Chapter 34: Marketing and Comopetitiveness

1. Chapter 34: Marketing and Comopetitiveness

2. Markets and market structure • In general, four different market structures explain the broad range of competitive environments in which most firms operate: • Monopoly – if there is little or no competition in providing a particular product or service, and therefore few or no alternative supplies of it, monopolists can charge high prices and offer poor service • Oligopoly – a market dominated by a small number of large businesses, rivalry between firms usually takes the form of ‘non-price competition’ such as special offers and advertising • Monopolistic Competition – where a large number of firms are competing in a market, each having enough product differentiation to achieve a degree of monopoly power and therefore some control over the price they charge • Perfect Competition – all the sellers produce homogeneous (identical) products and are ‘price takers’, meaning that they accept the ruling market price.

4. Porter’s five competitive forces • 5 features of markets that determine how a successful business might cope with its competitors • Intensity of competitive rivalry • Threat of entry to the industry by new competitors • Threat from substitute products or services • Power of suppliers • Power of buyers

5. Factors that determine whether a firm is competitive • Investment in new equipment and technology • Staff skills, education and training • Innovation through investment in research and development • Enterprise • The effectiveness of the marketing mix • Incentive schemes for staff • Improvements to operational procedures • Quality procedures • Financial planning and control

6. Methods of improving competitiveness • Marketing • Reducing costs • Improving quality • Staff training