1. Competition
VOŠ – 2. Ročník – 1. semestr
©Lenka Lexová

2. Competition
fighting against another business to achieve dominance in the market
the effort of two or more competitors to achieve the business power by offering the most favourable terms
a war between competitors in the market by all legal means such as sales promotion, offering different services, advertisement, offering higher quality etc.

3. Types of competition Competition across the market
Between supply and demand
Competition on the demand side
The demand is higher than the supply
Competition on the supply side
The supply is higher than the demand, the price tends to be low
Price competition
The sellers lower the price and sacrifice some of the profit
Non-price competition
Quality, innovation, packaging, service, selling term, ads

4. Impact of competition
Pros - causes commercial firms to develop new products, services, and technologies, stimulate innovation, encourage efficiency, or drive down prices
Contras - competition may also lead to wasted effort and to increased costs (and prices) in some circumstances

5. Perfect competition
an ideal market form in which no producer or consumer has the market power to influence prices
perfect competition would lead to a completely efficient outcome
in such a market, prices would normally move to economic equilibrium

6. Imperfect competition
Basic forms of imperfect competition include
Monopoly
Oligopoly
Monopsony
Oligopsony
Tenders
Trusts and cartels

7. Monopoly there is only one seller or provider of a good or service
he can dictate prices because there are no competitors and substitute goods
Try to think of an example of a monopoly
in the Czech Republic and abroad.

8. Oligoply there is a small number of sellers
a market form in which a market or industry is dominated by a small number of sellers
oligopolistic firms cooperate, the decisions of one firm influence the decisions of other firms
Try to think of an example of an oligopoly
in the Czech Republic and abroad.

9. Monopsony there is only one buyer of a good
a market form with only one buyer, called "monopsonist," facing many sellers
a monopsonist can affect the market price of the purchased good by varying the quantity bought
Try to think of an example of a monopsony
in the Czech Republic and abroad.

10. Tenders
is a competition of different bidders trying to get business activity such as work, supply, or service contracts
in the Czech Republic tenders are necessary for every state contract exceeding a certain sum of money
On the internet try to find financial conditions
of state orders which must be included into a
tender in the Czech Republic.

11. Trusts and Cartels
a group of companies or organisations which illegally cooperate to fix prices and eliminate competition to increase their profits
they are prohibited by antitrust laws in most countries, however, exist nationally and internationally, openly or secretly
On the internet try to find examples of a
trust or cartel.

12. Listening Business communication
After sales service is a method of non-price competition, which other legal methods of competition would you use to attract customers when launching a new car?
quality, innovative design, discounts for
regular customers, special offer for new
customers, mail shot advertising,
telemarketing, free gifts, free service

13. Misleading advertising
Misleading advertising is imperfect competition. Do you have any experience with that? Think about chain stores in Příbram (Tesco,Kaufland, etc) and on-line shops. Do they use this method?
misleading/incomplete information on the web/in the advert, bad pricing, wrong technical parameters, low quantity of products

14. Hotel accommodation
You would like to arrange hotel accommodation for your business partners in Příbram. You got an offer from two different competitors, which of them would you choose and why, discuss in small groups and finally write an to the hotel to book the room/rooms, include the date, number of people and other important details.
Hotel White
Location: in the suburbs
Price: single room 25E/double room 20E per night, breakfast incl.
Facilities: free parking, sauna, swimming pool, bar
Hotel Black
Location: in the centre
Price: single room 35E/double room 30E per night
Facilities: internet connection, restaurant, conference room

15. Resources
English in Economics, Miroslav Kaftan, Libuše Horáková:, Karolinum 2004
Market Leader, D. Cotton, D. Falvey, S. Kent, Pearson Longman, 2007