3.02 Explain the concept of

competition.

Competition The rivalry between two or more

businesses to gain as much of the total market sales or customer acceptance as possible.

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. http://www.youtube.com/watch?v=up3nC

Nlu28E

Types of competition1. Direct competition2. Indirect competition3. Price competition4. Non-price competition5. Monopolies

Direct competition Involves two or

more companies that utilize the same type of business format.

Example Coke and Pepsi

http://www.youtube.com/watch?v=POgDUEXrG6M&feature=related

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.

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.

Non-price competition Based on factors

not related to price.

Includes: quality of products, customer services, business location and qualifications of salespeople.

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.

In 1986, the USFL (having recently decided to compete directly with the NFL) filed an anti-trust lawsuit against the National Football League. The NFL was found to have violated anti-monopoly laws. However, the USFL was awarded a judgment of just $1 which, under anti-trust laws, was tripled to $3. The USFL finally received a check for $3.76 in damages in 1990, the additional 76¢ representing interest earned while litigation had continued. Notably, that check has never been cashed

http://www.youtube.com/watch?v=Jrtkr3gmAwQ&feature=results_video&playnext=1&list=PL743456C9EBA1F745

Monopolies

In 1986, the USFL (having recently decided to compete directly with the NFL) filed an anti-trust lawsuit against the National Football League. The NFL was found to have violated anti-monopoly laws. However, the USFL was awarded a judgment of just $1 which, under anti-trust laws, was tripled to $3. The USFL finally received a check for $3.76 in damages in 1990, the additional 76¢ representing interest earned while litigation had continued. Notably, that check has never been cashed.

http://www.youtube.com/watch?v=Jrtkr3gmAwQ&feature=results_video&playnext=1&list=PL743456C9EBA1F745

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.

Loss A decrease in a potential profit. Potential for loss or failure. Risk Management – how to

effectively manage losses due to risk.

http://player.discoveryeducation.com/index.cfm?guidAssetId=A72C694F-7C5D-4DCB-9432-6CEA486DF3C3&blnFromSearch=1&productcode=US

Sources of revenue1. Admission2. Food and beverage sales3. Parking4. Merchandise sales5. Sponsorships6. Naming rights

Sources of expenditures1. Performer fees2. Rental or leasing of facilities3. Advertising4. Incentives or in-game promotions5. Food and beverage services6. Security staff

Competition debateDivide students into groups and assign

half the students to support the view that competition harms society and

the other half the view that competition benefits society.

Encourage students to look at all types of competition, from the

business world to sports and even academics.