Changing the competitive environment External Influences

Learning Objectives A To evaluate why C To analyse why E To understand why

Starter What is a competition? What benefits does competition in a market bring to customers? Why does the Government try and encourage competition?

Changing the Competitive environment Businesses can change how competitive a market is by what they do: Increasing competition Reducing competition

Task In pairs you are to give examples of how competition can be increased and reasons why

How to increase competition in a m market New firms entering the market – increases number of sellers. Prices will fall Privatisation – Government owned businesses are sold to private owners Selling new products – existing firms can increase competition by introducing new products & services Cutting Prices – reduce prices and increase sales Increase advertising – persuades customers to buy from them

How to reduce competition in a market Takeovers/ mergers – Takeover is where one firm buys out the majority of shares of the other firm and takes them over. A merger is where 2 firms agree to join together Using the Marketing mix – firms can promote products to create brands, though it is not easy. This can lead to internal growth Patents & copyrights – patents mean that no other firm can copy the product or process with permission of the patent holder. A copyright is a similar restriction but applies to artistic creation such as books, music

How to reduce competition in a market Collusion – firms agreeing to charge the same price for a product rather than compete and sell at lower prices. This is illegal Internal Growth – increasing sales can help growth. If this is at the expense of other firms, competition falls

Exam Questions Does the Government prefer competitive markets rather than a monopoly? Explain your answer (6) Explain the difference between a patent and copyright? (4)

Plenary What were our learning objectives? Have we achieved them? A target for next lesson is… To improve I need to………