) costs: High costs raise barriers; low costs lower them.

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  • Available industry expertise: Scarce expertise raises barriers; widespread knowledge lowers them.

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  • Regulatory environment: Strict regulations raise barriers; lax rules lower them.

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• Other Examples: Economies of Scale, Brand Loyalty, Switching Costs, Network Effects, Technological Advantage, control of essential resources.

What is the function of the Federal Trade Commission (FTC)?

Protects consumers and promotes competition by preventing unfair business practices, monopolies, and deceptive advertising (details in text section).

What are the economic benefits of competition?

Lower prices, increased product quality, greater variety, and innovation.

What is the structure and purpose of a Competitive Analysis grid?

A table comparing competitors across key factors (e.g., price, quality, market share, strengths, weaknesses). To identify opportunities, threats, and gaps in the market to refine business strategies.