benefits of competition in business

One of the benefits of competition in the business as well as in the economic environment is the lower consumer prices. In a competitive market prices will be kept low, choice will be high and quality will be improved. This … When competitors are around you, you would be forced to provide better quality service. It’s said you should keep your friends close and your enemies closer. Quality: businesses will improve the quality of their existing products and services in order to retain and attract customers. I would love to hear what you have to say to continue the exploration of this subject further. In a competitive market each individual business will be fighting for customers in order to gain profit. Competition is one of the fundamental ingredients for economic growth. This is due to the endless need of staying ahead of others which in turn forces people to act fast. Over the last 4 years, Tim has written numerous articles on the topic and has been an active contributor in business forums. As far as there is high competition, you get better information about customer preferences or requirements. Advantages and disadvantages of competition in learning. If you operate your business in this manner you will leave yourself wide open to new entrants within your sector, starting up with ease and stealing your customers with a higher choice and quality of products and services at more affordable prices. Competition is to be considered as an important aspect of economic growth. The Benefits of Competition in Business. When making decisions business leaders should ask themselves the following question, “If I take this particular action, will all my stakeholders benefit?” If the answer is ‘yes’ then the right decision has been made. Customers would have to buy from you regardless. Better Knowledge about Customer Preferences. Benefits of Competition: The Major Reasons Why Free and Open Competition is Beneficial to the Economy Promotes the Welfare of Consumers In short, you get better ideas that you can make use of. But if there are particular situations where staff collaboration, sharing of finances or referral of customers is mutually beneficial then collaboration with competitors will support the growth of the sector as a whole benefiting everyone. If you have any thoughts on this topic please share them by posting a comment. Leveraging innovation, credibility, and more benefits may be the key to your success: Add This Infographic to Your Site Altogether, you become highly motivated to achieve great heights. If the achieved selling price can at least equal (o… A competitive market drives innovation as each individual business strives to gain a competitive advantage. Upgradation. Avoiding complacency. Innovation is crucial to the progress of any business. (EdD Candidate - University of Cambridge). From generating referrals to coaching your network to building a killer website, we love seeing solo professionals succeed. Filed Under: Blog, Entrepreneurship, Social Responsibility, Please prove you are human You are the only option for your customers and they have to be satisfied with what you provide whether it is service or product. The path to eCommerce success is rife with costly mistakes that can sink a good business. You need to drive innovation and productivity in your sector in order to become world class at what you do. The relative stability of Canadian, U.S., and European governments leaves citizens unfamiliar with the significant poli… If you create value for your competitors it will make your business sector more competitive overall. Choice: businesses will increase their product range or service offer in order to provide more choice than their competitors. Competition reduces the length at which the ideas are generated and put to use. While the competition may not exactly be your enemy, there are still advantages to knowing them. It helps to discover your’s and your competitor’s strengths and weaknesses. Creating value for your competitors can drive innovation and productivity in your business sector. It creates jobs and provides people with a choice of employers and work places. Competition between employees is an inescapable part of most people’s work lives. When I articulate this approach to business to my colleagues and students they nod along merrily agreeing with everything I have to say. While this immediately makes them seem like the enemy, the truth is that competition is not all bad. Firms may race to be the first to market a new or different technology. You could charge what you want without having to worry about the quality or choice you provide as you would be the only option available. Competition may not be the only driving force behind price, quality and choice for consumers and it is certainly not the only driving force behind innovation and productivity – but it certainly plays its part. You might have to adopt new technologies or business strategies to stand out from competition. Antitrust laws encourage companies to compete so that both consumers and businesses benefit. It could be better service, low prices etc. The fact is that competition benefits not only consumers, but also businesses in different ways. Competition may seem threatening at times, but the fact is that it comes with numerous benefits. Although economic competition forces lessen your market share, it can also force you to become a better business. I blog about educational management and leadership and have a particular interest in playfulness and humour in teaching and learning. You may still think that lack of competition would be a whole lot easier. You must identify your key stakeholders and aim to create value for each of them in a simultaneous and mutually-beneficial way. If you own a small grocery store, you inevitably have to compete with major national and regional chains. Your competitors are businesses that may deter people in your target audience from choosing you. It’s vitally important to … You may be able to get away with a non-competitive market for a while but sooner or later it will become competitive and when it does you had better be in a position to respond. When you have constant competition, you need to make new and exciting offerings to your clients to stay relevant and ahead. But, this thought arises because of lack of knowledge on how to utilize competition for the growth of your business. You provide a product or a service that is provided by a number of other companies. 28 June, 2014 by Jonathan Sandling Leave a Comment. Aside from blogging, Tim works at customgear.com.au, a company specialising in promotional products. Quality can mean various things: products that last longer or work better, better after-sales or technical support or friendlier and better service. At least during stressful times of business, business people think that it would have been better if there is no competition in business. Employees will be forced to think creatively and work innovatively to continuously improve within their sector. This means that you have a lot of competition in your sector, with other companies always trying to eat into your business. Competition is an inevitable aspect of business. Grocery Competitive Advantages. Working efficiently will allow a business to keep prices low and maximise their available resources. People would want to work for, invest in, buy from and support your business all over the world. Keeps you alert. How Committed are your Customers to Social Responsibility? But, this thought arises because of lack of knowledge on how to utilize competition for the growth of your business. This is a fairly straight forward point to make but it is important that I make this clear before moving on. Employees will be forced to think creatively … Quality of service is a key to customer satisfaction. Startup Why Competition May Be the Best Thing for Your Business It isn't fun, but competition actually brings a number of benefits to startups--just be sure to stand out from the rest. You never wish to go down and you become a real hard working at the same time smart individual though it might be to stand out from the competition. However, when I add ‘competitors’ into the equation the nodding stops and the thinking begins. Innovation and productivity in business results in overall economic growth: regionally, nationally and internationally. This could even mean working in partnership on specialised projects and programmes with your competitors: the very people you are trying to out-perform. In this case, you work with your smaller competition to get a stronghold over the market share. Students from eight different colleges and universities competed in this competition. Innovation and Productivity A competitive market drives innovation as each individual business strives to gain a competitive advantage. Companies regularly compete among themselves, hoping to win consumer trust and revenue. In fact, competition can benefit your company. But if it benefits all stakeholders then its collective positive impact will be desired. Competition also reduces the need for governmental interference through regulation of business. This is recognized as your competitive advantage. You really become proactive, alert, creative and above all focused. But creating value for your competitors is massively counter intuitive, surely?! (Essay Assignment) refers to the potential for government upheaval or interference with business to harm an operation within a country (Figure 7.8 “Entering New Markets: Worth the Risk?”). But these changes don’t just happen overnight and without significant effort on the part of the businesses. Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. After all your competitors are a major stakeholder in your business. Then, you do not have to think on how to satisfy your customers more than your competitor as there is no such competitor. This article discusses some of the benefits that competitors can offer to your business. This will lead to more customer satisfaction which of course benefits you in long term. You tend to regularly upgrade your product as well as innovate so that you stay ahead … In order to achieve lower prices, increased choice and improved quality businesses need to work more innovatively and productively. Remember, No One Succeeds Alone, Wait Until They Get a Load of You: Storytelling & Community Building, Three Poker-Related Analogies for Startups, Tips For The Professional To Make Working Away From Home A Little Easier. The pursuit of innovation and productivity often results in the collaboration of ideas and work with other stakeholders. Competition is good For Consumers. You would have no one to compete with and all the customers to yourself. Thus, you can easily know the pulse of your customers and this can be utilized to make your business successful. Competition among companies can spur the invention of new or better products, or more efficient processes. Better quality: Competition also encourages businesses to improve the quality of goods and services they sell – to attract more customers and expand market share. In building a business you work diligently to identify and capitalize on what sets you apart from others that currently occupy the marketplace. Just how can competition be a good thing? In business, there’s nothing wrong with a little friendly competition. By not embracing competition and being willing to evolve within your sector as choice, quality and price dictates, you will be unlikely to generate the innovation and productivity that is required to substantially expand and grow your business. Whether overtly or otherwise, most companies create a dynamic in … Healthy competition encourages change which will distinguish your company from others through technology, product alterations or by improving the customer experience. If actions only benefit your competitors and penalises other stakeholders then it is not an action you would want to take. When your competitors make more profit than you, it means that they have adopted some great techniques to attract customers. They prevent you from becoming too comfortable and lazy in your business operations Once you are world class the world will seek your services. For example, if you run a business in a highly competitive, innovative, productive business sector in the UK it will be attractive for customers, staff, investors and communities not only in the UK but also globally. One important benefit of competition is a boost to innovation. Building Your Brand, Marketing Professional Services, Referral Building. It is a fundamental economic force that benefits customers as firms are under pressure to constantly improve products and offer attractive prices. You stop being complacent and always think of better ways to satisfy your customers. I AM HUMAN. In economics, competition involves two economic entities, such as business organizations, seek to obtain a share of economic gains. I appreciate it is not always this simple and sometimes benefiting all stakeholders simultaneously is extremely difficult and even impossible in some cases. Not necessarily, and I would like to argue that creating value for your competitors can be of benefit to your business and your other associated stakeholders. If things were going well for any business, it probably would take the businesses longer to brainstorm and implement new ideas. Competition is not only good for your business, it’s good for … The concept of social responsibility in business involves making a positive contribution to society as a whole. This is an important consideration when planning value creation for your competitors. Being competitive is the key to growing a business. Sole suppliers in an industry quickly stop innovating simply because they no … Therefore, each business will have to differentiate itself from the crowd and there are three typical ways this can be achieved. Customer Intimacy, Product Leadership or Operational Excellence – Pick one and don’t be greedy! In order to achieve lower prices, increased choice and improved quality businesses need to work more innovatively and productively. Consumers derive several key benefits from business competition, including higher quality products, a larger variety of similar products, better prices and greater accessibility in finding products. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale.Why is cost leadership potentially so important? Suppose, yours is the only business in a particular industry and of course you have complete control of the market. Competition also creates opportunities for individuals to enter the marketplace and start new businesses. The non-competitive approach outlined above is drastically narrow-minded and would be ultimately short-lived. Creating camaraderie helps to … In fact, it is important for companies to have competitors, because it is through competition that innovation and improvement occur. But by having this ideal in mind, the concept of simultaneous value creation for all stakeholders, without the need for trade-offs, is crucial for achieving successful and meaningful social responsibility practices. But there is a case for supporting your competitors when specific situations arise that will provide mutual benefits. There are many benefits of competition in business and I will now attempt to explain and justify this argument as succinctly as I can. But, competition necessitates innovative thinking as you cannot survive without it. But these changes don’t just happen overnight and without significant effort on the part of the businesses. When you consider the secondary benefits of a competitive market and the associated economic growth, supporting a non-competitive market significantly limits your business’ potential for growth. Without competition, you’d be on cruise control, with no worries in the world. With this strategy, the objective is to become the lowest-cost producer in the industry. You might not focus much on quality of service you deliver if there is no competition. Soloville is dedicated to helping solopreneurs and other small firm owners think big and take their firms to the next level. Here are just a handful of benefits that a competitive analysis can offer. Higher quality at same prices – If you look at the Air conditioning market or any consumer durable … You try to reinforce your strengths and overcome your weaknesses. Competitive pressure drives innovation and productivity far more than a business’ intrinsic motivation to improve. The competition among them enable the consumers to select a product or products whatever they want. What a fantastic position to be in as a business and you have increased competition partly to thank for your success. In this example, the more soldiers you have in your army, the better. Required fields are marked *. I am not suggesting that you give all your customers away, donate money to or share all your research and secrets with your competitors: that would obviously be foolish. Benefits of friendly competition. This will increase the productivity of the business making them significantly more competitive in their sector. Price: businesses will compete for custom by keeping prices low offering good value for money. I am an educator, writer, presenter and academic based in the beautiful seaside town of Leigh-on-Sea, Essex, UK. Avoid Costly Mistakes. 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Tim enjoys blogging about business strategy and enterpreneurship. To stand out from competition, you always need to be highly motivated and try to remain as a better business owner in the industry. One of the most popular and well-known benefits of competition is how it allows for stronger innovations in any given industry. The business not only benefits during the competition as employees build those bonds, but also once the competition is over. Competition makes people innovative. Thus innovative thinking does not become a necessity which makes you inactive in thinking. Benefits of Participating in a Case Competition On October 21, 2017, I participated in a case competition hosted by the National Association of Black Accountants-New York and Deloitte LLP. Business competition is a contest or rivalry between firms to win revenue. This way, companies are battling with each other just to win over the consumer’s business. Competition makes you think more innovatively which is necessary for the growth of your business. In a competitive market prices will be kept low, choice will be high and quality will be improved. It’s easy to coast when you’re the only option. Building Your Brand, Marketing Professional Services, Referral Building At least during stressful times of business, business people think that it would have been better if there is no competition in business. The interests of all your stakeholders are interlinked and by helping one you will often be helping another. So, you can study strategies that your competitors adopted which makes them successful. Offering lower prices is one of the most common strategies that most companies are doing in order to cope up with the competition. Then its collective positive impact will be improved offer attractive prices will seek your services Tim... Of staying ahead of others which in turn forces people to act fast,. 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People would want to take teaching and learning such as business organizations seek. To continuously improve within their sector to utilize competition for the long-term competition as employees build those bonds but! With everything I have to compete so that both consumers and businesses benefit and! An important consideration when planning value creation for your competitors not survive it! Class the world will seek your services and improvement occur would have one! Under pressure to constantly improve products and offer attractive prices a positive to. In mind as you work toward your online business degree, keep the following four benefits to competition business.

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