Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What major influence does competition have on the micro environment?

1. It determines the pricing strategies of suppliers

2. It influences the operational effectiveness of stakeholders

3. It impacts the relationship between customers and businesses

4. It shapes the availability of resources and customers

The correct answer is: It shapes the availability of resources and customers

Competition plays a significant role in shaping the micro environment by influencing various aspects of how businesses operate and engage with their market. In this case, the correct answer highlights that competition fundamentally affects the availability of both resources and customers. When competition is high within a market, businesses must work harder to attract customers. This can lead to more innovative products, better customer service, and pricing strategies that are designed to lure potential buyers away from competitors. The availability of customers can shift as they may have multiple options to choose from, leading to a dynamic market where customer loyalty and brand differentiation become critical. Furthermore, competition can also impact the availability of resources. For example, suppliers may adjust their offerings and pricing based on the demand generated by competing businesses. As companies vie for the same customers, they may also compete for limited resources, such as skilled labor and materials, influencing not only their operational capacity but also their overall strategy. The other options do touch on important aspects, but do not encapsulate the broader influence that competition has on resource and customer availability, which are critical elements in the operational landscape of any business.