A competitive environment is a system where different businesses compete with each other by using various marketing channels, promotional strategies, pricing methods, etc. This system has regulations within it that companies should follow. Show
How does a competitive environment affect businesses?Your competitors can directly affect your business and the decisions you make. Let's imagine two online clothing stores that pose a threat to each other in terms of business development and profit. One of them decides to conduct a flash sale before Christmas and provide their customers with 40% off sitewide. The other store will also need to come up with a great offer to attract leads and customers, raise sales, sell unpopular products and, as a result, gain revenue. Similarly, if one coffee company brings out a new product to the market, their competitor will need to consider growth hacking. Thus, competition can be beneficial as it motivates companies to get better and improve their products. A competitive environment also has a positive effect on customers. Businesses often offer high-quality goods at an affordable price to win the attention of consumers. Besides, companies have to bring out their products through innovations. However, competition can sometimes complicate the existence of a business. Let's take two companies within one location, for example. If one of them sets low prices and discounts, it will be difficult for the second company to compete. Now that you know how a competitive environment influences your business and customers, it's time to proceed to the types of competition that define the relations between and among sellers and customers. It's essential to understand what types of competitive environments there are to assess the economic environment in business. You should know how companies and markets function so that you can analyze industry and market news, policy changes, and legislation in the future. Let's distinguish the main types of competitive environments and review each of them in detail.
Perfect competition, monopolistic competition, oligopoly, and monopoly are the four main market structures you should be aware of when entering the market. Now it's time to move to the competitive environment analysis. Competitive Environment AnalysisTo develop a great marketing strategy, you need to understand your competitors and their tactics. At this point, you need a competitive analysis framework to reach your business opponents. Let's discuss several most popular frameworks.
To fully understand different market structures, let's walk you through some examples. Examples of Competitive EnvironmentEvery business plan of even a small firm contains a section about competitive environment analysis. As you already know from the information above, it includes all the external factors that influence your business and the product or service you offer. Let's take electronics, for example. Samsung is a company founded in South Korea that specializes in electronic and smart appliance technology. Their competitors include Apple, Sony, Huawei, Intel, and many more, which is why Samsung's team tries to create a product that is better than competitors' alternatives using innovations that can attract prospects. Changes in technology or the way customers buy products can influence the types of competitive environments. For example, Amazon changed products' distribution and customer expectations. Introduced innovations influenced the number of consumer goods companies and opened markets for small firms that previously had no opportunity to compete with more prominent companies. Your business can find itself in different types of competitive environments. That's why it's critical to understand the difference between them and be ready to assess industry and market news, policy changes, and legislation. Resources:
Last Updated: 04.07.2022 Which change model argues that an organization is constantly developing and adapting to its environment much like a living organism?Complex Adaptive Systems. The final model we will review builds on the assumption that all organizations are complex adaptive systems (CAS). That is, an organization is constantly developing and adapting to its environment, much like a living organism.
What refers to factors that prevent new firms from successfully competing in the industry?Barriers to entry is an economics and business term describing factors that can prevent or impede newcomers into a market or industry sector, and so limit competition. These can include high start-up costs, regulatory hurdles, or other obstacles that prevent new competitors from easily entering a business sector.
Why the concept of competitive advantage is central to the study of strategic management?Competitive advantage is central to the study of strategic management. Few reasons are as follows: Competitive advantage strengthens the position of a company in the tough market conditions. Competitive advantage help in the strategic development of organizational functions like HR, Marketing, production, and so on.
Which of the following represents is one of the most difficult kinds of changes to create within an organizational system?Culture change is among the most difficult kinds of changes to create within an organizational system. It often involves reshaping and reimagining the core identity of the organization. A typical culture change process, if it is successful, requires many years to achieve.
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