It is always good to start with definitions. In business, a external competitiveness refers to the dynamic system in which a business or company competes and functions against other businesses and companies. To put it another way, if there are many companies that offer the same product or service, then the environment is externally competitive.
Here is an example. If you are thinking about starting a coffee shop in New York City, you will find out quickly that the market is saturated by chains like Starbucks and old establishments. Therefore, we would say that the market is competitive. However, if you are going to start an airline service to the Ivory Coast, where there are not too many flights, you would say that market is not very competitive. Based on this, you might want to go into fields that are not too competitive, but the downside is that there probably will be little demand. As a consequence, your business might not succeed.
The main factors that shape a company's ability to compete is twofold.
First, if the market is saturated, it will be harder for a company to succeed. The competition might be too fierce.
Second, the costs of a company to bring about a service or product is also important. If a company can manage to cut costs, then they will get more market share as they undercut competitors.