by Paul Herbig

Created on: May 15, 2009   Last Updated: May 16, 2009

The Good, The Bad, and the Ugly of competition


We have a love-hate relationship with competition. On one hand, who hasn't wished all one's competition would simply vanish (as if all one's troubles would vanish as well with one's competitors gone). Then being the only one left in the industry, life would be easy street. Being a monopolist, one would be able to control one's own destiny, setting prices at will and conducting business without regard of customer concern or worry about customer migration. Of course, the bad part is the government does not tend to take these things called monopolies lightly and would probably either regulate you or break up your company.

But competition does have its advantages. Even companies with intense rivalries must acknowledge that one's competition keeps one sharp, innovating, and constantly attuned to the marketplace, towards constantly improving quality and performance of products and the company's ability to provide needed services. This is a positive as it allows your company to continue to survive and prosper, alas with not nearly the same profitability as if you were alone but still sufficient for the market's purposes.

You can have both good and bad competitors. How can that be? Aren't all competitors necessarily bad? (see above) Not all competitors are created equal. Some are more desirous than others. They are the good competitors. These companies realize you both are in the market to make money. They may fight you tooth and nail for companies but they price similar to you and they hate price wars as much as you do. They tend to be consistent and predictable in their habits and behavior, as does yourself. This is advantageous as you can predict with high accuracy what they are likely to do (as they are with you) and thus the future becomes much more tolerable.

They tend to be credible and reliable. If they are overstocked, they will announce they are having a sale or price reduction to lower their inventory. As a good competitor, you believe their notice and will not match prices, knowing that they will also do the same courtesy to you if you have a similar problem. You also presume that as soon as inventories are corrected, they will return to normalcy with regular prices. Good competitors are like good neighbors, well respected, keep their house and yard in excellent shape, keep their word and obligations, and are a positive contribution to the neighborhood (i.e., industry). They tend to

• 1
• 2
• Next Page >>