Sent to me by my colleagues at http://humanresourceshelpdesk.com

Many startups and small businesses dread competition, but not their big business counterparts.

Consider the view of Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance. After investing $5 billion to develop a range of hybrid and electric vehicles, the company claimed the title of the leading manufacturer of zero-emission cars. Last fall, at the Frankfurt Auto Show, Ghosn said he welcomes competition from other automakers because a bigger field would help jump-start the market. “The more companies that buy into electric cars, the better it is,” he said.

Michael Porter is a Harvard Business School professor and leads The Institute for Strategy and Competitiveness. He has written numerous books and articles on competitiveness, and says that research shows a company is better off with competitors — that there are benefits to competition within an industry. Below are a few reasons competition is viewed as helpful:

It gives companies the ability to increase their fees. More competition means your industry is in demand. This allows you to justify higher rates while demonstrating what makes your organization a better partner than your competitors.

Your competitors may refer work to you. Not every opportunity that lands on a competitor’s doorstep is right for them. Maintain a relationship with your competitors and let them know that you’re available for projects that aren’t in their wheelhouse.

Competitors may want to collaborate. Chances are some of your competitors compete in some but not all areas. Teaming up may give you the ability to say yes to an opportunity you can’t handle on your own.

In MBA Mondays’ blog post Competition – The Pros and Cons, venture capitalist Fred Wilson, managing partner at Union Square Ventures and founder of Flatiron Partners, discusses both the positives and challenges of competition. For example, he explains how a sales team dislikes competition but a marketing team appreciates it. A sales team hates losing business since they are typically compensated on revenues. But when a competitor invests heavily in marketing its offerings, and identifies the solutions it provides, it probably generates additional demand for both companies. “The marketing team, which is always trying to do more with less, loves that,” he writes.

In 2012, Apoorva Mehta established Instacart, a same-day grocery delivery service in San Francisco. Mehta now competes with his former employer, Amazon, where he worked as an engineer, as well as a few other companies in the area offering a similar service. The company stands out by delivering a faster service with more selection than its competitors. Mehta believes that competition combined with having a better product will ensure the company’s success.

Advertisements