Competition is an outright form of a contest between two or more parties where each strives to be ahead of the other regarding resource capabilities, recognition, awards or status. Every party sets goals that make them superior to the others like the case of corporate organizations where companies make efforts to acquire larger market shares by having specific targets on aspects such as quality of their products and services. Competition could, however, affect the society either positively or negatively. Competition becomes disadvantageous in the event where it causes injuries, health issues or poor working conditions that interfere with the welfare of humankind. On the other hand, competition is beneficial if it is aimed at and contributes to the improvement of the wellbeing of the society or in case the challenge provided by competition is healthy for the economy. This essay, therefore, uses some life examples to discuss the advantages and disadvantages of competition.
Competition is considered to be the primary driver of success in business organizations since it enhances performance and promotes innovation among the competing parties as they strive to outdo each other (Hana 82). Innovative ideas are critical to shaping the world due to the way companies evolve from the creativity that flourishes at the marketplace. Consumers are then able to benefit from innovation because stiff competition compels organizations to produce numerous varieties of high-quality products from which customers can choose (Council of Economic Advisers 2). Moreover, competition is necessary for consumers since it leads to price reduction by firms thereby making such products and services affordable to the majority of buyers.
Fair and open competition, therefore, implies that consumers benefit more from having more choices and enjoy the reduced prices charged by firms (Council of Economic Advisers 1). Competition, therefore, provides an opportunity for corporate organizations to adopt various ways through which they could expand customers’ freedom of choice. Major innovations are evident in the information and technology field where firms strive to manufacture products that meet the changing needs and expectations of users. Innovation also offers employees the chance to advance their careers since competition provides insights on the market trends that enable employees to identify what works and what does not work for their organization (Council of Economic Advisers 2). This means that employees are likely to contribute actively towards the growth of their firm by generating creative ideas in line with industry and market forces (Hana 82). Information and technology industry is largely attributed to significant economic changes that continue to take place in the modern business environment. In the event where competition improves socio-economic welfare of people by allowing market forces to prevail, firms are then able to offer the best products.
Disadvantages of competition
Competition is also harmful to the society since it contributes to unethical practices such as corruption and fraud among competing firms (Council of Economic Advisers 9). Unethical business practices are the result of every company's wish to survive in highly competitive market environments such that they are willing to go the extra mile of providing financial incentives to political parties in exchange for favors (Council of Economic Advisers 6). As with the case of vehicle manufacturing firms where there are strict rules on emission tests, illegal practices that have higher social costs could be the result of competition (Council of Economic Advisers 6). In such scenarios, higher pass rates could be witnessed while in other cases, manufacturers could decide to rely on illegal means by manipulating test results. Businesses with honest operations, therefore, tend to lose out to dishonest competitors which imply that the latter's actions reduce the market share of the former. The consequences of such illegal activities are that even the honest firms could decide to cross over and adopt the same illegal practices to remain competitive in the market.
Conclusion
Competition is good since it contributes to economic growth through innovations and advancement of education. Consumers also have a wide range of different products to choose from. Also, competition makes the products relatively cheaper thereby influencing affordability by consumers. However, competition could also push firms to engage in illegal practices such as corruption, fraud, and failure to comply with regulations that call for disclosure of true and far view of testing results. In such cases, competition, therefore, leads to market failure as well social costs regarding unhealthy products.
Works Cited
Council of Economic Advisers. Benefits of Competition and Indicators of Market Power. Issue Brief. Washington, DC: Council of Economic Advisers, 2016. Document.
Hana, Urbancova. "Competitive Advantage Achievement through Innovation and Knowledge." Journal of Competitiveness (2013): 82-96. Web.
