What I’ve learnt about competition in business relates to the relevant statement of inquiry, understand that businesses operate within a system whose structure is influenced by external factors, as the competitor pyramid could be regarded as a system in which businesses operate. Firstly, competition refers to a situation where two or more firms offer essentially the same (direct) or similar (indirect) products. The system here is the market: for example, the market for a general need or want such as “electronic appliances” or something more specific such as the market for “e-book readers”. The businesses operating in the “e-book reader” market would therefore also fall under “electronic appliances”. The external factors that influence who gets more market share are many—for instance, in the aircraft manufacturing market, if a Boeing plane crashes then Airbus may gain more market share as the two businesses are in direct competition with each other.
The content also relates to the relevant global context, identities and relationships, as each of the individual products supplied by a business are an identity and they are interrelated by the competitor pyramid. The relationship that exists between these identities is that they are in competition with one another – when two or more parties have essentially the same goal and want to gain superiority over the other. This market system is a network of identities and relationships, as shown in the diagram below adapted from the class presentation:
The main inquiry question that can be answered here is to what extent do companies compete indirectly with each other? We must realise that the number of “competitors” really depends on how specific or how broadly you define the need or want that is being satisfied. Some companies, such as Apple and Canon, may not seem to be direct competitors but still could be considered indirect competitors, if the want that is being satisfied is defined as “electronic products”. On the other hand, if the want is defined as “high-end DSLR cameras”, the number of competitors in the level shrinks dramatically to a select few.
The content covered in competition can be associated with the content under chain of production. This is because businesses who are in the same sector (e.g. two different oil extraction businesses both operating in the primary sector) may be in some form of competition, whether that would be direct or indirect. Therefore, businesses in the same sector that are in competition will need to differentiate their products, i.e. make a product stand out by highlighting how it provides unique value to its customers. This can be done in a multitude of ways, such as changing features, quality, style, etc. For instance, in the DSLR camera market, the Canon 5D Mark III has differentiated from its Nikon rival by a higher image quality and better dynamic range (build quality).
Here is a mind map that shows how the concepts I’ve learnt in unit two tie together: