competition in business, benefits of competition in business

Do you believe competition in business is a bad thing? Think again, in this article we will talk about why competition in business is good. Additionally, we will also discuss competition analysis and how to transform competition into a growth engine. Before we dive deep into the issue, here we are talking about both “company and customer”. Let us understand this with an example. You run a pizza store and there is no other shop around. You are in a monopoly situation where your customers do not have a choice. Therefore, your customers will either eat pizza from you or will not eat at all. Now let me ask you a question. Do you fear the consequences of people opening similar shops in your neighborhood? I will say, you don’t have to worry about anything. In this article, we will discuss how you can convert competitors into friends and use this for your own growth. The idea is to ensure both are in a Win-Win situation and make something out of tough competition.

Why is competition in business good?

There is no doubt that making profit in business is the ultimate goal. After working for more than 18 years this is what I understood. There are many benefits of competition in business. Here is a list of 8 reasons that competition is good for your business.

  1. Improves Quality of Products and Services
  2. Customers get better price
  3. Competitors Become Friends
  4. Reduce Expenses
  5. You Feel Secure
  6. Hire talented staff at low cost
  7. More companies Strong voice
  8. Use resources that you do not own

Improves Quality of Products and Services

First of all, everyone wants to buy good stuff. Sometimes you are also ready to pay a little extra for quality services. For example, 5 star hotel food prices are high. Quality is also not exceptional. We go there to enjoy the services. The environment and service makes us go there. You can find similar or better tasting food in a small restaurant. They are in the same business but they do not worry about competition. Therefore, try and make the best possible product, you will find customers for it. Due to competition, you can compare products and prices and improve the quality of products in your business.

Customers get better price

When there are many businesses offering the same services, customers benefit. Companies are forced to cut prices to match competition. This also increases sales due to affordable rates. Soon businesses start focusing on the less profit and more sale model. This actually does not reduce the revenue. You get more customers. Therefore competition is good for business and customers both.

Competitors Become Friends

This is also true in business. Like Minded people become friends easily. Therefore, you can make a lot of friends in business. You regularly meet new people. Make friends from the same line of business and learn the techniques they are using to promote the brand. Even if they do not tell you the secret (no worries) you can do competition analysis. Study their business closely and find some good ideas for business improvement. If you are starting a new business then you can get the list of best practices in business. If you are an existing player, you can share resources.

Competition in business can reduce expenses

Competition in business can also reduce expenses. When you have many companies operating in the same field the cost of raw material reduces. Bulk production costs way less than making less units. The supply chain also becomes less costly. Above all you can also take advantage of resources (un-used) at your competitor. If you make competitors your friend, that resource sharing is the first thing they look for. This reduces the overall cost at both ends. You can make these decisions based on current demand. Making positive connections with others anyways gives you many benefits. You can also outsource work if there are not enough resources. As a result you create a foundation of healthy competition in business.

5 – You Feel Secure

One alone shop anywhere is always at risk. Like it or not, criminal minded people are always active. They are looking for a chance to snatch everything you have. When you have more people around (maybe competitors in the same business) you feel safe and secure. In case of an emergency you can also expect support. No matter how tough the competition is, human nature does not change. If you are in trouble and ask for help, people do help. Being secure is one of the most personal benefits of competition in business. Criminals avoid attacking dense markets because they also feel afraid.

6 – Hire talented staff at low cost

Earning bread and butter for the family is always a top priority. Everyone wants to choose a career with a lot of opportunities. Imagine who wants a career where only one company is operating. In this case very select people get training. When we have less people to do a job, the cost of hiring will be more. Advantages of starting a niche can become disadvantages any day. End of day you need people to work for you. Competition ensures that more and more people are getting trained. This reduces the hiring cost and increases opportunities for candidates. Employees can switch companies which is a good thing.

7 – More companies Strong voice

All trade unions operate in the same way. Small businesses make trade unions to ensure their voices are heard. If there is no competition in the market there is a possibility of you earning more. But on the other hand, a single change in government policy can also shut your business. Competition in business gives you the opportunity of being heard everywhere.

8 – Competition in business allows using resources that you do not own

Sharing resources with your competitors is common. Here the reference is making a joint venture (JV). A joint venture or JV is an agreement between two companies about sharing resources to develop / deliver products and services. For example, many tech companies do joint ventures with BPO units to provide customer service. Business Process Outsourcing (BPO) units have all the resources to take care of incoming calls traffic and making outbound calls. This is just one example. You can try many other options depending on your business model.

You should work towards creating healthy competition between businesses. This encourages good customer service, quality products, and fair pricing. You can make a lot of positive connections in your field. This results in overall growth and a win-win situation for everyone.

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