im doing my desertation on competition amoungst businesses.I would love to know all the negative and positive effects on a business organisatition of competition.how can companies overcome such a challenge of competition.
Very interesting topic. Well to start with competition has no positive effects on the business itself. All businesses would rather be a monopoly. However, competition will have great and positive effects on the consumers and the economy but not the business itself.
The negative effects on the business are the following:
– Cusomers: in any amrket you have a limited number of customers that businesses are competing for, so the more businesses there are the lesser your market share.
– Resources: Also limited in supply, resources like skilled employees, raw materials and other resources that you might need will become more expensive the more competition you have. You will be competing to acquire those limited resources making the more and more expensive.
Now the positive effects:
– Better customer satisfaction
– More efficient production
– Better employee remuneration
– more product variation
– better and more efficient economy
– Better value for money
The capitalist economic system is built around competition. it is the main engine that drives markets to operate as the do.
The solution to competition is in one of three ways:
1- product distinction: make your product distinct from your competion so that to appeal to a sertain market segment where you think there are unsatisfied demands.
2- Market or industry access: choose a market that is not saturated yet or industry with a high entry bariers that you can meet (like banking).
3- Produce cheaper: by making you internal processes more efficient or outsourcing, you will be able to beat your competition by lowering your price (but that is only temporary)
You can further expand each of the above issues. well that is all I could come up with for now. Enjoy
January 30th, 2010 at 1:44 am
Offhand, i’ll give you some examples.
1- two tattoo parlors within a few blocks of one another are liable to have the same clientele. The winner will offer better service, up to code with health inspection, better artists. The competition within a small town will be insane (think how many customers a small town will draw per capita)
2- My film-editor friend edits commercials and so they ask him to sign a non-disclosure stating he will not edit for other post-production houses within a 25mile radius of their business (cuts down on competition). As a freelancer, he was not compensated for his work, thus sought out work elsewhere. They tried to sue but case thrown out of court due to lack of compensation.
3- Many well-established businesses have high-salary employees sign the non-disclosure pact from running off with sensitive information to offer it up to the competitor (to kill competition). Like an employee who is whisked away by Company B with offer of a bigger salary and benefits in exchange for list of clients.
4- That employee may take their client list with them feeling justified since that person developed that list of contacts during their tenure at Company A. However, they were properly compensated for their skills at acquiring such contacts and the non-disclosure agreement is however, binding so it’s technically Company A’s property.
5- Is your product/service needed year-round? That may make competitor more aggressive in their pursuits to corner market
That’s all I can think of so good luck with your dissertation.
References :
January 30th, 2010 at 2:22 am
Very interesting topic. Well to start with competition has no positive effects on the business itself. All businesses would rather be a monopoly. However, competition will have great and positive effects on the consumers and the economy but not the business itself.
The negative effects on the business are the following:
– Cusomers: in any amrket you have a limited number of customers that businesses are competing for, so the more businesses there are the lesser your market share.
– Resources: Also limited in supply, resources like skilled employees, raw materials and other resources that you might need will become more expensive the more competition you have. You will be competing to acquire those limited resources making the more and more expensive.
Now the positive effects:
– Better customer satisfaction
– More efficient production
– Better employee remuneration
– more product variation
– better and more efficient economy
– Better value for money
The capitalist economic system is built around competition. it is the main engine that drives markets to operate as the do.
The solution to competition is in one of three ways:
1- product distinction: make your product distinct from your competion so that to appeal to a sertain market segment where you think there are unsatisfied demands.
2- Market or industry access: choose a market that is not saturated yet or industry with a high entry bariers that you can meet (like banking).
3- Produce cheaper: by making you internal processes more efficient or outsourcing, you will be able to beat your competition by lowering your price (but that is only temporary)
You can further expand each of the above issues. well that is all I could come up with for now. Enjoy
References :