Competition
In a free-market economy, customers are free to buy whatever and wherever they please. Therefore, companies must compete with rivals for potential customers. They might choose to compete in one of three ways: price, quality, or innovation.
Competition and Price
Southeast Airlines competes on price. It offers the lowest fares of any of its competitors. So does Dell computer. Each time Compaq loses a sale, it's either because of Dell's low price or because of Hewlett-Packard's and IBM's service and support. In fact, evidence of price competition is everywhere you look. Fast-food restaurants sell special meal deals at reduced prices, Coke sells 24-pak cans at $3.99, carmakers offer rebates and discounts, and stereo stores offer to beat any other price in town. These are all examples of using price to gain a competitive advantage--something that sets you apart from your rivals and makes your product more appealing to customers. When markets become filled with competitors and start to look alike, price often becomes a company's key competitive weapon.
Competition, Quality, and Service
Dominos Pizza was built on the convenience of home delivery. FedEx's so that customer orders are automatically shipped and tracked through the FedEx delivery system. Enterprise car rental has blown past its competitors. Instead of massing 10,000 cars at a few dozen airports, Enterprise sets up inexpensive rental offices just about everywhere. And as soon as one branch grows to 150 cars, the company opens another a few miles away. Enterprise's approach is astoundingly simple. If your car breaks down or needs service, Enterprise will provide you with a spare family car right at the dealer's service center. And it bets that you won't be in the mood to quibble about prices. These companies competes on quality and service, and my well end up with a total profit that's equal to or greater than the profit of a business that competes on price.
Competition and Innovation
Innovation has always been a way of life at 3M. For nearly a century, 3M's management has fostered creativity and given employees the freedom to take risks and try new ideas. Beginning with the invention of sandpaper in 1904, 3M has produced such staples as masking tape, cellophane tape, magnetic tape, and videotape--not to mention Scotchgard fabric and Post-it Notes.
Innovation not only drives growth, but it can also revolutionize an industry. Think of products like Rollerblades, AbFlex, Atomic hour-glass skis, and Burton & Sims snowboards. Each of these innovations revolutionized the sporting goods industry by creating new market opportunities and market demand.
Reference
Competition and Price
Southeast Airlines competes on price. It offers the lowest fares of any of its competitors. So does Dell computer. Each time Compaq loses a sale, it's either because of Dell's low price or because of Hewlett-Packard's and IBM's service and support. In fact, evidence of price competition is everywhere you look. Fast-food restaurants sell special meal deals at reduced prices, Coke sells 24-pak cans at $3.99, carmakers offer rebates and discounts, and stereo stores offer to beat any other price in town. These are all examples of using price to gain a competitive advantage--something that sets you apart from your rivals and makes your product more appealing to customers. When markets become filled with competitors and start to look alike, price often becomes a company's key competitive weapon.
Competition, Quality, and Service
Dominos Pizza was built on the convenience of home delivery. FedEx's so that customer orders are automatically shipped and tracked through the FedEx delivery system. Enterprise car rental has blown past its competitors. Instead of massing 10,000 cars at a few dozen airports, Enterprise sets up inexpensive rental offices just about everywhere. And as soon as one branch grows to 150 cars, the company opens another a few miles away. Enterprise's approach is astoundingly simple. If your car breaks down or needs service, Enterprise will provide you with a spare family car right at the dealer's service center. And it bets that you won't be in the mood to quibble about prices. These companies competes on quality and service, and my well end up with a total profit that's equal to or greater than the profit of a business that competes on price.
Competition and Innovation
Innovation has always been a way of life at 3M. For nearly a century, 3M's management has fostered creativity and given employees the freedom to take risks and try new ideas. Beginning with the invention of sandpaper in 1904, 3M has produced such staples as masking tape, cellophane tape, magnetic tape, and videotape--not to mention Scotchgard fabric and Post-it Notes.
Innovation not only drives growth, but it can also revolutionize an industry. Think of products like Rollerblades, AbFlex, Atomic hour-glass skis, and Burton & Sims snowboards. Each of these innovations revolutionized the sporting goods industry by creating new market opportunities and market demand.
Reference
- Michael H. Mescon, Courtland L. Bovée, John V. Thill, Business Today, 9th edition, Prentice Hall, 1999
