Is There Such A Thing As Too Much Competition In Business?

Competition is typically viewed as a good thing in a market-driven economy that promotes creativity, effectiveness and consumer choices. There are, however, some circumstances in which competition becomes excusive and is harmful to a number of stakeholders, including firms, consumers, and the general dynamics of the market. Maintaining a fair and sustainable marketplace requires being able to identify when competition has to be regulated. 

Since new business is quite easy to form and does not take much cost to build, there will come a time when offering the same products or services with identical capabilities to the same market become excessive. This is where the scenario can lead to harsh competition and some businesses might not be able to sustain in the market for long. However, according to theory in business, entrepreneurs should be creative and innovative in order to sustain in the business. Assume that all businesses that compete in the same industry are innovative and creative, what influence will this have on the industry, and who will survive to defeat the others instead? There are also cases where there is too much rivalry in the same market at the same time, forcing them to think outside-the-box in order to be at the top. They will a strategy that will eventually cannibalize other businesses.

Firms that are creative create products or services that are distinctive, new and different in the market. As a result of their efforts, they may become market leader. They have the advantage of defining an industry standard as first movers by offering a product or service first. The firms can develop high brand awareness when educating consumers about the products. After the successful products is widely known in the public, other companies began to enter the market by replicating a nearly identical product with similar functions. It can be a cutthroat situation as the first mover must bear the cost of research and development (R&D) while later firms embrace the concepts without incurring the cost. 

The competition is so intense that firms are willing to bring prices down to the point of cost in order to win customer attention. At some point, competition become less about how much profit is made and more about how many customers trust they will gain. This is an example of aggressive strategy used by some strong brand to capitalize on market opportunities in the market. Smaller, newer firms with less resources find this strategy nearly impossible to implement, forcing them to withdraw form the competition. 

Therefore, to the new firms out there, even though the competition is already fierce, the best thing firms can do is to cope with the trends which change virtually every day. The entrepreneurs may learn from young people, particularly about technological tools, social media usage, online delivery and promotion, as well as current market preferences. These are the very least things they could do when it comes to embracing competition.

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