Competitive Environment Analysis Flashcards

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Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is the competitive environment?

It is the situation where many firms try to win the same customers.

What is a direct competitor?

A business that sells the same or very similar product to the same customers.

What is an indirect competitor?

A business that sells a different product that meets the same customer need.

Why do businesses analyse competitors?

To find rivals’ strengths and weaknesses and choose how to compete.

Name three common ways businesses compete.

By price, by quality, and by customer service.

How can strong competition affect prices?

It can push prices down as firms try to win customers.

What is a unique selling point (USP)?

A feature that makes a product or service different from rivals.

What does differentiation mean?

Making your product or service stand out from rivals.

What is competitive advantage?

A benefit that makes a firm better than rivals in customers’ eyes.

Give one risk of competing mainly on price.

Lower profit per sale.

How can competition benefit customers?

Customers get more choice, lower prices, and better quality.