A competitive environment is the dynamic (ever changing) system in which the business operates.
The more sellers of a product or service there are, the more likely it is that the market is competitive.
Competitors might be DIRECT or INDIRECT.
Direct competitors sell the same product or service e.g. KFC and McDonald’s.
Indirect competitors compete for the same customers but they provide a different product or service e.g. trains and buses.
In order to help work out where it stands in the environment a business will carry out SWOT analysis. This can be done on itself or a competitor.
SWOT stands for strengths, weaknesses, opportunities and threats. A competitor’s weaknesses might provide you with an opportunity. Threats might just be relative to your business or they might impact on your competitors too.