Competition. The essence and causes of competition. Rivalry.

Competition underlies market relations and represents a confrontation between business entities for favorable conditions for the production, sale or purchase of goods. The ultimate goal of such competition is to obtain maximum profits or other benefits, and its result is a good supply of the market with industrial products or services. In this article we will define what competition is and what its functions are. Let us consider in detail the types of market confrontation and the role of competition in the economy. Let's study ways to compete that allow you to get ahead of your opponent.

Competition: definition of the concept

In a broad sense, competition is competition to achieve a specific goal.

From Latin competition (“concurrere”) is translated as “to collide”, “to compete”. It is impossible to give a universal definition of competition, since this concept is broad and has many meanings and interpretations.

First of all, competition is the interaction between companies regarding the formation of prices and sales volumes in the market. Companies compete for favorable production and sales conditions in order to ultimately obtain maximum income and other benefits. The means of competition are:

• quality of finished products/services;
• price flexibility;
• organization of pre-sales and after-sales services;
• width of the product line;
• informing consumers about the product through advertising.

Competition is also considered as a method of market management and a form of existence of capital.

On the one hand, competition provides ample opportunities for the sale (by the manufacturer) and the purchase (by the consumer) of goods. On the other hand, the producer and consumer place their interests above others. The seller wants to sell the product at the highest possible price, but is forced to reduce the price so as not to lose the client, which in turn is beneficial to the buyer. The buyer and seller must come to a mutually beneficial agreement when determining the price, otherwise the purchase and sale will not take place and everyone will suffer losses (the manufacturer will not receive income, and the buyer will not receive the goods).

Conditions of existence

Competition in a modern economy is an integral part of all market models. The existence of competition is possible only under a certain state of the market economy. Basic conditions for the formation of competition:

• a large number of producers of any given product, their economic independence;
• dependence of enterprises on market conditions;
• freedom to choose the area for carrying out economic activities (the subject independently chooses what, how and in what volumes to produce);
• the presence of a developed market for means of production;
• balance of supply and demand;
• desire to increase consumer demand and own income.

Rivalry between enterprises affects the overall economic level of development of the country. It arises naturally, while at the same time being a prerequisite for the existence and development of a market economy.

Express test

You can determine the level of your own competitiveness right now using the following criteria.

• a tendency to rude speech, ridicule, all sorts of forms of speech that involve humiliating people.
• public discussion of the shortcomings of a third party during his absence.
• making decisions from the position of “This was unfair, therefore it gives me the right to lie, steal, etc.”
• fear that I will be “stuck on”.
• the very great importance of public praise and recognition.

These five simple signs are quite clear markers that indicate the presence of certain manifestations of competition.

The biggest enemy of competition is a generous mindset. Yes, such an unfashionable concept of “generosity” today, if understood correctly and fully included in all your financial and life situations, can eradicate competition completely. Why? Yes, because there is no point in looking into someone else’s garden when you see unique opportunities for your own career and personal growth.

It's no secret that the main goal of competition is to be first and get what you want. There's just one problem. There is no white competition. Just as there is no white envy. There is envy and there is competition. And both of these feelings are completely destructive. Therefore, a positive result cannot arise from a negative cause. “An olive tree will not produce oranges.” (P. Belorussky) Competition is a weed that reseeds itself. The only way to get rid of it is to pull it out by the roots. Once again: there is no constructive competition. There is the ability to adopt experience, learn from the best, be flexible to change, etc.

The most common reason for competition in groups of people working on the same task is status. We are designed in such a way that everyone wants to look smart, beautiful, understandable, fashionable, successful, etc. In principle, there is nothing strange in these desires. But the question here is which path we choose when starting to move towards our dream.

Functions

Competition performs the following functions:

1. allocative (placement) – promotes the effective placement of production factors (capital, labor, land) in areas where the maximum return from the enterprise’s activities is expected;
2. regulatory - influences supply in order to maximally correspond to demand (the enterprise produces those goods that will be sold, and does not try to sell what it can produce);
3. innovative – ensures the introduction of the latest scientific and technical achievements, the development and release of new types of products, and improvement of quality;
4. adaptation - promotes the adaptation of enterprises to environmental conditions, as a result of which the areas of economic activity expand;
5. distribution - creates conditions for the development and growth of successful enterprises and leads to bankruptcy of those whose products are not in demand;
6. control – prevents the formation of a stable monopoly in the market.

Through competition, optimal conditions for the production and sale of goods/services are maintained. At a set market price, a greater profit is received by the manufacturer who spent less money on the production of the goods. Accordingly, enterprises seeking to increase profits allocate resources as efficiently as possible.

Exploitation and interference (interference)

Interspecific competition occurs when different types of species in an ecosystem compete for the same resources: food, shelter, light, water, and other essential needs. Such control can reduce the population of a particular species; moreover, an increase in the population of competitors also tends to limit the growth of a particular species. Thus, competition can occur in two ways at the level of individual organisms, namely: exploitative competition and interference competition.

Examples of competition in nature of the first type include often invisible competition for limited resources. As a result of their use by a certain species, they become insufficient for others. Intervention or interference means direct interaction to obtain resources.

Examples of intraspecific competition in nature, as well as interspecific competition, may include the struggle between predators for prey. Thus, a violent confrontation can arise within a species (between two tigers) and between several species (between a lion and a hyena).

Types of competition

Classification of competition.

By scale

Competition happens:

1. individual (the company strives to develop its niche by calculating optimal production conditions and sales volumes);
2. local (confrontation between enterprises in a limited area);
3. industry (competition for profits of companies in the same industry);
4. intersectoral (confrontation between producers in different fields of activity for the redistribution of profits);
5. national (competitive struggle of domestic enterprises within the country);
6. global (competition of economic structures in the world market).

By implementation methods

Competition is classified into:

1. price;
2. non-price.

Price competition is based on lowering the cost of a similar product. Price competition can be:

• direct (the consumer is widely informed about the reduction in product prices);
• hidden (a new product with improved properties is produced, but the price increases slightly).

One of the common methods of price competition is price discrimination - selling a specific product to different groups of consumers at different prices. Price discrimination is possible if the seller is a monopolist and is able to divide consumers into groups based on purchasing power, but the resale of this product/service is impossible. Most often, price discrimination is resorted to in the service sector (hotel business, private medicine, legal services, transportation of perishable products, etc.).

Non-price methods of competition are based on:

1. work on product quality (product competition) - modernization, improvement of technical characteristics, release of fundamentally new products;
2. actions aimed at improving service (competition in terms of sales) - free delivery, after-sales customer service (warranty, repair, provision of components);
3. advertising.

By degree of freedom

Competition happens:

1. perfect;
2. imperfect.

Signs of perfect competition:

• there are many economic entities (producers and consumers) who are unable to influence the market situation;
• the product offering includes equivalent, homogeneous, interchangeable goods and services;
• consumers are fully and reliably informed about prices;
• the activities of sellers are carried out independently of each other;
• every citizen can apply knowledge and invest capital in the economic sector that interests him, and become an entrepreneur;
• there is no discrimination against customers (products can be purchased at any market).

Perfect competition is an abstract entity that exists only in theory, since no modern market fully meets the listed criteria. If at least one of the conditions is not met, the market state is defined as imperfect competition.

Forms of imperfect competition:

1. monopoly (market power is concentrated in the hands of one monopolist company, which inevitably leads to an unjustified increase in the cost of goods, a decrease in production efficiency, and a slowdown in technical progress);
2. oligopoly (market power is distributed among several large firms);
3. monopolistic competition.

Characteristics of existing market models.

The most common form of market economy is monopolistic competition, characterized by:

• the presence of a relatively large number of companies;
• variety of products, the presence of a large assortment of interchangeable goods;
• free opportunity to enter the manufacturing industry.

In monopolistic competition, similar products are sold and given real or fictitious unique qualities.

The main tool of competition used by participants in a monopolistic market is non-price competition. It is quite easy to penetrate a monopolistic market - you need to offer a product with properties that will be of interest to the consumer. The monopolistic form of the market ensures the most complete satisfaction of consumer needs and activates production.

Dangerous changes

You have been single for a long time and have been thinking for months that it would be nice to meet someone. Just the thought of creating a profile on a dating site or talking to a man you like puts you in a stupor. You are spinning thoughts in your head about how to present yourself, what to say when you meet, but it never comes to fruition.

Or maybe you just can’t decide to talk to your boss about a promotion or fill out your resume and submit it to your dream company. Or at the party again you didn’t say even a few words, and a witty joke remained with you because you couldn’t bring yourself to wedge yourself into the table conversation?

This behavior, along with other reasons, can be provoked by our fear of competition. It occurs when our imagination (reasonably or not) draws a negative scenario for the development of events. We are afraid of defeat in competition, we expect it, and this fear paralyzes us.

However, it also happens differently. Sometimes fear of competition arises because we fear success. We are so accustomed to the way our lives are structured that any change, even for the better, seems frightening to us. In any case, this directly relates to the topic of our self-esteem, self-perception and boundaries.

The role of competition in the economy

Competition is one of the main categories of market management. Through competition in the economy, factors of production and profit are distributed (in accordance with the size of invested capital and production efficiency).

The modern market is characterized by so-called regulated competition. That is, the manufacturer:

1. cannot monopolize the production or sale of a product;
2. does not carry out actions contrary to the law;
3. does not infringe on consumer rights.

The confrontation between companies begins long before the product is released. Enterprises are fighting for:

• high-quality raw materials, equipment, materials and the opportunity to purchase them at the lowest possible price in order to reduce the cost of goods;
• favorable territorial location of the enterprise and sales markets;
• well trained personnel.

Competition affects the economy both positively and negatively.

The positive aspects of competitive confrontation include:

1. stimulating technical progress, increasing production efficiency, improving the quality of products, rational use of resources;
2. slowdown in price growth due to lower production costs;
3. equalization of profit rates and wage levels in economic sectors;
4. meeting consumer demand.

The negative aspects of competition include:

1. possible business instability, unemployment, bankruptcy, inflation;
2. unfair distribution of income;
3. overproduction of goods;
4. illegal actions of competitors (industrial espionage, falsification, poaching of qualified specialists, financial fraud).

Notes

1. Rubin Yu.B. On the constructive theory of competition in entrepreneurship // Modern competition. 2020. T. 11. No. 5 (65). pp. 114-129.. moderncompetition.ru. Retrieved April 6, 2018.
2. Michael Porter.
   Competitive strategy. Methodology for analyzing industries and competitors. - Moscow: Alpina Business Books, 2005. - 454 p.
3. Rubin Yu.B., Potapova O.N.
   Competition in the economy. How to confront and counteract your opponents and is it necessary to do so? (Russian) // Modern competition: magazine. - 2020. - T. 10, No. 6 (60). — P. 107-142.

Results

Competition is an important and integral element of the market economy, which equalizes supply and demand, helps to establish an equilibrium price, and achieve a compromise between seller and buyer.

Competition increases production efficiency, since in market competition the maximum benefit goes to the one who produces high-quality products at the lowest possible cost. To achieve this task, it is necessary to constantly update and improve production technology, thereby increasing its efficiency.

Competition is a determining factor in regulating prices and maximizing the full satisfaction of consumer demand. It helps to oust inefficient enterprises and prevents the dictatorship of monopolists in relation to the consumer.

In order for an enterprise to remain effective and successful in a competitive environment, it is important to always be one step ahead, several positions better than the opponent.

Possible effects

• As a result, there may be limitations in population sizes, as well as changes in communities and species evolution.
• According to the principle of competitive exclusion, no two species that use the same limited resources in the same way and in the same space can exist together.
• Although local extinction is rare compared to competitive exclusion and niche differentiation, it also occurs.

The Pros of Rivalry

• Lightning-fast decision making . In ordinary situations, the pace of decision-making turns out to be more significant than their essence. In the face of pressing deadlines, it is practical to focus on key indicators: meaningfulness, awareness of possible consequences, analysis - you need to stop, evaluate the current state of affairs, imagine how to get out of the conflict in the best possible way today.
• Confidence in the rightness and necessity of one's own actions . The person taking part in an acute conflict situation is not always the boss or the one who has power. But even an ordinary subordinate can win in a conflict of interests; it all depends on whose power reserve will prevail (economic, executive, temporary), how fundamental the issue is for one or another warring party, and who has stronger stamina and “strength of spirit.” . An individual who chooses rivalry as the basis for his subsequent actions in confrontation is absolutely confident in the legitimacy of decisions made in the future.
• Minimum energy consumption after making a certain decision . If a person persistently pursues a goal and intends to win the current conflict in order to satisfy his own ambitions, the strategy of competition is used “automatically.” An individual, resolutely defending his position, imposes his personal point of view on his opponents, without wasting energy on such a secondary thing, in his opinion, as assessing the level of ethics of his own actions.
• An ideal impetus for subsequent personality development . Competition is a special character trait that can lead to triumph for any average person. Motivation for the formation of a successful personality arises much earlier in those who are accustomed to moving towards a goal actively and fearlessly. Competition makes it possible to perform actions that previously seemed unthinkable and unrealistic. As a result, a unique ability is formed to achieve not average, but the highest results in any activity.
• Guaranteed results “here and now” . In emergency conditions, with pressing deadlines, in the absence of the opportunity to get to know the opponent and identify his strengths and weaknesses - rivalry and competition are the only tools that can lead their leader to victory.