Competition & Risk
Competition: the number and strength of other businesses selling products or services within a market sector
Direct competitors: produce the same type of goods and compete on price, quality, availability, etc.
Indirect competitors: offer substitute goods and services, reducing sales of other products
Competition occurs when two or more organizations independently aim to supply a product to the same target market
Factors affecting the level of competition:
market growth
market size
tastes and fashions
market structure
start-up costs
legislation
technology
brand power
Benefits of competition for consumers:
Encourages business efficiency
Forces businesses to listen to consumer needs and wants
Promotes constant improvement to meet consumer needs
Reduces wastefulness in businesses
Ensures production of good-quality products or services
Leads to exciting promotions and incentives for consumers to switch suppliers or products
Uncertainty: caused by unexpected events with a dramatic effect on markets and industries
Risk: can be planned for when probabilities of outcomes are known or fairly likely
Internal risk: within a business's control
External risk: outside a business's control
Examples of uncertainty
tsunami
floods
economic crashes
natural disasters
Competition: the number and strength of other businesses selling products or services within a market sector
Direct competitors: produce the same type of goods and compete on price, quality, availability, etc.
Indirect competitors: offer substitute goods and services, reducing sales of other products
Competition occurs when two or more organizations independently aim to supply a product to the same target market
Factors affecting the level of competition:
market growth
market size
tastes and fashions
market structure
start-up costs
legislation
technology
brand power
Benefits of competition for consumers:
Encourages business efficiency
Forces businesses to listen to consumer needs and wants
Promotes constant improvement to meet consumer needs
Reduces wastefulness in businesses
Ensures production of good-quality products or services
Leads to exciting promotions and incentives for consumers to switch suppliers or products
Uncertainty: caused by unexpected events with a dramatic effect on markets and industries
Risk: can be planned for when probabilities of outcomes are known or fairly likely
Internal risk: within a business's control
External risk: outside a business's control
Examples of uncertainty
tsunami
floods
economic crashes
natural disasters
