Understanding Market Competition

The video explores how competition affects businesses in a market, defining competition as rivalry between sellers. It distinguishes between direct and indirect competition, using examples like pizza delivery and takeaway food. The video discusses how competition impacts market dynamics, such as market share battles, price wars, and innovation. It introduces the concept of competitive advantage, where businesses add more value than rivals, and outlines strategies to achieve it, including efficiency, quality, and customer service.

What is the primary goal of businesses in a competitive market?

• To eliminate all competitors

• To capture a share of market demand

• To reduce product quality

• To increase production costs

Which of the following is an example of direct competition?

• A fish and chip shop competing with a supermarket

• A pizza delivery business competing with a curry house

• A clothing store competing with a tech company

• Pizza delivery businesses competing with each other

What is the nature of indirect competition?

• Competing with businesses in different industries

• Competing with businesses in different countries

• Competing with businesses offering similar products

• Competing with businesses offering different products

How can businesses compete in a market aside from price wars?

• By reducing customer service

• By limiting market access

• By developing new products and services

• By increasing product prices

Why might a business engage in a price war?

• To reduce its market presence

• To eliminate customer demand

• To capture a higher market share

• To increase its production costs

What role does innovation play in market competition?

• It limits market access

• It increases production costs

• It helps businesses differentiate their products

• It reduces the need for customer service

What does competitive advantage allow a business to do?

• Eliminate all competition

• Increase its production costs

• Reduce its market share

• Add more value to its customers than its rivals

What is a key characteristic of a business with competitive advantage?

• It has higher costs than its rivals

• It adds more value to its customers

• It has fewer products than its rivals

• It has a smaller market share

Which of the following is NOT a way to achieve competitive advantage?

• Investing in automation for efficiency

• Reducing product quality

• Offering distinctive customer service

• Building a strong brand

Which strategy can help a business achieve greater efficiency?

• Limiting product variety

• Reducing customer service

• Increasing product prices

• Investing in automation