Introduction:
The competitive environment, otherwise called the market structure, is the dynamic framework in which your business contends. The condition of the framework all in all restrains the adaptability of your business. World monetary conditions, for instance, may build the costs of crude materials, constraining organizations that supply your industry to charge all the more, raising your overhead expenses. At the flip side of the scale, nearby occasions, for example, regional labor shortages or natural disasters additionally influence the competitive environment.
There are many business environments these environments are divided to internal & external environment, as followed:
Internal & External Environmental Factors That Affect Business
The internal business environment includes factors within the organization that affect the approach and achievement of your operations. The external environment consists a variety of factors outside your
The lot of sellers of the same product or service, the lot of competitive the environment in which you compete. Consider fast food restaurants - there are a unit such a large amount of to decide on from; the competition is high. However, if you consider airlines servicing Hawaii, only a few really fly to the islands.
Direct competitors are businesses that are marketing a similar style of product or service as you. For example, McDonalds may be a direct competitor with Burger King.
Indirect competitors are businesses that also contend although they sell a unique service or product. The product or services offered by indirect competitors tend to be people who may be substituted for each other. Again, considering travel, you have got the choice to go plane, train, or car. Therefore, airlines also are competitor with train lines and buses (assuming the travel doesn't go
A firm?s external environment is divided into three major areas : the general, industry and competitor environments. Below is an elaboration in further detail regarding the firm?s opportunities and threats in these three environments.
Market structure refers to the amount of competition that exists in the market between producers. The degree of competition can be thought of as lying along a continuum with very competitive markets at the end and markets in which no competition exists at all at the other end.
A well-known company that I know of is Subway. Three direct competitors for Subway are Jimmy John’s, Quiznos, and Firehouse Subs. They all are direct competitors because they all specialize in a variety of subs. Three indirect competitors for subway are Magic Wok, Starbucks, and Chipotle Mexican Grill. They all are a restaurant/fast-food chain, but they don’t specialize in subs like Subway. Therefore, they are competitors but not direct competitors because if a consumer is seeking fast-food they can choose one or the other without getting the same type of food.
(P2.2) A business environment influences the development, performance, and outcome of a business which involves the law and government, the owners, the competitors, the market and the social and economic trends.
Firms within the fast food industry fall under the market structure of perfect competition. Market structure is a classification system for the key traits of a market. The characteristics of perfect competition include: large number of buyers and sellers, easy entry to and exit from the market, homogeneous products, and the firm is the price taker. Many fast food franchises fit all or most of these characteristics.
As soon as a competitor changes their plans or a new competition comes along customers may not want to change their mind about going to a different location (Belonwu). Having a “rivalry” may help concentrate on what needs to be improved in a business depending on what their weaknesses and strengths are. Having competition may be wonderful for the consumers because they have different choices to select what kind of brand of clothing, shoes, or a variety of tools, food and etc. Being able to choose a certain type of customer, may bring in a flow of customers that they’re are trying to reach out for; such as Walmart, they chose to sell products that are family oriented while having different areas in the store pertaining to men’s, women’s, and children’s necessities. If a customer is loyal and you all of a sudden are raising prices on items where they can get goods at a lower price elsewhere, that is causing a business to be disloyal due to competition.
Businesses depend on the external environment as much as they depend on the internal environment.
Price competition among rivals is close to nil, industry participants are very competitive when it comes to product differentiation. Product offerings to satisfy consumer demands include a variety of coffee, juices, muffins, bagels, cookies, cream cheese sandwiches, soups and other miscellaneous items.
The tool analysis, both internal and external environment. The internal environment is divided into strengths and weaknesses which are factors within the control of a company. The external environment is made up of the threats and opportunities which are factors that affect performance of a company but are out of a business
The more competitive corporations are in markets, the less the strategies are available to any corporation. All corporations become reactive rather than proactive, unable to impose their will on the market. They cannot control price, they cannot differentiate their product. Competition denies them the resources to acquire other enterprises. In reality cost positions differ, often significantly, and products are perceived to be different, sometimes so different that some are branded. This generates both the scope and resources needed for acquisitions, aggressive price behavior or a major marketing campaign.
The monopolistic has a barrier to entry in the market, for example copyright, technology, capital and economies of scale. McDonalds is the biggest chain food store in the world and they provide franchising, then need to prevent others firm entered ...
There are also many other competitors who advertise their products in order to gain customers. Due to this, the competition between
Different, but similar products. - Basically, monopolistically competitive firms get this name because although businesses are contending with each other for a specific set of consumers, each company 's product has something different about it. Thus, each business can be considered a “mini-monopoly” for their specific product.
Examination of the eight factors of rivalry intensity shows a number of competitors with many of them producing very similar product lines.
Analysis of the external environment is very important for the development strategy of the organization and a very complex process requiring a process tracking and assessment factors and also the establishment of links between those factors and the strengths and weaknesses as well as opportunities and threats. External environment has its complexity and uncertainty. It is obvious that without knowing the environment the organization can not exist. The organization studies the environment in order to secure a successful progress towards its goals.