Question: Peter Jensen has opened a small business making handcrafted guitars. His guitars sell for around 4,000 apiece and he only sells about 30 each year.

Peter Jensen has opened a small business making handcrafted guitars. His guitars sell for around €4,000 apiece and he only sells about 30 each year. When warned about potential competition from a producer in another country, Peter said, “I’m not worried about global competition. Although my guitars are very expensive, I work hard to satisfy my customers. My guitars have an exclusive name that customers are willing to pay for. I will never be a low-cost producer.” Should Peter worry about global competition and change his business?

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