Competitive Environment (AQA GCSE Business): Flashcards
Exam code: 8132
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Define market.
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Cards in this collection (26)
Define market.
A market exists where one party has a product to sell to another who wishes to buy it, resulting in trade.
What is the difference between a national market and a local market?
In a national market, buyers and sellers from the same country trade with each other. In a local market, buyers and sellers are in close proximity to each other.
Markets where buyers and sellers trade across national boundaries are known as global or ___________ markets.
Markets where buyers and sellers trade across national boundaries are known as global or international markets.
Define competition.
Competition exists when there is more than one business supplying goods to consumers in a market.
What is a monopoly market?
A monopoly market is one in which one business meets all consumer demand.
True or False?
Most business sectors in the UK are dominated by oligopoly competition.
True.
In an oligopoly, a few large businesses dominate the market, and this is the most common type of competition in UK business sectors.
In which type of market is price competition likely to be most intense?
Price competition is most intense where many small and medium-sized businesses compete to meet market demand.
Why do monopoly businesses not need to spend money on advertising or market research?
They are the single provider in the market, so they do not need to compete with rivals.
True or False?
In a monopoly market, customers can easily shop around for a better deal.
False.
Customers cannot shop around, and their needs are unlikely to be fully met because the products are standardised.
In some oligopoly markets, _________ intervene to ensure that no one business becomes too powerful.
In some oligopoly markets, governments intervene to ensure that no one business becomes too powerful.
Apart from price, how do large firms in an oligopoly usually compete?
They spend large sums on promotion to differentiate their brands. Product development also helps them stand out from rivals and encourage customer loyalty.
How can businesses in a highly competitive market persuade customers to stay loyal?
Customers can be persuaded to stay loyal through excellent customer service and products that meet their needs closely.
Define business uncertainty.
Business uncertainty is when a business cannot predict what is going to happen or directly influence it.
True or False?
Business uncertainty can be measured and planned for.
False.
Uncertainty is unknown, so it cannot be measured or prepared for. It is risk that can be measured, allowing owners to make informed decisions.
What factors typically cause business uncertainty?
Factors include environmental factors, economic changes, the entry of new competitors, changes in legislation and a change in the governing political party.
What is the difference between internal risks and external risks?
Internal risks arise from inside the business, which often has a significant level of control over them. External risks come from outside the business, which has less control over them.
Failure of key IT systems or theft of stock, data or intellectual property are examples of internal ______ risks.
Failure of key IT systems or theft of stock, data or intellectual property are examples of internal security risks.
True or False?
Losing key personnel to a major competitor is an internal business risk.
True.
Loss of key personnel is an internal risk, along with reputational risks and employee unrest.
How might a risk-averse entrepreneur choose to run a new business?
A risk-averse entrepreneur may prefer to start small and achieve slow growth.
Some entrepreneurs share risks with others in a partnership or protect their personal assets by forming a _____________________.
Some entrepreneurs share risks with others in a partnership or protect their personal assets by forming a private limited company.
How does training help a business reduce risk?
Training gives employees the skills, techniques and information they need, so they know how to respond when facing risks.
Define diversification.
Diversification is developing new products and targeting different markets to reduce the risk of overall failure.
How does market research reduce business risk?
Market research helps a business find out what customers want, reducing the risk of developing products that fail to meet their needs.
True or False?
Taking out insurance removes all risk from a business.
False.
Insurance only gives some protection against the most common risks, such as fire, floods and theft. Its financial compensation helps fund recovery after these events.
How does business planning help a business reduce risk?
Business planning involves detailed forecasting, which helps a business make appropriate decisions and prepare resources for external events.
Why might a business take advice from business consultants?
Consultants and experts give a deeper understanding of risks, helping managers avoid the worst impacts of events such as economic changes.
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