Competition: concepts, types, and applications

Competition is a reality of the business world that cannot be escaped. Indeed, it is one of the key factors that a company needs to consider when starting a new business. Thorough research is required to determine the level of competition, and whether this will be a significant threat to the new company. If the threat is too high, the new company needs to either strengthen its strategy, seek another market, or another location for the start of its business. Certain markets for example feature a very high level of competition and are therefore almost impossible to enter. If a company could however find a unique angle for its product, it could on the other hand eliminate most of its competition.

Competition is however not only negative. For the existing company, competition is a healthy driver towards better products, customer service, and ultimately higher profits. This occurs when an existing or new competitor finds a unique angle for its market. A car manufacturer can for example furnish its product with a unique new alarm system, which other manufacturers will then attempt to imitate or mitigate by improved, cheaper systems of their own.

While competition can therefore be favorable for both the manufacturer and consumer, it could also be beneficial for the economy in general. In addition to providing better quality and service, the competition in the motor industry for example creates an environment in which the consumer receives the best value for money. A wider variety of choice provides the consumer with many different options in terms of safety, aesthetic quality and pricing.

In terms of job creation and provision, competition relates to compensation and bonus packages. Workers are attracted to motor companies with the best package available. Employees are attracted by packages including elements like bonuses and other incentives for excellent performance. In this way, competition results in a healthy, growing economy.