The main competitors of Tesco are Sainsburys and Asda. These 3 supermarkets compete on price by doing special offers such as ‘buy one get one free’ and offer discounts on certain products.
Supermarkets such as Tesco and Asda are both national chains, but they are trying to expand worldwide which would make them a more powerful and profitable company.
Errol Anderson Motors is a local business, but Errol’s main competitor, Kwik-Fit, are a national chain, which gives them the edge over Errol as they are more well-known.
For Errol to start competing with Kwik-Fit, he would first have to start importing more parts for less popular cars. This would attract more customers to his garage.
Economic Conditions
Interest rates
The interest rate is the cost of borrowing money, and is measured as a percentage.
Interest is normally charged by banks to borrowers. The higher the interest rate, the more expensive it is to borrow money. If the interest rate is higher less businesses will want to borrow, invest and expand.
If the interest rate is low, more businesses will be encouraged to borrow, invest and expand.
Inflation
Inflation can be described as ‘a widespread rise in the level of prices cross the economy’.
It is measured as a percentage rate which indicates the amount by which prices increase over a year. Inflation rates have varied widely over the years.
When inflation is high:
Interest rates are high, therefore borrowing is expensive
Future money values become very uncertain
Price lists keep changing
Exchange Rates
The exchange rate is the conversion rate from one currency to another.
Changes in the 3 economic conditions above can affect Tesco and Errol Anderson Motors.
If inflation is high Tesco’s price list would keep changing, which would cause problems for customers.
If there was a rise in the £ then fewer tourists would come to the UK, which would mean slightly less customers for Tesco.
These changes will also apply for Errol, but it would have a bigger impact on him because his garage is a smaller business.
