Question

Discuss the effects of the presence of competitors in the market of business and what are its advantages and disadvantages?

Answer 1

The existence of competitors in the market of business works as a catalyst. It promotes the business people to improve efficiency, undertake innovations, improve technology, and ensure them to take their consumers seriously and consider them vital for the success of their businesses. Businesses care for customer needs and become client-centric.

With competition, social & economic infrastructure development takes place in the surroundings. With this the business can reap the benefits of economies of scale.

Competition helps provide the best products and services at the best price.

It helps in improving the business itself. It promotes working smartly with the resources that are already existing such that improvement in productivity is achieved without incurring additional cost.

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Advantages of the presence of competitors in the market of business:

1) Helps become a better business

2) Promotes efficiency in production & sale

3) Strategy driven business

4) Economies of scale

5) Customer-centric

6) Innovations and new product development
7) Collective business growth and hence, the market growth

8)Promotes understanding of the market and prioritization of customer needs

9) Avoid avoidable-expenditures

10) The customer gets many choices

Dis-advantages of the presence of competitors in the market of business:

1) Lower market share

2) Price competition driving price down

3) Over-production and stock-piling of inventories

4) Customer may not have an easy purchasing decision