The competitive environment

Overview

Judging rivals on price, quality, location, product range and customer service, how competition shapes decisions and products, and how a small business responds to a large competitor.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is meant by the competitive environment?

   Model answer

   The competitive environment is the market in which a business competes with rivals for the same customers. The number and strength of rivals shape its decisions.

2. 2

   Name five features a business can use to judge the strengths and weaknesses of competitors.

   Model answer

   A business can compare competitors' price, quality, location, product range and customer service.

3. 3

   How can price be a competitor's strength or weakness?

   Model answer

   A rival with lower prices will attract price-sensitive customers. A rival with high prices leaves room to compete on value.

4. 4

   How can location give a competitor an advantage?

   Model answer

   A rival on a busy high street or close to customers wins passing trade and convenience. A poorly located rival is easier to beat.

5. 5

   Why is product range a basis for comparing competitors?

   Model answer

   A wider range gives customers more choice in one place. A business with a narrow range may lose customers who want to buy everything at once.

6. 6

   How can customer service be a competitive strength?

   Model answer

   Friendly, knowledgeable staff and quick problem-solving make customers feel valued. Good service builds loyalty and justifies higher prices.

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