3'02 Explain the concept of competition'

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3.02 Explain the concept of competition.
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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.

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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.

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Types of competition

• Direct competition
• Indirect competition
• Price competition
• Non-price competition
• Monopolies

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Direct competition

• Involves two or more companies that utilize the
  same type of business format.
• Example Coke and Pepsi

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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.

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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.

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Non-price competition

• Based on factors not related to price.
• Includes quality of products, customer services,
  business location and qualifications of
  salespeople.

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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.

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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.

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Loss

• A decrease in a potential profit.
• Potential for loss or failure.
• Risk Management how to effectively manage
  losses due to risk.

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Sources of revenue

• Admission
• Food and beverage sales
• Parking
• Merchandise sales
• Sponsorships
• Naming rights

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Sources of expenditures

• Performer fees
• Rental or leasing of facilities
• Advertising
• Incentives or in-game promotions
• Food and beverage services
• Security staff