Disadvantages of Competition in Business: A Comprehensive View

This essay critically examines the disadvantages of competition in business activities from the perspective of both business organizations and individual customers. It argues that while competition can benefit larger businesses with greater logistical capabilities, smaller businesses often struggle to survive, leading to closures or acquisitions. Examples like Amazon's entry into the Australian market and Coca-Cola's impact on local beverage industries illustrate how competition can reduce market share and customer support for smaller players. Excessive competition can also drive down prices, leading to overproduction, reduced demand, and potential job losses. For customers, intense competition can result in market saturation with similar products at similar prices, causing confusion and potentially leading to unnecessary purchases. Furthermore, the pressure to lower prices can compromise product quality, ultimately disadvantaging consumers. The essay references academic sources to support its claims about the complex and sometimes detrimental effects of competition in the business world.

Running head: DISADVANTAGES OF COMPETITION IN BUSINESS ACTIVITIES
DISADVANTAGES OF COMPETITION IN BUSINESS ACTIVITIES
Name of the Student
Name of the University
Author Note

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DISADVANTAGES OF COMPETITION IN BUSINESS ACTIVITIES
Disadvantages of Competition in Business activities
Giving due consideration to the advantages of competition in business activities, this
particular essay shall be dealing with the disadvantages of it. The discussion in this essay shall be
focusing upon the aspect of disadvantages from the perspective of how it affects the business
organizations and how it affects the individual customers. Since the businesses are directed
towards satisfying the requirements of the customers and the customers look forward to the
business organizations for seeking satisfaction of their needs and aspirations. Precisely because
of this functional relationship that the disadvantages should be analyzed with reference to this
relationship.
Disadvantages for the Business Organizations
The stiffness of the competition shall always be favourably disposed towards the big
business organizations who can by virtue of the better and greater logistical facilities be able to
exert an overarching influence on the market forces. However, the smaller businesses shall be on
the losing end as they shall be struggling to cope up with the competition generated by the big
business houses. The small businesses shall either have to be closed down or they shall have to
lose out on their autonomous mode of functioning. There are higher chances of small businesses
getting coopted by the larger ones. When Amazon had entered the Australian, several online
retail chains had allowed themselves to be bought by the online retail giant, in order to safeguard
their interest of not incurring loss. They were well aware of the fact that the facilities they
offered could never match up to the level of Amazon. Similarly, the launching of Coca Cola had
also caused the functioning of several local carbonated beverage industries to be disrupted. They
were either bought by Coca Cola, or they had to give up on conducting their business activities.

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DISADVANTAGES OF COMPETITION IN BUSINESS ACTIVITIES
The surplus amount of dairy products produced in Europe are on a regular basis shipped into
Africa where they are saleable at a price almost similar and sometimes lesser than the locally
produced dairy products. This has caused several industries trading in dairy products to have
gone out of business. These examples are reflective of the fact that competition causes the
market share of certain products to be reduced and also cause the customer support base to be
reduced by leaps and bounds (Barney, 2012).
An excessive amount of competition cam cause the business organizations to lower the
range of the price of their products. Competition in the market space amongst the business
organizations is concerned with the attracting the maximum amount of customers, and the most
generic and the most basic of attracting customers is by means of providing attractive price range
which shall be suiting the budget of the persons. Naturally, there shall be too many companies
providing similar kind of products with very little scope for actual innovation. This in turn leads
to overproduction of goods and the rate of demand in the market tends to fall (Chen, 2015). The
rate of supply exceeds the rate of demand and that leads to fall in demand of a particular product.
Thus in such a situation it shall become difficult for even the big businesses to survive as they
shall be finding it difficult to even gather the basic cost price of the product, profit shall seem
like a distant dream. The worst hit in that situation shall be the workers of the organization who
shall be terminated on a large scale. Thus excessive competition in the market is not just harmful
for the business organizations but also for the employees the organization who depend on it for
seeking their livelihood (Correa, 2012).
Disadvantages for the Customers
The disadvantage of stiffness of competition also hits the customers. As it has been
discussed in the previous section that the market gets filled with similar kind of products and at

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DISADVANTAGES OF COMPETITION IN BUSINESS ACTIVITIES
similar prices. That has the propensity to make the customers get confused and they might as
well be driven to buy goods more than they required as a result of the lure of the low prices. The
customers shall not be saving money and in the long run they shall be ending up spending up
more than they could have spent had the prices been higher comparatively (Satell, 2014).
As the generic saying goes that lowering of the price shall lead to the lowering of the
quality of the product. This means that the product which the customers shall be getting at a
lower price shall be of poorer quality (Aghion et al., 2015).

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DISADVANTAGES OF COMPETITION IN BUSINESS ACTIVITIES
References
Aghion, P., Cai, J., Dewatripont, M., Du, L., Harrison, A., & Legros, P. (2015). Industrial policy
and competition. American Economic Journal: Macroeconomics, 7(4), 1-32.
Barney, J. B. (2012). Purchasing, supply chain management and sustained competitive
advantage: The relevance of resource‐based theory. Journal of supply chain
management, 48(2), 3-6.
Chen, S. C. (2015). Customer value and customer loyalty: Is competition a missing
link?. Journal of Retailing and Consumer Services, 22, 107-116.
Correa, J. A. (2012). Innovation and competition: An unstable relationship. Journal of Applied
Econometrics, 27(1), 160-166.
Satell, G. (2014). A Look Back At Why Blockbuster Really Failed And Why It Didn't Have To.
Retrieved from https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-
blockbuster-really-failed-and-why-it-didnt-have-to/#135ee8951d64