Issue - The presence of a competitor is always beneficial to a company.
Competition forces a company to change itself in ways that improves its practices.
Response -
If we did not have competition in sports, we would not have had olympics. We could have never imagined a man running as fast as to cover 100m meters in less than 10 seconds. This same rule of competition applies to every sphere of life. In the corporate world, the importance of a good competition for a company to succeed in the long run is as great as a good corporate culture.
The competition stimulates the organization to do better than it is doing at present, in all the spheres of its operations. It forces the company to change & improve its practices & policy, becuase if the company does not improve its practices, soon it will be lagging behind in the market.
For example, American cars company A was making profits & going through a good phase but gradually sales started to diminish as companies from Japan came into American market & started eating into A's market share. Japanese companies did it by keeping the price lower for their cars while providing the car performances as good as company A's cars. Soon company A realized that Japanese car makers could reduce their price as they did not have huge inventory costs & this resulted in A to start using just in time technologies, as being used by the Japanese car makers.
On the other hand, if company A was not under pressure from its japanese competitors, it might not have realised that huge inventories costs are making it's cars costlier & hence many prospective custmores are not buying the cars because of the high price. This would have reduced its sales & hence profit.
So we can clearly see that the competetion was the force that prompted the comapny A to change & improve its practices.
Competition forces a company to change itself in ways that improves its practices.
Response -
If we did not have competition in sports, we would not have had olympics. We could have never imagined a man running as fast as to cover 100m meters in less than 10 seconds. This same rule of competition applies to every sphere of life. In the corporate world, the importance of a good competition for a company to succeed in the long run is as great as a good corporate culture.
The competition stimulates the organization to do better than it is doing at present, in all the spheres of its operations. It forces the company to change & improve its practices & policy, becuase if the company does not improve its practices, soon it will be lagging behind in the market.
For example, American cars company A was making profits & going through a good phase but gradually sales started to diminish as companies from Japan came into American market & started eating into A's market share. Japanese companies did it by keeping the price lower for their cars while providing the car performances as good as company A's cars. Soon company A realized that Japanese car makers could reduce their price as they did not have huge inventory costs & this resulted in A to start using just in time technologies, as being used by the Japanese car makers.
On the other hand, if company A was not under pressure from its japanese competitors, it might not have realised that huge inventories costs are making it's cars costlier & hence many prospective custmores are not buying the cars because of the high price. This would have reduced its sales & hence profit.
So we can clearly see that the competetion was the force that prompted the comapny A to change & improve its practices.
