Topic 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."
My response:
In today's global economy, the presence of fierce competition is always knocking on your door. For businesses to stay in the game and compete at all fronts, they was must be able to adapt quickly and forcefully.
There are several ways for a company to stay active and continually compete. For example, a company can retire its products before a competitor makes them obsolete or spin off or sell one of its unprofitable divisions. IBM knew the personal computer industry was changing rather fast due to several computer companies were merging (e.g. HP and Compaq) to compete against IBM. In addition, IBM understood there was a slim profit margin on selling computers and wanted to concentrate in areas where expansion was more profitable. Hence, IBM sold its PC division to Lenovo Inc.
Similarly, HP spun off its medical and test equipment division (Agilent) to concentrate solely on its PC and Ink divisions. HP's incoming CEO, Carley Fiorina wanted the industry to observe HP as a leading "Innovative" technology company. As a result, HP continued with retiring several of its products to ensure competitors did not established themselves in the industry by retiring HP's product lines.
In closing, for a company to establish and maintain its competitive edge, it must be able to adapt to change, spin off or sell unprofitable divisions, and retire product lines before they are made obsolete by their competitors.
"The presence of a competitor is always beneficial to a company. Competition forces a company to change itself in ways that improve its practices."
My response:
In today's global economy, the presence of fierce competition is always knocking on your door. For businesses to stay in the game and compete at all fronts, they was must be able to adapt quickly and forcefully.
There are several ways for a company to stay active and continually compete. For example, a company can retire its products before a competitor makes them obsolete or spin off or sell one of its unprofitable divisions. IBM knew the personal computer industry was changing rather fast due to several computer companies were merging (e.g. HP and Compaq) to compete against IBM. In addition, IBM understood there was a slim profit margin on selling computers and wanted to concentrate in areas where expansion was more profitable. Hence, IBM sold its PC division to Lenovo Inc.
Similarly, HP spun off its medical and test equipment division (Agilent) to concentrate solely on its PC and Ink divisions. HP's incoming CEO, Carley Fiorina wanted the industry to observe HP as a leading "Innovative" technology company. As a result, HP continued with retiring several of its products to ensure competitors did not established themselves in the industry by retiring HP's product lines.
In closing, for a company to establish and maintain its competitive edge, it must be able to adapt to change, spin off or sell unprofitable divisions, and retire product lines before they are made obsolete by their competitors.
