FirmsCompetitive pressure is a basic driver of change in every industry whereby firms competing for business make improvements that puts pressure on their competition. The following are common types of competitive pressure for firms.
Competitive pressure benefits consumers and nations in general as it pushes firms to add more and more value at less and less cost. This assumes there are laws in place to prevent competitive pressures from creating economic bads.
Cost / Price
Time to Market
IndividualsIndividuals also face competitive pressure in school, sports, business and social groups. People appear to be naturally competitive such that they commonly enjoy simulations of competition in games. As with firms, competition can be viewed as a driver of improvement in individuals but can have negative impacts as well, particularly where people become overly competitive such that they are unhappy or overly stressed. A certain level of stress can be positive as a means for building personal resilience and adaptability. Avoiding all competition is indicative of mediocrity. The following are common types of competitive pressure on individuals.
As an example, employees may compete to be more productive in order to earn respect, bonuses, promotions and job security.
Quality of Life
Mindless CompetitionMindless competition is competition that is causing more damage than good. This can occur where either firms or individuals fail to ask basic questions such as "Why?" or "Is this worth it?" Firms often fall into the trap of trying to emulate everything a competitor does such that they lose their identity and core competencies. Likewise, individuals may engage in stressful and fruitless competition such as negative office politics that may cause them more damage than good.
The Surprising Benefits of LosingThe benefits of competition stem from the effort that it creates even if you don't win. There is often value to be found in a loss. In an individual, losing can create positive character traits such as humility, personal resilience or a sense of humor. If one carefully examines each loss there is often value to be found that may be the basis for your next win. Likewise, a firm strongly driven by competitive pressures may be likely to succeed in the long term regardless of short term failures due to the competencies and culture this can build up that defeats mediocrity.
NotesFirms and individuals may also compete against themselves whereby they try to continually improve upon their best results so far. This is a good approach where you lead or lag the competition.Learning to thrive in competition without becoming stressed is a priceless skill in the real world that can be described as personal resilience.
|Overview: Competitive Pressure|
|Definition||The drive to change and perform in order to keep up with the performance of competitors.|