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103.02 Explain the concept of competition. Competition. The rivalry between two or more businesses to gain as much of the total market sales or customer acceptance as possible. Competition continued.
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Competition • The rivalry between two or more businesses to gain as much of the total market sales or customer acceptance as possible.
Competition continued . . . • Helps to maintain reasonable prices, provides consumers with new and improved products, and results in a wide selection of products from which to choose. • Forces businesses to operate efficiently.
Types of competition • Direct competition • Indirect competition • Price competition • Non-price competition • Monopolies
Direct competition • Involves two or more companies that utilize the same type of business format. • Example Coke and Pepsi
Indirect competition • Between two or more retailers that employ different types of business formats to sell the same type of goods. • Example: Playing Putt-Putt versus an 18 hole golf course.
Price Competition • Focuses on the selling price of a product. • Preferring to buy the products that are the lowest in price. • Purchasing clubs at Wal-Mart versus a golf specialty store.
Non-price competition • Based on factors not related to price. • Includes: quality of products, customer services, business location and qualifications of salespeople.
Monopolies • Exist when one company has exclusive control over a product or the means of producing it. • The free enterprise system prohibits monopolies except when it is wasteful to have more than one company. • Ex. There is only one football team per area.
Profit • The money earned from conducting business after all costs and expenses have been paid. • Profit for most businesses is 1-5% of sales. • 95-99% of the selling price goes to pay costs, expenses and business taxes.
Loss • A decrease in a potential profit. • Potential for loss or failure. • Risk Management – how to effectively manage losses due to risk.
Sources of revenue • Admission • Food and beverage sales • Parking • Merchandise sales • Sponsorships • Naming rights
Sources of expenditures • Performer fees • Rental or leasing of facilities • Advertising • Incentives or in-game promotions • Food and beverage services • Security staff