Strategies For Long-Term Business Sustainability – OpEd
Competition is generally seen as a positive force in a market-driven economy, promoting creativity, and efficiency, and providing more choices for consumers. However, there are instances when competition becomes harmful, excluding certain stakeholders like firms, and consumers and affecting overall market dynamics. It becomes crucial to identify and regulate competition to maintain a fair and sustainable marketplace.
The ease and low cost of forming a new business can lead to a saturation point where numerous businesses offer identical products or services to the same market. This excessive competition can create harsh conditions, making it challenging for some businesses to survive in the long run. While entrepreneurship theory emphasizes the importance of creativity and innovation for business sustainability, the scenario raises questions about the impact when all businesses in an industry are equally innovative. Who will emerge as the survivor amidst this intense competition? Moreover, in some cases, intense rivalry within the same market forces businesses to adopt unconventional strategies to reach the top, even if it means cannibalising other competitors.
Creative firms distinguish themselves by offering unique and innovative products or services in the market, potentially establishing themselves as market leaders. They can set industry standards by being the first movers to introduce their offerings. These firms invest in educating consumers, resulting in high brand awareness. However, once their successful products become widely known, other companies enter the market by replicating similar products with comparable features. This creates a cutthroat situation as the first mover bears the cost of research and development (R&D), while later entrants benefit without incurring the same expenses.
The intensity of competition reaches a level where firms are willing to lower prices to the point of breaking even just to capture customer attention. At this stage, competition becomes less about maximizing profits and more about gaining customer trust. This aggressive strategy is often employed by strong brands to capitalise on market opportunities. However, smaller, newer firms with limited resources find it nearly impossible to implement such a strategy, leading them to withdraw from the competition.
For new firms entering the market, even amidst fierce competition, the best approach is to stay adaptable to the ever-changing trends. Entrepreneurs can learn from young individuals, especially regarding technological tools, social media usage, online delivery, promotion, and current market preferences. Embracing these elements is the minimum requirement for effectively competing in the dynamic market landscape.
Dr. Faiz Masnan and Dr. Nazra Aliff Nazri are senior lecturers at the Faculty of Business and Communication (FPK), Universiti Malaysia Perlis (UniMAP)