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How does competition affect business?

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Quick Answer

Competition may benefit businesses if they offer lower costs or meet consumer demands in ways competitors do not, but it can hurt companies who enter into crowded markets and do not offer distinct advantages. To thrive in a competitive environment, companies must identify their consumer base, then give customers products they need at the best price. Competition in marketplaces for the same customers ultimately leads to a race for businesses to produce products quickly, in addition to lowering costs, to keep customers happy.

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Full Answer

While competition can stimulate leading industry practices, it can hurt companies too. Organizations that do not provide unique or high-quality products can lose their customers. Marketing is also key to success, as companies must be able to brand their products effectively to attract clients.

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