Price Competition: Meaning and Relevant Aspects

This report will try to explain the meaning of price competition and its various relevant aspects which the various business organizations as well as companies often take the help of in a bid to outrival their competitors. The report will analyze three articles for the purpose and try to understand the concept of price competition through the lens of these articles.

Running head: PRICE COMPETITION
Price Competition
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Executive Summary
This report will try to explain the meaning of price competition and its various relevant
aspects which the various business organizations as well as companies often take the help of
in a bid to outrival their competitors. The report will analyze three articles for the purpose
and try to understand the concept of price competition through the lens of these articles. The
first article will give an overview of the concept of price competition and business
environment scanning. The second article will give an overview of the concept of price
competition and business strategy. Finally the third article will give an overview of price
competition and globalization.

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Table of Contents
Introduction................................................................................................................................3
Price competition and Environmental scanning.........................................................................3
Price Competition and Business Strategy..................................................................................6
Price Competition and Globalization.........................................................................................7
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
The present world of business has become more diversified than the earlier times and
the choices which are available to the customers is more varied than it was about a decade
ago. Therefore, to differentiate their products as well as services the various business
organizations and the business organizations often take the help of the policy of price
competition in a bid to outrival their competitors and also to improve the percentage of their
sales and annual revenue (Salvatore and Brooker 2015). Price competition can be “defined as
the process by means of which the various business organizations as well as the companies
lower the prices of the products and the services offered by them while maintaining a high
quality of the products and the services offered by them” (Dixit and Skeath 2015). The
“various companies as well as business organizations often take the help of this particular
mechanism to capture the market and also to increase their customer” (Baud and Durand
2012). Another important factor which the various business organizations as well as the
companies depend is that after they have captured the market and the customer base even if
they raise the cost of the products or the services offered by them to the customers, they will
stay with them on the basis of the customer loyalty (Baud and Durand 2012). This report
proposes to explain the meaning of “price competition and its related processes”.
Price competition and Environmental scanning
The article “Strategic Environmental Scanning and Organization Performance in a
Competitive Business Environment” written by the authors “Bayode O. Babatunde and
Adebola O. Adebisi” appeared in the “Economic Insights-Trends & Challenges” in the year
2012 (Babatunde and Adebisi 2012). This particular article aimed to analyze “the impacts of
Strategic Environmental Scanning on Organization performance in a competitive business
environment” (Babatunde and Adebisi 2012). It is to be noted that the process of price

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competition “forms an important aspect of the process of the environmental scanning process
and thus the majority of the companies try to analyze the internal as well as the external
environment in which they transact their business with a view to develop effective pricing
strategies” (Friesenbichler, Clarke and Wong 2014). In addition to this, the “finding out of
the needs as well as the requirements of the customers” also forms “an important part of the
overall pricing strategies” of the various companies and the business organizations. It is often
seen that the customers are a very fickle lot and their switch from one particular brand to
another on a regular basis (Friesenbichler, Clarke and Wong 2014). Therefore, in order to
counter act this particular nature of the customers the various business organizations as well
as the companies often develop effective pricing strategies to outrival their competitors.
The primary research issue of the article is the analysis of “the impacts of Strategic
Environmental Scanning on Organization performance in a competitive business
environment” (Babatunde and Adebisi 2012). The entire research work of the authors in this
particular article is directed at finding the answer to this particular topic. In addition to that,
the article also states that “30% of the variation or change in effective organization
performance is caused by variation in strategic environmental scanning” which in turn is
affected by the pricing strategy followed by the company or the business organization
concerned (Babatunde and Adebisi 2012). Therefore, it would be apt to say that effective
pricing strategies as well as price competition forms an important aspect of the overall
business plan and the strategy of the various companies and the business organizations
(Friesenbichler, Clarke and Wong 2014).
The major findings in the article can be said to be the fact that the article states that
the “coefficient of determination (R2) of the customers is 0.301” and “30% of the variation or
change in organization productivity is caused by variation in external environmental factors”
which again is regulated by the buying behavior of the customers and which in turn is

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regulated by the “pricing strategy followed by the company or the business organization
concerned” (Babatunde and Adebisi 2012). The “various companies as well as the business
organizations” can take “the help of these statistics to further improve the prospects” of their
business.
The various managers as well as the marketing managers can take the help of the
findings of this particular article by the authors “Bayode O. Babatunde and Adebola O.
Adebisi” to improve the prospects of their business organization or company. The article
clearly articulates the need of the “analysis of the external as well as the internal environment
in which the company or the business organization is operating and also an effective
consideration of the needs and the requirements for the development of the pricing strategies
utilized by their company or the business organization” (Babatunde and Adebisi 2012). It is
often seen that price is one important factor which attracts the customers to the products as
well as the services offered by them. Therefore, the various managers as well as the
marketing managers should focus on the process of price competition to enhance the
prospects of their products or the services.
The primary recommendation which the authors in this particular paper provides to
the managers as well as the marketing managers is an effective consideration of the needs as
well as the “requirements of the customers and also an analysis of the internal and the
external environment in which the company or the business organization is operational”
(Friesenbichler, Clarke and Wong 2014). Therefore, for the development of their pricing
strategies the “various companies as well as the business organizations” should take these
factors into consideration.

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Price Competition and Business Strategy
The article “Information Technology and Business-Level Strategy: Toward an
Integrated Theoretical Perspective” written by the authors “Paul L. Drnevich and David C.
Croson” and published in “MIS Quarterly” in the year 2013 “intends to give an overview of
the concept of price competition and its related concepts” (Drnevich and Croson 2013). It is
to be noted that this particular “intends to give an overview of the concept of price
competition from the perspective of the information technology which the majority of the
companies as well as the business organizations often take the help of the in the present day
technological world” (Salvatore and Brooker 2015). In the present world of technology “it is
often seen that the various companies as well as the business organizations often take the help
of the various forms of technology” to find out the “needs and the requirements of the
customers” in the best possible manner. An “effective analysis of the needs as well as the
requirements of the customers is essential in order to devise effective strategies to form
relevant pricing strategies” (Salvatore and Brooker 2015).
The research issues which the authors try to address in this particular article are the
way information technology is utilized by the “various companies as well as the business
organizations to develop effective pricing strategies and also the factors which affect the
pricing strategies followed by the various companies as well as the business organizations”
(Drnevich and Croson 2013). In addition to that, the article also tries to find out the
importance of the strategy of effective price competition strategy followed by the “various
companies as well as business organizations”.
The various managers as well as the marketing managers can take the help of the
policies and the strategies articulated in this particular article by the authors for finding out
the needs as well as the requirements of the customers. It is to be noted that the policy of
price competition “forms an important part of the overall business plan of the business

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organizations and companies” and the “various managers and the marketing managers” need
to collect the required amount of data for the development of the effective strategies which is
likely to “lead to the overall growth and development of their company or the business
organization” (Drnevich and Croson 2013).
The issues discussed in the article are very much relevant in the field of business
world today. The issues articulated in the article like the importance of price competition and
the “taking into consideration the various needs as well as the requirements of the customers
are very much relevant” in the present day business of today. Therefore, it would be apt to
say that the concepts as well as issues articulated in the article are very much relevant today.
Price Competition and Globalization
The article “China and Latin America: Complementarity, Competition, and
Globalisation” written by the authors “Dosch, Jörn, and David S. G. Goodman” and
published in the “Journal of Current Chinese Affairs” in the year 2012 intends to provide an
overview of the concept of price competition and its relation to the concept of globalization
(Dosch and Goodman 2012). In the opinion of the authors of this particular article
globalization is one of the major factors which has affected the price competition strategy
“followed by the various companies as well as business organizations” of the world. It is be
noted that the globalization is one of the primary factors which has compelled the majority of
the “companies as well as business organizations of the world to formulate and implement the
strategies related to the genre of price competition” (Dixit and Skeath 2015).
The research issues which the authors have discussed in this particular article are the
rise of China as one of the major economic power houses of the world and the impact which
this particular phenomenon is likely to have on the price competitive strategies followed by
“the various international companies as well as business organization” (Dosch and Goodman

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2012). Therefore, it would be apt to say that globalization has indirectly affected the way the
various companies as well as business organizations formulate and implement their pricing
strategies.
The major findings of the article can be said to be the facts that “China’s trade with
the region reached 180 billion USD in 2010, evincing not only an increase of 50 per cent
from 2009 but also a pattern of sharp growth since 2000” and “the China–Latin America
trade volume stood at just 13 billion USD. By 2007 bilateral trade had already exceeded Hu’s
original target of 100 billion USD, set for 2010” (Dosch and Goodman 2012). Therefore, this
is likely to affect the international trade and commerce in a significant manner and the way
the various business organizations as well as companies transact their business. The various
business organizations as well as companies will need to develop effective pricing strategies
in a bid to counteract this particular phenomenon (Dixit and Skeath 2015).
It is to be noted that the various marketing managers as well as the managers can take
a leaf out of the drastic economic growth of the nation of China and Latin America and
implement the same “for the overall growth and the development of their companies or
business organizations” (Dosch and Goodman 2012). Therefore, “the various companies as
well as business organizations” will need to formulate and implement effective pricing
strategies in order to counteract this particular international phenomenon.
The concepts articulated in the article by the authors regarding the impact of
globalization on the pricing strategy followed by the “various companies as well as business
organizations” are very relevant in the present day business world. The “various companies
as well as business organizations” can take the help of effective pricing strategies to develop
new pricing strategies “taking into consideration the needs as well as the requirements of the

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customers and also the changing global scenario” in a bid to outrival their competitors (Dixit
and Skeath 2015).
Conclusion
Therefore, from the above discussion it becomes apparent that price competition
forms one of the most basic aspects of the overall business plan followed by the various
companies. Thus the various companies as well as the business organizations should take into
consideration the needs and the requirements of the customers in the most effective manner
for the formulation and implementation of their pricing strategies. Therefore, the various
companies need to take the help of various platforms offered by the electronic media for
finding out the needs as well as requirements of the customers and the development of
strategies to counteract them.

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References
Babatunde, B.O. and Adebisi, A.O., 2012. Strategic Environmental Scanning and
Organization Performance in a Competitive Business Environment. Economic Insights-
Trends & Challenges, 64(1).
Baud, C. and Durand, C., 2012. Financialization, globalization and the making of profits by
leading retailers. Socio-Economic Review, 10(2), pp.241-266.
Dixit, A.K. and Skeath, S., 2015. Games of Strategy: Fourth International Student Edition.
WW Norton & Company.
Dosch, J. and Goodman, D.S., 2012. China and Latin America: Complementarity,
competition, and globalisation. Journal of Current Chinese Affairs, 41(1), pp.3-19.
Drnevich, P.L. and Croson, D.C., 2013. Information technology and business-level strategy:
Toward an integrated theoretical perspective. Mis Quarterly, 37(2).
Friesenbichler, K., Clarke, G. and Wong, M., 2014. Price competition and market
transparency: evidence from a random response technique. Empirica, 41(1), pp.5-21.
Salvatore, D. and Brooker, R.F., 2015. Managerial economics in a global economy. Oxford
University Press.