Question

In 250 words essay discuss how a company from your own selection has dealt with competition. Discuss the type of competition and its dynamics according to what you have studies in chapter 8

Answer 1

Competition arises whenever at least two parties strive for a common goal which cannot be shared: where one's gain is the other's loss. Competition is a major tenet of market economies and business, often associated with business competition as companies are in competition with at least one other firm over the same group of customers. Competition inside a company is usually stimulated with the larger purpose of meeting and reaching higher quality of services or improved products that the company may produce or develop. Competition is often considered to be the opposite of cooperation, however in the real world, mixtures of cooperation and competition are the norm.

In addition, the strong desire to defeat rival firms with competitive prices has the strong possibility of causing price wars. Three levels of economic competition have been classified:-

• The most narrow form is direct competition (also called "category competition" or "brand competition"), where products which perform the same function compete against each other. For example, one brand of pick-up trucks competes with several other brands of pick-up trucks. Sometimes, two companies are rivals and one adds new products to their line, which leads to the other company distributing the same new things, and in this manner they compete.
• The next form is substitute or indirect competition, where products which are close substitutes for one another compete. For example, butter competes with margarine, with mayonnaise and with other various sauces and spreads.
• The broadest form of competition is typically called budget competition. Included in this category is anything on which the consumer might want to spend their available money. For example, a family which has $20,000 available may choose to spend it on many different items, which can all be seen as competing with each other for the family's expenditure. This form of competition is also sometimes described as a competition of "share of wallet".

Competition does not necessarily have to be between companies. For example, business writers sometimes refer to internal competition. This is competition within companies.

Example:- The idea was first introduced by Alfred Sloan at General Motors in the 1920s. Sloan deliberately created areas of overlap between divisions of the company so that each division would compete with the other divisions like it happened got the Chevrolet division which would compete with the Pontiac division for some market segments. The competing brands by the same company allowed parts to be designed by one division and shared by several divisions,

Competitive dynamics is often analyzed by understanding one’s competition. The most accepted model is to start with is the AMC (Awareness, Motivation and Capability) where awareness indicates managers’ understanding of competition followed by motivation to take on the competition and whether capability to implement counter strategy exists or not. One of the best examples to study competitive dynamics is the current smartphone industry where the life cycle of products have become very less and each competitor is pushed to take competitive actions in response to others or become irrelevant in the market place. The AMC model is knowingly or unknowingly followed by each manufacturer as they determine the positioning of the phones.