COMPETITION AND SUCCESSFUL BUSINESS By Mansur Boydaş
COMPETITION AND SUCCESSFUL BUSINESS By Mansur Boyda
By Mansur Boyda
Competition is an essential tool that is used widely in any industry around the world. To be accepted and successful competing with other companies is vigorously employed to defend the market position of firms. Competition is utilized in market share, marketing strategy and location. A firm utilizes competition to raise its market share, finding better strategies like advertisements etc. to have a better advantage in marketing strategy, and undertaking to discover better locations for their business to settle. It is a fact that competition works not just by generating enticement for given businesses to perform better but also sorting levels of success achieved by businesses. It is clear that competition is a booster for companies to be more successful in their field against competitors. I will continue to be one of the elements of business world in the future.
Introduction
In today's business world there are many strategies to keep a business successful in its market. One of the many important components to success is competition between other companies in the market. Competition can be expressed as the effort of two or more parties acting separately to secure their businesses. Croatian Competition Agency (2006) states that "competition in the economy encourages and promotes enterprise and efficiency and supports growth through the incentive to improve productivity, introduces technological improvements and innovation, which subsequently lessens production costs and leads to enhanced competitiveness in domestic and international markets". Competition is conducted in three different ways in order to achieve the goals are being set. They are market share, marketing strategy, and location. After the market has been acknowledged and estimated, it is important to consider competition in the picture. After competition information has been compiled and evaluated, develop strategies for competing against competitors. For example, if competitors' emphasis is on a variety of products or services, specialization might be an effective approach. In order to compete for achieving better success levels, thoroughly knowing competitors could be very advantageous. Competition can be seen in any market among companies to be more profitable than others. Square Two Marketing (2004) competition creates opportunities and penalizes static business models. For example, in the computer market Wang, Gateway and many other companies were ahead of Dell Computer in gathering and marketing the personal computer. Dell has succeeded amazingly whilst some of the leading companies dramatically downsized or out of business. Dell has succeeded in this hard market because of its business model that is business to consumer also called direct model.
Market Share
Competition is an important strategy that keeps the market share steady or to get a higher market position and it is also a way to be a successful business. The reason is that this technique requires the company to identify the underlying factors that guide the decisions of competitors. To get a higher market share price, promotion, and product strategies are utilized. Rothermel (2003) says that "competitive actions of price, promotion, and product can have dramatic short-term effects on market share, and the imposition of a longer-term effect of capacity share helps reproduce realistic market share behavior for industrial markets". Before setting price, companies should decide on its strategy for the product. If the company has selected its target and positioning carefully, then its marketing strategy that includes price to be straightforward. As an example if Mercedes-Benz decides to produce a new sports car to compete with BMW sports cars in the high-income segment, they may decide to set a higher price. This kind of competition is known as direct competition where products which perform the same function compete against each other in order to provide more profitability to the company. Eckard (1987) reveals that "advertising reduces leading firm market share instability by creating market power". Advertising is an effective presentation and promotion of ideas, products or services that helps companies to be more successful in their specific markets. Furthermore, a new or improved product may not achieve immediate market acceptance, advertising is the process to get the good or service to get to acceptance levels of consumers to have a share in its market. Companies are competing against each other to get a higher share in the market to continue their existence in business and marketing is the essential way to accomplish competition. "Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others" (Armstrong, Kotler, Cunningham,2002, p.5). There are strategies to accomplish marketing of products, services or businesses.
Marketing Strategy
Marketing consists of activities required for getting and keeping consumers. A carefully envisaged and implemented marketing plan, focusing on the customer, is a major contribution to business success. Widen your overall marketing strategy by taking into consideration how products or services will help the consumer. Businesses are also competing in marketing strategy field to be more successful. Croatian Competition Agency (2006) states that "business competition is very important in a free market economy, given that it ensures the efficient and effective operation of the most successful businesses and enables the undertaking to survive only if it serves its customers well through efficient pricing, innovation and greater product quality and variety". A firm's marketing activities affect the performance of its products as well as that its competitors in a wide period of time. Armstrong, Kotler, Cunningham (2002) states that "marketing strategy is the marketing logic whereby the company hopes to achieve its marketing objectives". Marketing strategy involves three parts; describing target market, outlining the price of the product, and planning sales and profit goals. Businesses compete with each other to come up with the best marketing strategies to be more successful than their competitors in the market. If a business does not have efficient marketing strategy, its products would not be accepted in the market by the consumers and this makes the company lose its market share against its competitors.
Location
The kind of product or service offered will often manipulate how reachable you have to to be to your target market. After the market has been acknowledged and estimated, decision on location becomes simpler. Location wise, it is important to check; how near is the location to other stores, cost of location, suitability for business, existence of parking, and convenience to transportation. Decision on choosing location is significant in order to compete in the market with competitors. Location is actually important in local perspective of business world. "In a world of global competition, it is argued location is no longer relevant" (Porter, 1994). Geographical distance and political boundaries have been exceeded. As globalization gets wider, the competition of businesses in location decreases. This theory is valid in the global perspective of business world. However the competition locally is still in the picture having the better location of businesses in order to be more efficient and successful in the market.
Influence of Competition on Performance
Carlin and Seabright (2004) reveals "the evidence points overwhelmingly to the fact that competition works not just by creating inducements for given firms to perform better but by sorting between more and less successful firms". Competition motivates and at the same time sorts out the firms in success levels. It is clear that competition is a booster for companies to be more successful in their field against competitors. Carlin and Seabright (2004) says that "a number of theoretical models help to identify how competition might affect performance". They are:
the selection effect (how the market operates to reallocate market shares from lower to higher productivity firms),
the incentive effect on incumbents (how rivalry alters behavior),
the entry effect (how new suppliers enter the market and thus affect aggregate performance both by virtue of the new capacity that they bring and by influencing incumbents), and
the exit effect (how poor performers are able to leave the market and release resources).
The process begins with a model that supplies an impression on the competition progression and follows with important models that supply more in depth information about how competition might increase performance in businesses.
Conclusion
Competition is performed in market share, marketing strategy, and location. It is clear that competition is motivating as well as boosting the performance of firms. It could also be said that competition is an unavoidable component of business world to achieve success. Competition also creates opportunities and exterminates the stereotyped way of doing business.
Mansur Boyda
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