Edexcel Business A Level Revision

Push factors - are those that force a business to leave the market in which they currently operate to look for new income streams in the future e.g. operating in a different market. Often businesses look to another country when operations in their current market become difficult. This can include a saturated market or products coming to the end of their product lifecycle. These are mainly reasons a business has to want to grow outside of the domestic country in which it currently operates. Saturated markets are the point at which a market is no longer generating new demand and decline in sales revenue for a firm's products, due to competition, decreased need, obsolescence or alternatives. Businesses will look for growth in overseas markets where there are similar characteristics, for example demographic trends and GDP per capita and where sales revenue will rise again. An example of a UK saturated market is the grocery market, where Tesco attempted to expand into China, Thaila...

Competition - is where rival businesses in the same market try to win customers from each other. Price - The value at which a product or service is offered to customers Businesses can gain customers through using the price of their product or service, for example by offering a lower price for a product or service that is similar to that of a competing business.

Dynamic markets - Markets which are constantly changing. The environment is dynamic, for example buyers may choose to buy less of one product and more of another. It can grow, change and decline very quickly Some markets are quite stable and change little over time. For example, the market for Kelloggs cornflakes has changed very little, although there are far more competing products than there were when they were invented in 1894. Market size and market share do not change much and there is little innovation. Other markets are far more dynamic, subject to rapid and continuous changes. All businesses must adapt to the changing nature of their markets. Reasons for dynamic markets constantly changing: Social trends Changes in technology Competitiveness Trends Consumer tastes Fashion Rising/Falling incomes Arrival of a superior product offered by competition External shocks Business have to adapt their marketing in response to these changes... If they do not keep up, the...

Predatory pricing - When prices are set low for a short period of time to force competitors out of the market. Prices are then put back to where they were previously or even higher. This strategy is used by dominant businesses, who can afford to make a loss in the short run, to force new entrants out of the market. This is deemed as illegal in the UK. Once existing firms have been driven out and entry of new firms deterred, it can raise its prices. This is ANTI-COMPETITIVE and therefore not in the best interest of consumers in a market. The existing competitors in the market see the new entrant about to launch - and immediately begin to lower prices to retain their customers If the new entrants cannot match the lower price (or provide a product which customers still belive represents value for money) then they may have to choose not to enter the market. The big loser in this is the customers. They are denied a wider choice in products. This therefore means price...