Revision and practice on the influences on business decisions.
Key vocabulary: Market Conditions, Ethics, Opportunity Cost, Competitiveness
Competitiveness is about how well a business can attract and retain customers compared to its rivals. In any market, businesses are in a constant 'race' to win the customer's choice. A business wants to gain a 'competitive advantage'.
Ways in which a business competes:
| Benefits of being competitive | Challenges of maintaining competitiveness |
|---|---|
| Profitability | Dynamic markets |
| Market Share | Technological Change |
| Customer Loyalty | Globalisation |
| Able to attract talent |
Business decision-making is the process of choosing a course of action from a range of alternatives to achieve a specific objective. Every decision is influenced by a complex mix of internal and external factors.
| Objectives | The business's goals will always be the main driver of its decisions. A business aiming for fast growth will make very different decisions from one aiming for simple survival. |
|---|---|
| Risk Vs Reward | A decision with a high potential reward (e.g. a big profit) often comes with a high level of risk (e.g. a large chance of failure). |
| Resources | The availability of resources acts as a major constraint on decision-making, e.g. lack of finance. |
| Market Conditions | The external market environment can create both opportunities and threats. |
| Ethics | The business's moral principles can act as a constraint or a guide. |
| Opportunity Cost | When a business chooses to spend its money on one project, it gives up the benefit of the next best alternative. |
UK discount supermarkets Aldi and Lidl have grown their market share over the past decade largely by competing on price against long-established rivals such as Tesco, Sainsbury's, Asda and Morrisons. Their approach — fewer product lines, efficient store layouts, and a focus on value — illustrates "price" as a way of competing, one of the six methods listed in this lesson.
Source: widely reported UK grocery market coverage; general market-share trend, not a specific figure.
Ocado's technology division signed a major deal with US grocer Kroger in 2018 to build up to 20 robotic warehouses. This was a high-risk, high-reward strategic decision, driven by the objective of international growth. By December 2025, Kroger had decided to close three of the warehouses and cancel another planned site, though it paid Ocado $350 million in compensation. This shows how a decision made for its potential reward can carry real risk that plays out years later — directly illustrating "Risk Vs Reward" as a key influence on business decisions.
Source: verified via search, September 2026 — Reuters coverage of the Ocado-Kroger warehouse closures.
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1. True or False: "Data & personalisation" is one of the six ways a business can compete, according to this lesson.
2. True or False: "Opportunity cost" means the total cost of running a business.
3. True or False: in the Ocado/Kroger case study, Kroger closed three warehouses and cancelled another, but still paid Ocado $350 million in compensation.
4. True or False: "market conditions" refers to the internal rules set by a business's own management.
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Tap the word that correctly completes each sentence.
1. The external market environment, which can create both opportunities and threats, is known as ____.
2. The benefit given up by choosing one option over the next best alternative is called ____.
3. An edge over rivals that helps a business attract and retain more customers is known as ____.
4. According to the case study, Aldi and Lidl have grown their market share largely by competing on ____.
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Short, snappy recall questions — tap to reveal the answer.
How well a business can attract and retain customers compared to its rivals.
Any one of: price, quality, innovation, customer service, convenience.
The next best alternative given up when a business makes a choice.
Any one of: objectives, risk vs reward, market conditions, ethics.
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Connecting to operations (3.2): Ocado's warehouse decision links directly to later content on economies of scale and technology in operations. Strong students can pre-empt this by noting that the SAME decision (build robotic warehouses) can be analysed through multiple lenses: as a marketing/growth decision now, and later as an operations efficiency decision.
Weaker answers treat the six influences on business decisions (objectives, risk/reward, resources, market conditions, ethics, opportunity cost) as an unconnected checklist. Stronger answers show how two or more influences interact in a single real decision — as the Ocado/Kroger case does with resources and risk/reward together.
Before using this: AI tools can get facts or mark scheme details wrong, and quality varies by tool. Always check anything factual against your notes or ask your teacher.
Give me a short scenario about a UK business making a pricing decision. Ask me to identify which of the six influences on business decisions (objectives, risk/reward, resources, market conditions, ethics, opportunity cost) are most relevant, and challenge me to justify my choice.