How Competition Brings About Diverse Challenges In Contemporary Business Markets

An ideal market is one where businesses; both new and old ethically compete against each other abiding by the regulatory framework and established best practices. Over the years, with the advancement in technology and mechanization of industries across the world, new manufacturing techniques and knowledge sources have come to the fore that have changed how business is conducted across the world. With the increase in incomes and disposable incomes of consumers across the world, people have now developed a more accepting attitude towards new brands and businesses. This new trend has brought about a paradigm shift not only in the attitude and choices of the consumers but also in the structure and nature of modern business markets which now see the participation of new players.

The threat of New Entrants - Bargaining Power of Buyers

There is no doubt about the fact that the disposable incomes of people have increased over the years. With international conglomerates establishing themselves in new countries across the world, there has been a wider acceptance for foreign brands offering better quality at fair prices. An increase in the collective buying power of the consumers in an economy also raises the demand for all kinds of services and products. The demand for commodities of all types is directly proportional to the paying capacity of the consumers in the economy. It is also pertinent to note that the paying capacity of modern-day consumers is also directly related to the gross domestic product or the total output of the economy.

Competitive markets: Then and Now

There was a time when it used to be very difficult for new businesses and enterprises to press upon the imagination of the consumers and make a mark on the business markets. Brands had to toil for years to be able to successfully demonstrate a distinct brand identity to the consumers. However, now people are constantly looking out for new options. Fresh concepts and disrupting products. Therefore, there is a separate market for new businesses. Businesses can now thrive thanks to the free and fair business markets, easy regulatory framework, straightforward business policies and a shift in people’s attitudes and preferences.

With the constantly growing and evolving aspirations and desires of the modern-day consumer, there is also a subsequent need for new and innovative brands that can fulfil their aspirations and desires. To keep up with the evolving markets and trends, the business must constantly develop their products and improve on their technologies to be able to cater to the growing segment of customers who are on the lookout for distinct services and products.

Product development and its impact on competitive markets

With the advent of new technologies, cutting edge designs and innovative research endeavours around the world, product development is now happening at a much faster rate than before. Companies now have specialized divisions and are considerably invested in design research. With companies constantly engaged in improving their products, consumers have a wide selection of products to choose from, often also leading to the problem of oversupply. This also has several adverse effects on competitive markets around the world.

Advantages of a constantly evolving business market

Ethical competition:one of the biggest challenges before most modern-day businesses is anti-competitive practices pt forth by industry incumbents who create conditions that are not favourable for new entrants. Whereas governments and agencies constantly strive to create a business environment that is conducive to the growth and development of all kinds of businesses; new and old, the old business has an obvious advantage over their budding counterparts. In terms of industry knowledge, control over supply chains, technological superiority and consumer trust, old businesses have a greater market share than the newer ones. Constantly developing and evolving business markets that are characterized by free and fair entry and exit rules and ethical competition have various advantages. The problem of anti-competitive practices is solved to a huge extent.

Constantly evolving design: with the ever-changing aspirations of modern-day consumers, businesses have to constantly work on improving both their products and their marketing strategies. The evolving tastes of consumers have also inevitably led to better products and services which have benefited the consumer community at large. When businesses compete with each other for a greater share of the consumer market, the end customers are always the biggest beneficiaries.

Alternative configurations: with ongoing evolution in research and development, new products are designed and built every day. Companies are finally realizing the importance of catering to a diverse market. Whereas most businesses in the past decades followed a one-size-fits-all approach. More and more businesses are now focused on serving specific target markets. This has led to the availability of better products to suit the diverse consumer needs while also ensuring that the business markets have been able to accommodate all kinds of businesses across the world

Disadvantages of a constantly evolving business market

Whereas there are plenty of advantages for the consumers and the industries when a market is conducive to constant competition. There are also several disadvantages of a constantly competitive business market. It can lead to various outcomes that could be detrimental to the markets themselves.

Hyper competition: one of the biggest challenges brought about by a market system conducive to free and fair competition is the problem of hyper-competition. Most brands and businesses are engaged in a colossal campaign to topple one another.Many businesses resort to misleading brand communication, stolen identity and other malpractices to survive the cutthroat competition.

Sub-par quality: Another detrimental outcome of fast-changing business markets is the deterioration of quality standards in products and services. When the focus of business shifts from the quality of the commodities they sell to the brand pitch that they are trying to create with their product, the most direct consequence is inferior quality. Also to meet the highly competitive pricing by newer entrants, many established brands have compromise on the quality of their products to sustain the new consumer's trends.

Oversupply: Oversupply is the most direct consequence of a hyper-competitive market. This can cause piling up of inventories and over time can also affect the pricing of the products. When the situation of oversupply occurs in a competitive market, the price of commodities usually falls leading to collective financial losses for all the players in any industry. In many economies like China, businesses resort to exporting their surplus production. However, there are now strong anti-dumping laws against products that are in over-supply in foreign markets. It is therefore getting increasingly difficult to trade surplus goods.

Market crashes: when the situation of oversupply occurs, the government or regulatory agencies are required to step in to plan price caps and formulate strong price control policies. However, since most capitalist and free-market economies ate characterized by minimum interference from the government agencies, it has often been seen that oversupply can bring about a market crash-like situation.

Bottom Line

Understanding competitive markets is easier said than done. This is the reason why the most eminent business schools and universities around the world now offer undergraduate and postgraduate programs in business markets. The analysis of the various underlying fiscal factors that influence the competitive business markets is a difficult task for any student. Due to a lack of reliable assignment help services, the students have to resort to online management assignment help for academic guidance.

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