How important is business competition?
Last week we were working on a business plan for one of our clients in the food and beverage industry whose business concept we found very thought-provoking.
During the business plan research and writing process, one section-the competitor analysis, caught our attention. The type of gap within the Qatar market that we identified was one we have not yet seen, hence, one of our colleagues asked, how important is business competition? (This question was asked after one of us commented that our client was sure the business concept had no competitors yet).
At that moment we all agreed that this is a topic worth discussing further and perhaps sharing with our avid readers. Truth is sometimes we work on projects that drive us into creative spaces, experiences and discoveries we never anticipated.
We do understand that most entrepreneurs dream of having a market all to themselves, but, research shows that you're probably better off with some company. You should simply embrace the existence of competitors however insignificant they may be and focus on differentiating yourselves- because competition may have more advantages than disadvantages especially for start-ups!
So, how did our discussion go?
We realized that if nobody is competing in your space, there's a very good chance the market you're going into is too small. Basically, your business needs some critical mass to legitimize what you're doing.
Healthy competition is important as it shakes off complacency and leads to innovation which distinguishes your company from others through encouraging product alliteration, and offering great customer service. Competition also creates room for learning by looking at what your competitors do best and what they don‘t. Further, it enables you to understand your customers well since you are forced to identify a specific niche and focus on.
Competition is beneficial to everyone right from the customers, businesses, the economy etc.
To customers, the existence of fair and open competition means lower prices and free will to choose from a selection of excellent products at affordable prices .Restricting consumers’ freedom of choice stalls innovation and limitations to innovation are a setback for anyone who desires better innovative technology. Market conditions that allow a single company to become the sole judge of price and quality set a dangerous example.
To Enterprises, irrespective of your business industry, unbiased trade and open competition in the market permits retailers and manufacturers to provide a variety of competitive products to their customers around the world which often results in fair pricing and higher performance. Competition emboldens the implementation of innovation as companies advance and new ideas flourish in the marketplace. When competition allows market forces to prevail, leading companies are encouraged to offer the best products to an extensive range of customers. Further, competition allows for market research, encourages customer loyalty and helps you identify your strengths, weaknesses and potential threats to your business.
To the economy, regional and global economies benefit from an environment of fair and open competition simply because market competition and innovation fuel growth in various industries and encourage economic progression globally.
Our thoughts…Competition is one of the essential elements of economic growth. Creating value for your competitors has a high chance of motivating innovation and productivity in your industry segment. Business competition may not be the only motivating force behind price, quality and choice for consumers and it is definitely not the only driving force behind innovation and productivity – but it undoubtedly plays a crucial part.
Happy Reading!