Competition. Changing competition between modern firms (most important)

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Competition. Changing competition between modern firms (most important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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51. Changing competition between modern firms

Change options The competition between firms is:

1) an increase in the number of competing firms;

2) large firms take on another firm and take drastic measures to bring it into the lead;

3) the demand for the product is growing slowly;

4) economic conditions in the industry push the firm to lower prices or to use other means of increasing sales;

5) the costs of buyers in the transition from the consumption of one brand to another are small;

6) one or more firms are not satisfied with their market share;

7) profit growth from successful strategic decisions;

8) the costs of exiting the market are high, barriers are high;

9) strategies, resources, organizational features, missions of firms differ to a large extent and are open to the majority.

Rivalry among existing competitors leads to the desire to achieve an advantageous position by all means, using the tactics of price competition, promotion of the product on the market and intensive advertising.

Increasing competition depends from the following factors:

▪ the presence of a large number of competitors or their approximate equality in terms of size and strength;

▪ slow growth of the industry, intensifying the struggle for market share, which attracts expansive participants into the market;

▪ the product or service lacks differentiation or switching costs that keep the buyer engaged and protect one participant from the influence of another on its consumers;

▪ fixed costs are high or products are perishable, pushing prices down;

▪ the volume of production capacity is increasing with a large increase;

▪ exit barriers are quite high and, like specialized assets or management commitment to a particular business, increase competition among companies;

▪ Rivals differ in strategy, background and “personality”. They have different ideologies about how to compete and are constantly outperforming each other in the process of competition.

A company may have different home countries for different activities or segments. Competitive advantages are formed in the home country. Conditions in the home country should be conducive to innovation; otherwise, moving your base to a country that stimulates innovation and provides the most favorable environment for international competition.

Companies can take certain actions to better see the signs of change and act on them, making a powerful leap forward on the path of competition.

Author: Ilyina V.N.

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