The Nature of Competition

Change is the only constant. Even the nature of competition changes over time. How people competed yesterday is different than how they compete now. And it will be different tomorrow.

Here is a quick study of the nature of competition — personal, social, or business.

The nature of low competition

This is almost always seen at the high end of the value chain, where the entry barriers are high.

High end of the value chain is almost always dependent on lower end of the value chain. Without the right power dynamics the hierarchy won’t remain and competition will increase.

Low competition almost always benefits from privileged information.

Sustaining low competition is not just a result of product/service superiority, but also eliminating existing competition and raising entry barriers for others. Skills needed at this level are far different than what are commonly known or taught.

The nature of high competition

The speed at which competition intensifies rises with the disparity between resources and consumers. Competition intensifies when a society consumes faster, or it grows faster, or if the resources deplete faster.

Competition also increases as general information availability increases. No longer could companies just charge high margins because only they knew how a product was being procured. Internet has levelled the playing field. Soon you will find more suppliers and products than buyers.

High competition almost always brings down benefits/margins. The faster this reduction, the more intense the competition gets. It is a downward spiral that only ends bad if people/businesses don’t find a way out of it.

Lastly, competition always moves from areas of high intensity to areas where entry barriers are low.