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. In fact, it is important for companies to have competitors, because it is through competition that innovation and improvement occur. A competitive market drives innovation as each individual business strives to gain a competitive advantage. It’s easy to coast when you’re the only option. 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. Being competitive is the key to growing a business. 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. This … Keeps you alert. Whether overtly or otherwise, most companies create a dynamic in … With this strategy, the objective is to become the lowest-cost producer in the industry. How Committed are your Customers to Social Responsibility? Employees will be forced to think creatively … Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. 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. One important benefit of competition is a boost to innovation. It is a fundamental economic force that benefits customers as firms are under pressure to constantly improve products and offer attractive prices. But, competition necessitates innovative thinking as you cannot survive without it. Tim enjoys blogging about business strategy and enterpreneurship. Apart from being a rather unethical way of running a business this simply isn’t an effective business model for the long-term. It’s vitally important to … The Benefits of Competition in Business. In building a business you work diligently to identify and capitalize on what sets you apart from others that currently occupy the marketplace. Innovation is crucial to the progress of any business. You would have no one to compete with and all the customers to yourself. After all your competitors are a major stakeholder in your business. Avoiding complacency. When I articulate this approach to business to my colleagues and students they nod along merrily agreeing with everything I have to say. I am an educator, writer, presenter and academic based in the beautiful seaside town of Leigh-on-Sea, Essex, UK. (Essay Assignment) Upgradation. But, this thought arises because of lack of knowledge on how to utilize competition for the growth of your business. Innovation and Productivity A competitive market drives innovation as each individual business strives to gain a competitive advantage. Price: businesses will compete for custom by keeping prices low offering good value for money. Companies regularly compete among themselves, hoping to win consumer trust and revenue. There are many benefits of competition in business and I will now attempt to explain and justify this argument as succinctly as I can. Suppose, yours is the only business in a particular industry and of course you have complete control of the market. To stand out from competition, you always need to be highly motivated and try to remain as a better business owner in the industry. Your competitors are businesses that may deter people in your target audience from choosing you. Competition is an inevitable aspect of business. In economics, competition involves two economic entities, such as business organizations, seek to obtain a share of economic gains. Choice: businesses will increase their product range or service offer in order to provide more choice than their competitors. Grocery Competitive Advantages. In this case, you work with your smaller competition to get a stronghold over the market share. Avoid Costly Mistakes. You may still think that lack of competition would be a whole lot easier. I blog about educational management and leadership and have a particular interest in playfulness and humour in teaching and learning. You might not focus much on quality of service you deliver if there is no competition. Working efficiently will allow a business to keep prices low and maximise their available resources. In a competitive market each individual business will be fighting for customers in order to gain profit. Your email address will not be published. Although competing in international markets offers important potential benefits, such as access to new customers, the opportunity to lower costs, and the diversification of business risk, going overseas also poses daunting challenges. If things were going well for any business, it probably would take the businesses longer to brainstorm and implement new ideas. Aside from blogging, Tim works at customgear.com.au, a company specialising in promotional products. The competition among them enable the consumers to select a product or products whatever they want. But if it benefits all stakeholders then its collective positive impact will be desired. Competition is to be considered as an important aspect of economic growth. The relative stability of Canadian, U.S., and European governments leaves citizens unfamiliar with the significant poli… By analyzing your competition, you can learn from their failures and avoid making the same mistakes that could potentially ruin your business. At least during stressful times of business, business people think that it would have been better if there is no competition in business. Competition also creates opportunities for individuals to enter the marketplace and start new businesses. Business competition is a contest or rivalry between firms to win revenue. Competition makes people innovative. One of the benefits of competition in the business as well as in the economic environment is the lower consumer prices. As far as there is high competition, you get better information about customer preferences or requirements. The fact is that competition benefits not only consumers, but also businesses in different ways. Competition is one of the fundamental ingredients for economic growth. Competition also reduces the need for governmental interference through regulation of business. Building Your Brand, Marketing Professional Services, Referral Building. Competition may seem threatening at times, but the fact is that it comes with numerous benefits. It brings about new ideas and sees them getting effectively tested in a relatively short amount of time. But these changes don’t just happen overnight and without significant effort on the part of the businesses. This article discusses some of the benefits that competitors can offer to your business. Better quality: Competition also encourages businesses to improve the quality of goods and services they sell – to attract more customers and expand market share. If the achieved selling price can at least equal (o… Antitrust laws encourage companies to compete so that both consumers and businesses benefit. Competition is not only good for your business, it’s good for … Competition is good For Consumers. 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. But there is a case for supporting your competitors when specific situations arise that will provide mutual benefits. Healthy competition encourages change which will distinguish your company from others through technology, product alterations or by improving the customer experience. Filed Under: Blog, Entrepreneurship, Social Responsibility, Please prove you are human This is recognized as your competitive advantage. I appreciate it is not always this simple and sometimes benefiting all stakeholders simultaneously is extremely difficult and even impossible in some cases. 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. 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. Without competition, you’d be on cruise control, with no worries in the world. This is a fairly straight forward point to make but it is important that I make this clear before moving on. Customers would have to buy from you regardless. Although economic competition forces lessen your market share, it can also force you to become a better business. But, this thought arises because of lack of knowledge on how to utilize competition for the growth of your business. 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? 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. The pursuit of innovation and productivity often results in the collaboration of ideas and work with other stakeholders. The path to eCommerce success is rife with costly mistakes that can sink a good business. Once you are world class the world will seek your services. Sole suppliers in an industry quickly stop innovating simply because they no … I AM HUMAN. In order to achieve lower prices, increased choice and improved quality businesses need to work more innovatively and productively. 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 business, there’s nothing wrong with a little friendly competition. One of the most popular and well-known benefits of competition is how it allows for stronger innovations in any given industry. (EdD Candidate - University of Cambridge). Better Knowledge about Customer Preferences. Employees will be forced to think creatively and work innovatively to continuously improve within their sector. But creating value for your competitors is massively counter intuitive, surely?! It could be better service, low prices etc. Firms may race to be the first to market a new or different technology. Benefits of friendly competition. This is an important consideration when planning value creation for your competitors. You must identify your key stakeholders and aim to create value for each of them in a simultaneous and mutually-beneficial way. You tend to regularly upgrade your product as well as innovate so that you stay ahead … 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. It helps to discover your’s and your competitor’s strengths and weaknesses. 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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. You stop being complacent and always think of better ways to satisfy your customers. Here are just a handful of benefits that a competitive analysis can offer. It’s said you should keep your friends close and your enemies closer. If competition in business is good – why don’t more business help their competitors. Therefore, each business will have to differentiate itself from the crowd and there are three typical ways this can be achieved. The non-competitive approach outlined above is drastically narrow-minded and would be ultimately short-lived. 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. Quality can mean various things: products that last longer or work better, better after-sales or technical support or friendlier and better service. I would love to hear what you have to say to continue the exploration of this subject further. You try to reinforce your strengths and overcome your weaknesses. This will increase the productivity of the business making them significantly more competitive in their sector. Higher quality at same prices – If you look at the Air conditioning market or any consumer durable … Required fields are marked *. From generating referrals to coaching your network to building a killer website, we love seeing solo professionals succeed. 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. Offering lower prices is one of the most common strategies that most companies are doing in order to cope up with the competition. When your competitors make more profit than you, it means that they have adopted some great techniques to attract customers. However, when I add ‘competitors’ into the equation the nodding stops and the thinking begins. So, you can study strategies that your competitors adopted which makes them successful. 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. Thus, you can easily know the pulse of your customers and this can be utilized to make your business successful. You might have to adopt new technologies or business strategies to stand out from competition. In a competitive market prices will be kept low, choice will be high and quality will be improved. 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. Competition makes you think more innovatively which is necessary for the growth of your business. The business not only benefits during the competition as employees build those bonds, but also once the competition is over. You are the only option for your customers and they have to be satisfied with what you provide whether it is service or product. Leveraging innovation, credibility, and more benefits may be the key to your success: Add This Infographic to Your Site 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. Altogether, you become highly motivated to achieve great heights. The concept of social responsibility in business involves making a positive contribution to society as a whole. Over the last 4 years, Tim has written numerous articles on the topic and has been an active contributor in business forums.