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Analysis of an Issue - Please rate and advise

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mehravikas GMAT Titan Default Avatar
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Analysis of an Issue - Please rate and advise Post Thu Aug 21, 2008 2:05 am
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  • Lap #[LAPCOUNT] ([LAPTIME])
    Issue -

    "The presence of a competitor is always beneficial to a company. Competition forces a company to change itself in ways that improve its practices."

    Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/or examples from your own experience, observations, or reading.

    Response -


    Whether competition with its rival is beneficial to a company or not depends on various factors. In my view, companies that are at the same level always benefit by competing with each other, but competition can also show its ugly side if it is between a small company and a big one.

    The main reason for my view is that companies competing with their rivals often try to outdo each other at each and every step and for that to be a continous process one needs a heavy financial backing. For example, IT giants such as Accenture and IBM often compete with each other on a daily basis because they provide same services, target similar domains and spend big bucks on their reasearch and development, but at the end of the day they look for business in same industry. To win affuluent contracts these companies often spend heavily on their practices. But similar spending by a small or a mid-sized company cannot be expected at all stages. Also, small to mid-sized companies are often dependable on big companies to shell out some of its business to them.

    Another reason for my view is that improvement in practices is a continuous process and most of the time it requires a heavy dose of spending. Small to mid-sized companies have a limited budget to improve its practices over a period of time. Generally these companies are flexible to tweak their practices to fetch business. Specifically, these companies follow practices of the big companies and rely on their approach.

    Some might argue, prescence of a competitor forces its rival to perform much more efficiently. Yet it leads to heavy spending and unrealistic deliverables which in turn can hurt the company in the long run. Others might cite, competition as a way for small vendors to face bigger companies and in turn learn from that challenge. However, most of the time the growth of a small to mid-sized company stops at a point because beyond that they need a solid financial backing which is given by a big company by acquiring it.

    In sum, I agree that competition leads to better practices and it is an exact opposite of monopoly. Consumers do not enjoy much benefits in the monopolistic market but competition is always healthier between companies that are at same level.

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    VP_Jim GMAT Instructor Default Avatar
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    Post Thu Aug 21, 2008 2:01 pm
    Exact same comments on this one as the other one - always back up your points with specific, real world examples (Accenture is a good one), and avoid writing in first person.

    This one gets a 4 since you did use one example.

    _________________
    Jim S. | GMAT Instructor | Veritas Prep

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