L5: Competition & Influences on Business Decisions
Companion Material — beyond the lesson
Real-World Case Studies
Aldi and Lidl vs the "Big Four" — competing on price
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 decision to expand robotic warehouse technology with Kroger — risk vs reward materialising
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.
Exam-Style Practice
State two ways a business can compete with its rivals. (2 marks)
Model answer
Any two of: price, quality, innovation, customer service, convenience, data and personalisation.
Explain one way that 'opportunity cost' might influence a business decision. (4 marks)
Model answer
Opportunity cost is the benefit given up when a business chooses one option over another. For example, if Ocado spends heavily on robotic warehouse technology, the opportunity cost might be investment it could have made into its core UK grocery delivery service instead — meaning the decision to prioritise international technology partnerships has a real cost even if it later proves successful.
Analyse how market conditions might influence a business's decisions, using an example. (9 marks)
Model answer structure
Point: Market conditions — such as competitor pricing, demand levels, and the wider economic climate — directly affect whether a business decision is likely to succeed.
Application: A business in a highly price-competitive market may need to hold off on a planned price rise if rivals are cutting prices, to avoid losing customers to them.
Analysis: This shows that ignoring market conditions when making a decision risks that decision failing, even if it fits well with the business's other aims — for example, a decision that looks strong on paper can still fail if competitors respond aggressively or demand shifts unexpectedly.
Second point (for full marks): Add a second influence on business decisions, such as objectives or ethics (covered earlier in this lesson), applied to a specific example — a business with a strong ethical mission, such as Patagonia, may accept weaker short-term market conditions to stay true to its values, showing market conditions are rarely the only factor at play.
Key Term Flashcards
Tap a card to flip it.
Competitive advantage
An edge over rivals that helps a business attract and retain more customers.
Opportunity cost
The benefit given up by choosing one option over the next best alternative.
Market conditions
The external market environment, which can create opportunities and threats.
A*/A Stretch
Synoptic link
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.
Examiner's eye
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.
Try This With AI
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.