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The competitive environment
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Few businesses have no rivals. Understanding competitors helps a business decide how to stand out.
Competitors' strengths and weaknesses
Compare rivals on price, quality, location, product range and customer service.
A business can compete by being better on one or more of these.
A business can compete by being better on one or more of these.
Impact of competition
Competition affects business decisions: a rival's price cut might force a response.
More competition usually means lower prices and better quality for customers.
More competition usually means lower prices and better quality for customers.
Getting it wrong
Ignoring competitors can mean losing customers to a better or cheaper rival.
Competing only on price can squeeze profits.
Competing only on price can squeeze profits.
A new coffee shop opens next to a big chain. How could it compete?
- It cannot easily beat the chain on price.
- It could offer higher quality, local products and friendly service.
- A cosy atmosphere could be its USP.
Answer: Compete on quality and service rather than price.
Compare competitors on price, quality, location, range and service. Competition affects decisions and benefits customers. Compete on strengths, not just price.
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