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marketing 8.docx

Course Code
MKT 2210
Subbu Sivaramakrishnan

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competitive forces
competition refers to the alternative firms that could provide a product to satisfy a
specific market's needs.
a. alternative forms of competition
there are four basic forms of competition.
in pure competition, every company has a similar product.
in monopolistic competition, many sellers compete with their products on a
substitutable basis.
oligopoly occurs when a few companies control the majority of industry sales.
monopoly occurs when only one firm sells the product.
b. components of competition
three forces drive industry competition
1. entry. entry refers to the likelihood of new competitors. barriers to entry
are business practices or conditions that make it difficult for new firms to
enter the market.
2. power of buyers and suppliers. powerful buyers exist when they are few
in number or there are low switching costs. suppliers gain power when the
product is critical to the buyer or there are high switching costs.
3. existing competitors and substitutes. industry growth and fixed costs
influence competitive pressures.
c. small business as competitors
small businesses make up the majority the of the competitive landscape. canada
has over 2.7 sme’s (small and medium sized enterprises) generating half of the
country’s gdp.
d. pure-play online competitors
these competitors exist only on-line. most are quite small and target niche
regulatory forces
regulation consists of restrictions provincial and federal laws place on business with
regard to the conduct of its activities.
a. protecting competition and consumers
the competition act was passed in canada to replace the combines investigation
act. the act encourages competition, sets out criminal charges for major violations
such as price fixing, misleading marketing and other unlawful acts, and allows for
the review of matters such as mergers. the competition act is governed federally
by consumer and corporate affairs canada and many provinces have provincial
ministries of consumer affairs.
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