Syllabus: 3.2 Influences on Business
Module: 3.2.2 Ethical and Environmental Considerations
Lesson: 3.2.6 Competitive Environment

Introduction

This article supports the AQA GCSE Business specification, focusing on Unit 3.2.6: The Competitive Environment. It’s part of the broader theme 3.2 Influences on Business, which equips students to understand external pressures that shape how businesses operate.

Understanding competition is vital for grasping how markets work and why businesses make certain strategic decisions. This topic lays the foundation for strategic thinking, resilience, and adaptability — key skills for both exams and real life.

Key Concepts

The AQA syllabus requires students to understand the following about the competitive environment:

• What competition is and how it affects businesses.

• How competition influences:

  • Price

  • Quality

  • Choice

• Impact of competition on business decision-making regarding:

  • Product development

  • Marketing

  • Customer service

  • Operational efficiency

Students should be able to compare competitive vs. non-competitive markets and explain how businesses might respond to increasing or decreasing levels of competition.

Real-World Relevance

Competition is everywhere — from supermarkets to streaming services. Bringing in examples students already know makes this topic more engaging and less abstract.

Mini Case: Supermarkets and Price Wars

Tesco, Aldi and Lidl have competed intensely on price and convenience. In response to Aldi’s rise, Tesco introduced “Aldi Price Match” campaigns. This shows how competition can drive price strategies and innovation in customer service (e.g. scan-as-you-shop tools).

Mini Case: Netflix vs. Disney+

In digital markets, competition has driven down prices and increased content quality. To stay competitive, platforms invest heavily in original content, bundle services, and optimise user experience.

Encouraging students to spot competition in their own consumer habits — e.g. gaming consoles, phone providers — helps deepen their understanding.

How It’s Assessed

Students are typically assessed on this topic through a mixture of:

• Multiple choice (e.g. identifying features of competitive markets)

• Short-answer questions requiring definitions and brief explanations

• Application questions using business contexts

• Extended writing questions asking students to evaluate how competition affects a specific business decision

Key Command Words:

• Explain – give reasons or causes

• Analyse – examine impacts and consequences

• Evaluate – make a judgement with reasons, considering both sides

To prepare students, use activities that require them to compare scenarios, justify business strategies, or analyse case studies.

Enterprise Skills Integration

The competitive environment topic offers a natural fit for building practical, real-world thinking.

Using Enterprise Skills Business Simulations, students can step into the shoes of a business owner navigating a competitive market. They make decisions on pricing, product selection, and promotion while reacting to competitor moves — ideal for:

• Problem-solving: What to do when a rival undercuts your price?

• Decision-making: Balancing quality, cost and customer needs

• Commercial awareness: Understanding consumer choice and behaviour

These simulations can be embedded within the scheme of work or used in drop-down days or exam revision sessions.

Careers Links

This topic maps well to the Gatsby Benchmarks, especially:

• Benchmark 4 – Linking curriculum to careers

• Benchmark 5 – Encounters with employers and employees

Relevant pathways include:

• Marketing – Understanding how to position a business in a crowded marketplace

• Retail Management – Making pricing and product decisions

• Entrepreneurship – Spotting opportunities and responding to competitive threats

• Product Development – Innovating to differentiate in a competitive market

Invite guest speakers or alumni working in these sectors or use virtual encounters to help students connect classroom learning to future roles.

Teaching Notes

Tips:

• Start local: Use local businesses or student-loved brands as case studies.

• Encourage comparisons: Ask students to compare businesses in competitive and less competitive markets.

• Integrate simulation: Use plug-and-play simulations to bring decision-making to life.

• Use debates: E.g. “Should a business always try to beat competitors on price?”

Common Pitfalls:

• Students may confuse competition with collaboration or fail to grasp indirect competition (e.g. cinema vs. Netflix).

• Watch for vague responses — encourage use of business terminology like market share, USP, and consumer loyalty.

Extension Ideas:

• Run a “Dragon’s Den” style pitch competition where students must develop a product and defend how it stands out in a competitive market.

• Compare responses to competition in different sectors — e.g. fast food vs. tech.