Business Competition – Differentiating Competing Businesses and External Factors
Business competition is a rivalry that occurs within companies that provide similar products or services and have the same group of people to target. Competition is important as it creates business opportunities for those starting new businesses, provided they can provide their products or services in different noticeable ways. Business competition also provides a thriving and fair economy (Boushay & Knudsen, 2022).
In order to attract customers and stand out, competing businesses try to appeal to the market using unique means to stand out. Competing businesses can try to stand out by, for instance, selling high-end products compared to other sellers. Notably, such a strategy would help a business such as a high-end clothing shop become known fast to its target population, meaning that the business can claim an advantageous position in the clothing industry.
Furthermore, competing businesses strive for differentiation because it can benefit business owners. Notably, business differentiation allows business owners to set high prices for their products or services. In such a case, customers might be willing to pay premium prices, helping the business get above-average returns (Hitt et al., 2019). For instance, a famous company, A, can sell a pair of jeans for $60, while a less-known or new company, B, sells the same jeans for $20. People might still buy from company A since it is unique, well-known, and trusted, allowing company A to make huge profits due to the differentiation.
External factors can regulate the nature of competition within an industry by impacting the need for products or services and production costs. For instance, a clothing company can receive a high demand for sweaters. Consequently, the high demand would lead to high production numbers, which also affects the cost of production as well as the selling price. Conclusively, business differentiation is an important business strategy as it can help businesses grow rapidly and give them high returns.
References
Boushay, H., & Knudsen, H. (2022). The White House. Retrieved January 29, 2023, from https://www.whitehouse.gov/.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2019). Strategic Management Concepts and Cases Competitiveness and Globalization. Cengage.
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