When you are trying to understand the status quo of a business, a key factor is the nature of the market in which it operates, in particular, you will be interested in the number of competitors and therefore the level of competition it can expect.
Some common classifications are set out below.
Monopoly
A market form in which there is only one business undertaking, meaning that there are no competitors. Within the UK, the Competition and Markets Authority tries to guard against abuses of monopolies.
Oligopoly
A market in which there are only a few (perhaps three of four) major competitors, which control the vast majority of the market. The small number of sellers makes it easier for any particular business to be more aware of what the other players in the market are doing. Price fixing is often seen in this type of market. This is where key players collude to set prices. They can set prices high, because there is nowhere else where consumers can then go to get a lower price. Alternatively, perhaps two providers will collude together to set prices low in order to push out other players and then raise their prices to recoup their losses. This is known as predatory pricing.
Monopolistic Competition
In this scenario, there are many competing businesses and consumers in the market and, because products are differentiated between businesses, there is more than just a price consideration between products. In the short run, firms may have a monopoly on their products but in the longer run, because there are usually low barriers to entry, other providers may step in to their market.
Oligopsony
This is quite a specific type of market form but one which you are likely to come across if you work within the farming sector, where there are many suppliers, such as cocoa, tobacco or cattle farmers but they have only a few possible buyers to which that they can sell. In the case of cocoa, there are only three major buyers which sell the cocoa beans on to chocolate makers.
When you are trying to understand a business, it is very useful to understand the market form that it operates within as it will provide you with an idea of how competitive its sector is and therefore what conditions it operates within.