Competition As a Means of Achieving Excellence

Competition is a driving force in the business environment. Michael Porter, a Harvard professor, created an analysis model for assessing the competition in various economic marketplaces. Porter's competition analysis centers around the rivalry created by companies that develop superior goods or services, use business relationships to create a valuable supply chain or develop unique products that are not easily duplicated by competitors.

Facts

Companies to develop business strategies to achieve higher levels of market share. Companies may reduce fixed operating costs, eliminate wasteful production functions or processes, employ highly skilled workers to produce goods or services and diversify operations into business industries or sectors with fewer competitors. These strategies help companies achieve higher operational profits.

Function

Competition often decreases the availability of economic resources. Low economic resources prohibit companies from increasing production output. In the absence of highly available resources, companies often look to improve production processes and use economic resources in a more efficient manner. The efficient use of economic resources can help companies reduce wasted resources and improve product quality. Competitors constantly entering the business environment and selling similar goods can achieve excellence through a continual refinement of business operations.

Considerations

Companies often review a competitor's products and attempt to improve or advance their own goods through a reverse engineering process. Reverse engineering allows a company to break down a competitor's product and learn how the competitor developed the product using resources and production methods. Companies can build or tweak this design to improve functionality or offer a better product based on the competitor's model. While this tactic is someone devious, it's a common way for businesses to achieve excellence through competition.

Potential

Using competition to achieve business excellence is a common way to put competing companies out of business. Constantly refining business operations and improving financial profit often leads companies to the number one position in the business industry.Companies may also be able to raise prices if no competition exists since consumers are unable to purchase substitute or inferior goods.

Warning

Focusing on competition as the sole means for achieving business excellence is usually not the best business strategy. Companies should focus on providing goods or services considered highly valuable to consumers. Spending too much time on trying to beat competitors can lessen the focus on meeting consumer needs. Failing to meet consumer needs can create negative goodwill with individuals in the economic marketplace. Negative goodwill may drive these individuals to purchase a competitor's products.