Competitors

As well as having to consider rising costs and how this impacts on the price of products, an enterprise needs to know what its competition is doing. This might be:

• Existing competitors the enterprise already knows about

• New enterprises coming into the market

A new enterprise can have an impact on an existing enterprise by attracting its customers – for example, by running promotions or special offers that are appealing. Existing competitors may also decide to run special offers to try and gain customers from other businesses.

Competition can sometimes become very fierce and turn into a price war, with enterprises trying to outdo one another by offering the lowest possible price. This could lead to problems, or even failure for some of the enterprises, because lower prices mean lower revenue for the businesses involved. Reduced revenue will affect cash flow and can leave businesses struggling to pay bills