COMPETITION

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

RISK

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