less of a session a competitive environment so competition is when a business operates in a local national or global market but there are other businesses that are providing similar goods or services and these other businesses providing similar goods or services are known as rivals now let's go through these rivals in that the fact they may have strengths and weaknesses let's go further so your rivals well they might try to lower prices than you they might have higher quality products than you clearly that's a strength but as a result of that maybe they have higher costs they might have higher football or a better location than you but that might have incurred a higher cost they might have a wide product range compared to you again that's a strength of them but that might mean that they are less able to exploit economies of scale it might also mean that they have higher storage costs they might have better customer service but that might be because they have higher training costs now moving beyond the strengths and weaknesses of rivals we need to look at the impact of having more competition or for the impact of having less competition we'll start with more competition so if you in a market and you now have more rivals well that's going to have impacts it might mean that you need to reduce your prices to stay competitive that might lead to you reducing your revenue it might mean that you need to increase your marketing as a result of new entrants to the market you know in order for you to retain your customers you might need to increase the quality of your goods or services but that might lead to higher costs you might have to improve your customer service but that might be leading to higher training costs the other side to the impact of more competition your market is the impact of less competition in your market let's go through that so if you've got less rivals in your market well that might mean you don't need to have higher sales the reason why is because customers have fewer options and if customers have fewer options well then you might be able to raise your prices and if you're having higher sales higher prices then it's likely you're gonna make higher profits now the question is what do you do these high profits or you could invest more you could increase your investment or if you're the business ownership structure that is a public limited company well then you might pay your shareholders higher dividends now the other thing that we need to look at beyond this about the impact of less competition is what the opportunities and dangers of this situation we'll start with the opportunities so the opportunities of having higher profits from less competition well as I said before higher investment but what is higher investment mean it means that you might be able to invest in new capital new machinery that improves your production maybe you move to flow production for example that could mean that you get technical economies of scale and if it gets in technical economies of scale as a consequence of more investment in your production in your machinery you might be able to reduce your average cost per unit now on one side we looked at the opportunities let's look at the dangers of increased competition well the dangers are you get lazy you get complacent if you have no competition that might mean that you in fact invest less and if you invest less you might reduce the barriers to entry in your market and that allows because you haven't done all that investment it allows rivals to enter the market and they become competitive to you they might actually steal your market share I hope that helps with the competitive environment and I'll see you at the next session [Music]