The Impact of High Competition
Business: Cambridge International GCSE (2027 Exams), topic 3.1.6
The Impact of High Competition
Competition normally has a negative effect on a business’ profits. This is because in a competitive market, the business has less control over prices. Competition forces businesses to be efficient and to constantly try to improve their product. Firms usually compete on:
Price
- Competition often forces businesses to be efficient.
- Businesses may try to produce their product at the lowest cost possible.
- Ryanair is an airline that tends to compete with competitors on price. It has a very short period of time between its flights so that it uses its planes as efficiently as possible.
Quality
- Competition can lead to better quality products or services if firms compete by creating the highest quality or best product (or service).
- Companies like Apple compete by making the highest quality product that they can.
Test yourself on The Impact of High Competition
Does Apple compete more on price or quality?
Does Aldi compete more on quality or price?