Reflecting and consolidating

Chapter summary
  • A market is the place where sellers of particular goods and services meet with the buyers of those goods and services.
  • Markets vary in form, scale, location and types of participants, as well as the types of goods and services traded.
  • Competition is the desire to be more successful than others and occurs in all aspects of our lives, both as individuals and businesses.
  • Competition for both businesses and consumers has a range of benefits.
  • Businesses want to be able to gain a competitive advantage or edge over their rivals.
  • In seeking to be competitive in the market, businesses can draw on a variety of strategic areas, such as gaining market share, managing their brand, adopting ethical and socially responsible behaviour, how they source their inputs, differentiating their product or service, and adopting an online presence, using social media, blended marketing and open innovation.
Interactive activities

Key terms

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Short-answer questions
  1. Define the following terms. Demonstrate your understanding by incorporating each term in a sentence.
    1. Monopoly
    2. Brand leader
    3. Product differentiation
    4. Competitive edge
  2. Categorise the following statements as either true or false:
    1. A market is the process by which the prices of goods and services are established.
    2. Market share is the number of shares you own in a company listed on the Australian Securities Exchange.
    3. The internet has greatly reduced the importance of the physical location of all businesses.
  3. Describe why it is important for a business to listen to and interact with its customers.
  4. For each of the following factors, identify an issue that may concern a business:
    1. consumers or customers; for example, changing consumer preferences
    2. competitors
    3. suppliers
    4. regulatory bodies; for example, health warnings and plain paper packaging on products.
  5. Analyse and evaluate the following statement: ‘A business that sources its raw materials from a sustainable source is guaranteed to gain a competitive advantage over its competitors.’
Extended-response question

Read the case study and complete the task that follows.

The Rainbow Serpent is a Sydney based company specialising in promoting Aboriginal artists and marketing Aboriginal art and design. It is a family run business which was established in 1991 by Gerry Parnes, Brad Parnes and Caroline Friend. It has stores in Sydney and Brisbane International Airports and operates from its warehouse in Marrickville, Sydney Australia

The Rainbow Serpent’s philosophy is to combine the sale of authentic Aboriginal products and promote local and international awareness of Australian indigenous artists and crafts people. All commercial ranges are of genuine design with artists receiving royalties for their sales. It stocks one of the largest ranges of authentic Aboriginal art, craft and endorsed commercial products in representing Aboriginal artists from the Tiwi Islands, Central and Western Deserts, Arnhemland, NSW, Queensland and Victoria. Proceeds and royalties from all purchases assist Aboriginal artists and communities. The gallery promotes community art centres as well as individual artists. Community art centres represented are Tiwi Designs, Bathurst Island NT, Munumpi Arts, Mellville Island NT, Keringke Arts, Santa Teresa, NT.

Source 20.14 Rainbow Serpent, a company which promotes Australian Aboriginal art, craft and design

Discuss whether you believe this business would be judged as being ‘socially responsible’ in the way it operates it business. Provide examples of any actions taken by the business which you believe support your opinion.