What do you think is the best strategy for existing businesses to adopt in response to the entry of a new large competitor?
What do you think is the best strategy for existing businesses to adopt in response to the entry of a new large competitor? Justify your answer with reference to the UK bottled water market and/or other markets that you know.
Almost all business operates in competition with other businesses, whether this is Sainsbury's competing with Asda for customers at a local, national and international level or two local hairdressers competing for clients in a single town. Competition is usually between firms supplying the same product. For example, British Gas compete not just with other suppliers in the gas provision market but also with the suppliers of other types of fuel, including coal, electricity and oil. The managing director of Waterman Pens is famously quoted as saying: 'We are not in the market for pens, but executive gifts.' Therefore he redefined the company's competitors as Dunhill and Rolex, rather than Parker and Bic.
Competition is generally regarded as being positive, bringing benefits in particular to customers. The advantages of competition are based on the fact that, in order to gain market share, firms need to offer the cheapest or the best quality products to customers. This requires them to operate as efficiently as possible, in a cost effective way while at the same time improving the quality of products and services as much as possible. However, competition also has some negative. Where competition is based solely on price, product quality might be sacrificed because resources that are devoted to competing with other firms, such as the huge amounts spent on advertising and packaging, could be directed to producing cheaper or better products. Also, competition between firms means that, inevitably, some businesses will be forced out of the market, with the economic and human consequences of redundancy and unemployment. Finally, the competitive process tends to mean that successful established businesses gradually take over, for example Nestle
Almost all business operates in competition with other businesses, whether this is Sainsbury's competing with Asda for customers at a local, national and international level or two local hairdressers competing for clients in a single town. Competition is usually between firms supplying the same product. For example, British Gas compete not just with other suppliers in the gas provision market but also with the suppliers of other types of fuel, including coal, electricity and oil. The managing director of Waterman Pens is famously quoted as saying: 'We are not in the market for pens, but executive gifts.' Therefore he redefined the company's competitors as Dunhill and Rolex, rather than Parker and Bic.
Competition is generally regarded as being positive, bringing benefits in particular to customers. The advantages of competition are based on the fact that, in order to gain market share, firms need to offer the cheapest or the best quality products to customers. This requires them to operate as efficiently as possible, in a cost effective way while at the same time improving the quality of products and services as much as possible. However, competition also has some negative. Where competition is based solely on price, product quality might be sacrificed because resources that are devoted to competing with other firms, such as the huge amounts spent on advertising and packaging, could be directed to producing cheaper or better products. Also, competition between firms means that, inevitably, some businesses will be forced out of the market, with the economic and human consequences of redundancy and unemployment. Finally, the competitive process tends to mean that successful established businesses gradually take over, for example Nestle