The importance of competition

Monday, July 26, 2010

Traditionally, every economy is basically based on one major concept, competition.

Competition can sometimes be good or bad, depending on the end of the spectrum.

Competition between two companies can benefit society, just as often it hurts society.

Business is often associated with competition as most companies are in competition with at least one other firm over the same group of customers.

The big problem with avoiding competition is that you are also avoiding customers. The existence of a competitor indicates the existence of paying customers. If you can't find anyone who is making money with your idea, you really need to wonder if there is any money to be made there at all.

Competition is found in many fields of human activities, such as sports, education, business, and politics. There are many goals for which people compete against each other to achieve their desired results, be it fame, knowledge, wealth, etc. 

Competition is an essential component of a free-market economy. Businesses must strive to produce the highest-quality products or provide the best services at the lowest prices in order to win consumer acceptance and support.

If Company A fails to do this, consumers can take their patronage to Company B, who will. Company B will be more profitable than Company A, because Company A did not produce the products or provide the services to the consumers' satisfaction. 

People compete against each other for jobs with the determining factors being the experience, knowledge, and skills that the employer demands.

In a society with a democratic government, candidates for political positions must compete against each other to win voter approval and get elected.  Students compete to achieve the highest grades or for scholarships. 

The truth is "A business is not worth venturing into if you do not have competition." Competition is the only way to evaluate the existence of the market that you are trying to sell to.

"Competition is not only the basis of protection to the consumer, but is the incentive to progress."

Herbert Hoover