business_problem_1.docx 

 

The problem

                Increased competition in the market place is always good for consumers. This is because of the fact that consumers have several brands at their disposal. At the same time, firms are forced to sell their products or services at a low price, something that ends up reducing their revenues and profitability. According to many observers, competition in the market place is not as good as many people tend to think especially to firms. Today, there are many firms which have been forced to close down their operations as a result of the increased competition. For instance, companies such as Enron have been forced to shut down their operations since their products do not have enough buyers (Schiffbauer & Ospina, 2010).

Why competition in the market place is a problem for businesses

                Increased competition in the market place usually makes it very difficult for businesses to effectively conduct its activities. For instance, firms are forced to constantly come up with new ways of conducting their operations such as new marketing strategies. Coming up with ways usually cost business firms a lot of resources (Cseres, 2005). For example, business firms are forced to spend a lot of time in thinking of ways of combating competition in the market place.

                Competition has a huge impact on companies’ revenues and profitability. Companies that enjoy monopoly powers usually dictate prices on customers. At the same time, these firms usually dictate the quantity of goods to produce in order to earn huge profits. However, this is not the case with companies that are facing stiff competition with others in the industry. For instance, these firms have no control over prices and have to price their goods or services according to the market forces of demand and supply. At the same time, firms operating in competitive market structures have to be very critical in determining the amount of goods to produce. These considerations usually end up affecting the operations of the business and even the quality of goods or services produced. With increased competition, businesses price their goods or services at relatively low prices which end up decreasing the amount of revenue collected.   A decrease in revenue reduces profitability margins which end up lowering the stock prices of businesses. When this happens, businesses are unable to attract investors, thereby being unable to expand their operations.

                Increased market competition has led to some businesses losing their identity and even culture. This happens mainly as a result of merging whereby two or more businesses come together and function as a single firm. Merging denies individual firms to retain their own identities and are instead forced to adopt a common identity. This in turn denies these firms opportunity to retain their own customers (Motta, 2007).

What causes increased competition in the market place

                The increased competition in the market place is brought about by new investments. Today, there are a lot of investments in the business arena which are in turn leading to increased amount of goods and services in the market. Businesses are therefore unable to charge high prices for their goods since customers have opportunity to buy goods which serve similar purposes. As a result of this, firms are forced to lower the prices of their products so that they can acquire customers.

Consequences of increased competition in the market place

                If the current stiff competition in the market place is not combated many firms are going to close down their operations. This is because many businesses will not be in a position to cater for their expenses such as operating costs as their revenues will be very low. This implies that these firms will be making losses, therefore being unable to go on with their operations (James, 2013).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Cseres, K. J. (2005). Competition law and consumer protection. The Hague: Kluwer Law   Internat.

James, H. S. (2013). The ethics and economics of agrifood competition. Dordrecht: Springer.

Motta, M. (2007). Competition policy: Theory and practice. Cambridge [u.a.: Cambridge Univ.          Press.

Schiffbauer, M., & Ospina, S. (2010). Competition and Firm Productivity: Evidence from Firm-        Level Data. Washington: International Monetary Fund.

 

 

 

CourseLover

(12)

Status NEW Posted 04 Sep 2017 08:09 AM My Price 10.00

----------- He-----------llo----------- Si-----------r/M-----------ada-----------m -----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------acq-----------uis-----------iti-----------on -----------of -----------my -----------pos-----------ted----------- so-----------lut-----------ion-----------. P-----------lea-----------se -----------pin-----------g m-----------e o-----------n c-----------hat----------- I -----------am -----------onl-----------ine----------- or----------- in-----------box----------- me----------- a -----------mes-----------sag-----------e I----------- wi-----------ll

Not Rated(0)

• Buy Answer