Better Knowledge about Customer Preferences. Suppose, yours is the only business in a particular industry and of course you have complete control of the market. 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. 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. You would have no one to compete with and all the customers to yourself. Innovation is crucial to the progress of any business. Your email address will not be published. Furthermore, competition agencies may encourage businesses to consult competition experts in assessing risks to the company. Soloville is dedicated to helping solopreneurs and other small firm owners think big and take their firms to the next level. Quality of service is a key to customer satisfaction. If actions only benefit your competitors and penalises other stakeholders then it is not an action you would want to take. It’s easy to coast when you’re the only option. Customer Intimacy, Product Leadership or Operational Excellence – Pick one and don’t be greedy! Then, you do not have to think on how to satisfy your customers more than your competitor as there is no such competitor. If there is only one seller in the market, it may charge higher prices without fearing a loss of sales to a competitor. Mike Michalowicz. This is due to the endless need of … One of the most popular and well-known benefits of competition is how it allows for stronger innovations in any given industry. Innovation and productivity in business results in overall economic growth: regionally, nationally and internationally. Competition is one of the fundamental ingredients for economic growth. ... A free market that is competitive benefits consumers- and, society and preserves personal freedoms. There are a million ways to combat competition in business, but which are right for your company? Healthy competition can keep you on your toes and spur you on to improve your business. At one point of... 2) Higher quality at same prices –. When firms compete with each ... also benefits consumers with new and better products, helps drive economic growth and increases standards of … The interests of all your stakeholders are interlinked and by helping one you will often be helping another. 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. In a competitive market prices will be kept low, choice will be high and quality will be improved. Think Positive: The Unexpected Benefits of Competition in Business. FTC Fact Sheet: How Competition Works C ompetition in the marketplace is good for consumers and good for business. If things were going well for any business, it probably would take the businesses longer to brainstorm and implement new ideas. Competition is to be considered as an important aspect of economic growth. The non-competitive approach outlined above is drastically narrow-minded and would be ultimately short-lived. But if it benefits all stakeholders then its collective positive impact will be desired. Sole suppliers in an industry quickly stop innovating simply because they no … When you have constant competition, you need to make new and exciting offerings to your clients to stay relevant and ahead. From generating referrals to coaching your network to building a killer website, we love seeing solo professionals succeed. When your competitors make more profit than you, it means that they have adopted some great techniques to attract customers. If a business does not face competition, it has little incentive to lower its prices or improve its products. Increases the demand:A healthy competition often leads to investment in more marketing activities by different players, which eventually increases the overall demand for the product in the market. Altogether, you become highly motivated to achieve great heights. QUICK LINKS Adoption Antitrust Laws Business Registrations Charity/Nonprofits Consumer … Don't use plagiarized sources. Competitive analysis should be viewed as an ongoing process whereby your company continues to understand the strengths, weaknesses, opportunities and threats in relation to your competition. Thus innovative thinking does not become a necessity which makes you inactive in thinking. But creating value for your competitors is massively counter intuitive, surely?! Employees will be forced to think creatively and work innovatively to continuously improve within their sector. As far as there is high competition, you get better information about customer preferences or requirements. You really become proactive, alert, creative and above all focused. Customers would have to buy from you regardless. Competition from many different companies and individuals through free enterprise and open markets is the basis of the U.S. economy. You need to drive innovation and productivity in your sector in order to become world class at what you do. One of the most popular and well-known benefits of competition is how it allows for stronger innovations in any given industry. Business competition isn’t something to be afraid of. Filed Under: Blog, Entrepreneurship, Social Responsibility, Please prove you are human Innovation and Productivity A competitive market drives innovation as each individual business strives to gain a competitive advantage. At least during stressful times of business, business people think that it would have been better if there is no competition in business. In short, you get better ideas that you can make use of. I would love to hear what you have to say to continue the exploration of this subject further. In fact, competition can benefit your company. Over the last 4 years, Tim has written numerous articles on the topic and has been an active contributor in business forums. 6 Reasons competition is good for Business – Benefits of competition 1) Awareness & Market penetration –. One of the benefits of competition in the business as well as in the economic environment is the lower consumer prices. 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. Quality: businesses will improve the quality of their existing products and services in order to retain and attract customers. You must identify your key stakeholders and aim to create value for each of them in a simultaneous and mutually-beneficial way. Required fields are marked *. This essay will discuss the benefits and drawbacks of competition in learning. In order to achieve lower prices, increased choice and improved quality businesses need to work more innovatively and productively. But, competition necessitates innovative thinking as you cannot survive without it. Whenwe talk about business competition; then the next question comes to our mind iswhat type of competition. If you create value for your competitors it will make your business sector more competitive overall. It is a fundamental economic force that benefits customers as firms are under pressure to constantly improve products and offer attractive prices. In most cases, … Summary. The competition among them enable the consumers to select a product or products whatever they want. When competitors are around you, you would be forced to provide better quality service. A competitive market drives innovation as each individual business strives to gain a competitive advantage. Keeps you alert. But these changes don’t just happen overnight and without significant effort on the part of the businesses. 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. People would want to work for, invest in, buy from and support your business all over the world. You tend to regularly upgrade your product as well as innovate so that you stay ahead … For example, solar panels that have a … Train Your Staff. This is due to the endless need of staying ahead of others which in turn forces people to act fast. 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. Products & Services The features and quality of products and services. 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. Your staff needs to … Competition between employees is an inescapable part of most people’s work lives. Although economic competition forces lessen your market share, it can also force you to become a better business. Once you are world class the world will seek your services. There are many benefits of competition in business and I will now attempt to explain and justify this argument as succinctly as I can. It isn’t good enough that you know what your business does. 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. Your email address will not be published. There’s nothing like that competition rush! 3. This is a fairly straight forward point to make but it is important that I make this clear before moving on. In order to achieve lower prices, increased choice and improved quality businesses need to work more innovatively and productively. Competition between employees is an inescapable part of most people’s work lives. I appreciate it is not always this simple and sometimes benefiting all stakeholders simultaneously is extremely difficult and even impossible in some cases. Active and dynamic engagement and dialogue between competition authorities and business stakeholders can raise awareness and encourage compliance. I am an educator, writer, presenter and academic based in the beautiful seaside town of Leigh-on-Sea, Essex, UK. Tim enjoys blogging about business strategy and enterpreneurship. This will increase the productivity of the business making them significantly more competitive in their sector. ... Consumers derive several key benefits from business competition, including higher quality products, a larger variety of similar products, better … T he Benefits. 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. When I articulate this approach to business to my colleagues and students they nod along merrily agreeing with everything I have to say. Choice: businesses will increase their product range or service offer in order to provide more choice than their competitors. (EdD Candidate - University of Cambridge). Amplify your business knowledge and reach your full entrepreneurial potential with Entrepreneur Insider’s exclusive benefits. Helps business find its competitive advantage: Businesses often track, an… 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. Author, Profit First. To stand out from competition, you always need to be highly motivated and try to … Competition makes you think more innovatively which is necessary for the growth of your business. There are usually three types of competition andthree types of competitors which are as follows; Competition makes people innovative. Therefore, each business will have to differentiate itself from the crowd and there are three typical ways this can be achieved. Quality can mean various things: products that last longer or work better, better after-sales or technical support or friendlier and better service. This will lead to more customer satisfaction which of course benefits you in long term. One of the main advantages of competition in learning is that it can create an environment where students push each other to exceed their normal limits, which can result in increased performance, both at an individual level and among the entire classroom as a whole. 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. It's the stuff of fantasy for many entrepreneurs: A pool of interested customers and not a competitor in sight. Creating value for your competitors can drive innovation and productivity in your business sector. I AM HUMAN. Having competitors is often positioned as a bad thing. It could be better service, low prices etc. Competition benefits all the three parties connected with the offering – business, consumers, and even the market. The following are common types of business competition. Better quality: Competition also encourages businesses to improve the quality of goods and services they sell – to attract more customers and expand market share. But these changes don’t just happen overnight and without significant effort on the part of the businesses. 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. Without competition, you’d be on cruise control, with no worries in the world. What a fantastic position to be in as a business and you have increased competition partly to thank for your success. Such dialogue can be This could even mean working in partnership on specialised projects and programmes with your competitors: the very people you are trying to out-perform. Aside from blogging, Tim works at customgear.com.au, a company specialising in promotional products. Competition may exist between organizations in different lines of business as well as between organizations in the same line of business. You may still think that lack of competition would be a whole lot easier. But, this thought arises because of lack of knowledge on how to utilize competition for the growth of your business. In a competitive market each individual business will be fighting for customers in order to gain profit. Competition reduces the length at which the ideas are generated and put to use. Most businesses already gather information about their competition, but many small business owners don’t recognise it as competitive analysis. Leveraging innovation, credibility, and more benefits may be the key to your success: Add This Infographic to Your Site Benefits of Knowing Your Competitors’ Target Audience It’s important to know your own target audience so that you can stay attuned to their needs and adjust your products and services accordingly. You might not focus much on quality of service you deliver if there is no competition. In fact, it is one of the major causes why a small business survives in the first place. Apart from being a rather unethical way of running a business this simply isn’t an effective business model for the long-term. It brings about new ideas and sees them getting effectively tested in a relatively short amount of time. If you have any thoughts on this topic please share them by posting a comment. The fact is that competition benefits not only consumers, but also businesses in different ways. Business competition is a contest or rivalry between firms to win revenue. There is no other feeling like stepping into the ring for the … Following these 10 strategies to handle competition in your business will help you develop a better idea of what your customer needs. You try to reinforce your strengths and overcome your weaknesses. This article discusses some of the benefits that competitors can offer to your business. Boosts innovation:Competition keeps the business on the toes and makes it imperative for it to innovate and improve. This is an important consideration when planning value creation for your competitors. You are the only option for your customers and they have to be satisfied with what you provide whether it is service or product. Better Motivation. Companies regularly compete among themselves, hoping to win consumer trust and revenue. To stand out from competition, you always need to be highly motivated and try to remain as a better business owner in the industry. The pursuit of innovation and productivity often results in the collaboration of ideas and work with other stakeholders. Thus, you can easily know the pulse of your customers and this can be utilized to make your business successful. For a small business, the competition does not have to be a death knell. The difference is the quality of information … 28 June, 2014 by Jonathan Sandling Leave a Comment. Avoiding complacency. 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In a competitive market prices will be kept low, choice will be high and quality will be improved. Upgradation. Competition is good For Consumers. As you can see in the above illustration, consumers receive various benefits from competition, for example, between cell phone carriers in terms of quality improvement, such as light in weight and smaller in size, performance improvement in electronic mail and cameras and service improvement, and price … Competitive pressure drives innovation and productivity far more than a business’ intrinsic motivation to improve. 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. I blog about educational management and leadership and have a particular interest in playfulness and humour in teaching and learning. Working efficiently will allow a business to keep prices low and maximise their available resources. This … Price: businesses will compete for custom by keeping prices low offering good value for money. By learning about your competitors and striving to distinguish your business from them, you can actually benefit from your 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. But there is a case for supporting your competitors when specific situations arise that will provide mutual benefits. Remember, an unsuccessful idea is only failure if you stop trying. They prevent you from becoming too comfortable and lazy in your business operations Building Your Brand, Marketing Professional Services, Referral Building. You stop being complacent and always think of better ways to satisfy your customers. As individual performances increase, so do those of the … This way, companies are battling with each other just to win over the consumer’s business. competition benefits their business (section 2 will cover key messages to businesses). Here’s how 1. As you work toward your online business degree, keep the following four benefits to competition in mind as you advance your career. Competition is healthy for business enterprises. 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 seem threatening at times, but the fact is that it comes with numerous benefits. Employees will be forced to think creatively … 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. You might have to adopt new technologies or business strategies to stand out from competition. As there is no other go for your customers, your products might get a boost in the market though customers are not actually satisfied with your service. With these ideas in hand, you can be sure that your customers will keep coming back again and again. 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. If competition in business is good – why don’t more business help their competitors. Usually business firms compete only with other firms of the same kind. 5 Reasons Why Competition Is Good For Your Business Competition exists in every field, and, believe it or not, can actually be good for your venture. But having competition in business can actually help your company become more productive. 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