Business Unit 12

The type of competition

Businesses compete with each other in different ways. direct competition involves providing an almost identical or similar service in the same market. For example, now wall-mart have started selling household furniture goods they are in direct competition with Ikea has they may sell the same or similar products. Involving wall-mart and Ikea the competition can be both in direct and direct. It is direct in what I have said above but is also indirect as Wal-mart main products are food based and Ikea specialise in furnishings, in this way they aren't indirect competition. This may clash as Asda and Wal-mart will offer household items at a cheaper price than Ikea so some people might be tempted to purchase Asda's product as they are cheaper and have a better customer service reputation if there is a fault with the product.

There are several types of competition which occur with both Wal-mart and Ikea. Below I will say the types of competition and how It effects the business in their day to day running and over seas markets.

Perfect competition - this would exist in an ideal world. This is a situation were there are lots of buyers and sellers of a product that is identical in every respect. All buyers and sellers of the product have detailed knowledge of the prices being charged by all the firms in the market. In this situation no seller would be able to charge a higher price than competitors because nobody would want to buy from them.

The internet is bringing customers nearer to perfect competition for some products. For example, Tesco, Asda and Morrisons, all offer a budget range of