Bracing Competition in the Business Environment

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Competition is a normal phenomenon in the business world. No matter how small or established a business may be, there will always be rivals within the market that one has to compete with. This competition, however, should be “healthy” in that it will enhance provision of better services or products to customers rather than the business owners turning their efforts towards one another and forgetting the importance of their clients.

A good example of a competitive market in which there are many buyers and sellers is that of Internet booksellers. Because there are so many firms selling identical products then the price of these books will be highly similar. This competition helps to drive down the profit that such firms can make.

Competition occurs when two or more organizations act independently to supply their products to the same group of consumers.

Direct competition exists where organizations produce similar products that appeal to the same group of consumers. For example, when two supermarkets offer the same range of chocolate bars for sale.

Indirect competition exists when different firms make or sell items which although not in head to head competition still compete for the same £ in the customers pocket. For example, a High Street shop selling CD’s may be competing with a cinema that is also trying to entice young shoppers to spend money on leisure activities.

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To small businesses, competition may seem as a stumbling block, as chances of thriving amid the harsh competitive conditions may seem minimal. This is a perception that is however far from the reality. Competition lays a strong foundation for hard work and eventual success in the business environment. For starters, getting used to the struggle for customers gives one an edge that is important in succeeding in the business world.

After investing $5 billion to develop a range of hybrid and electric vehicles, Nissan-Renault claimed the title of the leading manufacturer of zero-emission cars. CEO Carlos Ghosn has found that it can be lonely at the top. Speaking at the Frankfurt motor show earlier this year, Ghosn said he welcomes competition from other automakers because a bigger field would help jump-start the market. “The more companies that buy into electric cars, the better it is,” he said.

If competition is good for a billion-dollar automaker, why not for your start-up? Although most entrepreneurs dream of having a market all to themselves, research shows that you’re probably better off with some company. Professor Michael Porter of Harvard Business School has written extensively about industry “clusters” and has shown the benefits that competition brings to similar businesses within an industry.

“If nobody is competing in your space, there’s a very good chance the market you’re going into is too small,” says Ben Yoskowitz, an angel investor and founding partner at Year One Labs, a start-up accelerator in Montreal. “Any reasonably good idea has 10,000 people working on it right now. You may not even know they exist because they’re as small as you.”

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It does not matter where you operate from, competition in business will always be there with you. Even if you do not find existing businesses offering the products or services you are offering, others will come within the horizon over time, and you can’t avoid it. The only secret in succeeding against all odds where competition is prevailing is to keep ahead of the competition, outsmarting your competitors and standing out.

Look to the future. Businesses that plan for growth are more successful than those that are happy to stay still. Keep up with developments in your sector, follow consumer trends, invest in new technology and – crucially – have a clear idea of where you want to be in one, three and five years’ time.

Expand your offer. What related products or services might your customers be interested in? You might even consider diversifying into another area – many cafes have successfully offered Internet access, for example.


Target new markets. Selling into a greater number of markets can increase your customer base and spread your risk. Consider whether you can sell online or overseas, for example. Are there groups you’ve never targeted before who might be interested in your offer? Don’t waste time marketing to people who won’t be interested, however.

Look after your existing customers. They will be your competitors’ target market. Provide better customer service by being more responsive to their needs and expectations. If feasible, consider offering low-cost extras such as improved credit terms, discounts or loyalty schemes – remember, it’s cheaper and easier to keep customers than to find new ones.

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