Good morning everyone. Today, we are going to talk about two very important external influences on a business: competitors and suppliers. No business works alone. Every company, whether it’s a small local shop or a global brand, is affected by what other businesses and their suppliers do. Understanding these influences helps a business make better decisions and stay competitive in the market.
Let’s start with competitors. Competitors are other businesses that offer similar products or services to the same group of customers. The way these competitors act can have a big impact on a business’s decisions.
For example, let’s think about the airline industry. When budget airlines like Ryanair or EasyJet offer cheaper fares, larger airlines such as British Airways or Emirates often have to reconsider their own pricing strategies to stay attractive to customers. This shows how pricing decisions are directly affected by what competitors do.
Competition also pushes businesses to innovate and improve their products. Take the smartphone market for example. Companies like Apple and Samsung are constantly trying to outdo each other by adding new features or improving camera quality. This innovation benefits customers and keeps the market dynamic.
Next, competition influences marketing and promotion. Businesses try to stand out through advertising, loyalty schemes, and special offers. You’ve probably noticed how McDonald’s and Burger King often compete with limited-time menus or catchy new campaigns to attract more customers.
Another area affected by competition is customer service and brand image. When customers have many choices, good service becomes a way to stand out. Think about Amazon — it focuses heavily on fast delivery and easy returns, which makes customers trust and prefer it over competitors.
Now, let’s move to the second part: suppliers. Suppliers are the businesses that provide raw materials, components, or services to another business. Their reliability, quality, and pricing have a big impact on how efficiently a business can operate.
One major influence is the cost of production. If suppliers raise their prices, businesses might face higher costs. For example, if the global price of wheat goes up, companies that make bread or pasta, like food manufacturers, may have to increase their prices or accept lower profits.
Another important factor is product quality. The quality of a company’s suppliers affects the quality of the final product. Luxury brands such as Louis Vuitton or Rolex rely on premium materials from trusted suppliers to protect their brand reputation.
Dependability is also key. If suppliers are late with deliveries or unreliable, it can cause big disruptions in production. For instance, companies like Toyota that use just-in-time systems rely heavily on parts arriving exactly when needed. A delay in supply could stop the entire assembly line.
Finally, there’s negotiation power. If a business has only one supplier, it might have to accept whatever price or terms that supplier offers. But if it has several suppliers, it can negotiate better deals. A good example is large supermarket chains like Tesco or Walmart. Because they buy in huge quantities, they have strong bargaining power and can demand lower prices from suppliers.
So how do businesses manage these pressures from competitors and suppliers? They use a few smart strategies. One is supplier diversification, which means not relying on just one supplier. Another is vertical integration, where a business buys or controls its suppliers to have more control over the supply chain. Businesses also use market research to stay one step ahead of competitors and spot new trends. Sometimes, they even form strategic partnerships with suppliers or competitors to share resources or reduce risks.
To wrap up, competitors and suppliers are two powerful external influences that shape business decisions every day. Competitors affect how a business prices, promotes, and designs its products, while suppliers influence production costs, quality, and reliability. Successful businesses keep a close eye on both, adapt quickly, and build strong, flexible relationships to stay
