In order to attract and satisfy customers, businesses need to be competitive and make products that are superior to their rivals.
This is not easy because businesses operate in a dynamic and challenging market place. Business rivals are likely to be at work creating new products or improving operations to reduce costs and drive down prices. Businesses may need to adapt their products because ever-changing fashion trends mean that customer requirements evolve over time. Success today is no guarantee of future profits.
A competitive market will have many businesses trying to win the same customers. A monopoly is either the only supplier in a market, or a large business with more than 25% of the market.
Competition can make markets work better by improving these factors: