Competition is a way of developing commodity production and a type of competition between economic elements for the preferences of the consumer audience in order to maximize profits. Translated, "competition" means "to face", and, being a regulator of production volumes and rates in modern society, encourages the manufacturer to introduce scientific and technological achievements and increase labor productivity.
The development of competition and the assessment of the competitiveness of an enterprise became possible only under the conditions of a capitalist way of managing the economy. Capitalist relations, under which all restrictions on the directions and ways of movement of labor, goods, capital, relations on the national market and the emergence of the world market were lifted became possible only thanks to the emergence of competition.
The optimal intensity of competition and the assessment of the competitiveness of goods in the market suggests the following points as the goal of the policy in this area:
- the rapid introduction of technological progress in the production of goods and services, the so-called innovation policy under the pressure of competition;
- flexible adaptation and reprofiling of enterprises under the influence of consumer inclinations.
Assessing the competitiveness of a product or service, and the scale of the intensity of competition is determined by the rate of loss of advantage in profit, that is, how quickly competitors apply innovative production methods. And first of all, this indicator depends on the efficiency and speed of competing companies and their reaction to the leap in the quality and technology of the enterprise that is at the forefront, as well as on the dynamics of demand.
The basic principle of competition is that the most favorable conditions for the development of healthy rivalry appear if competition is represented by a "wide" oligopoly. A “narrow” oligopoly, coupled with a strong individualization of goods or services, significantly reduces the intensity of competition.
In any system of a market economy, there is a danger of competition participants avoiding mandatory risks and norms that are closely related to the condition of free competition, and then an accurate assessment of the company's competitiveness cannot be made. In order to avoid unfair methods of competition (conspiracy about prices, imitation of trademarks, etc.), the state publishes regulatory documents governing competition. These rules and regulations guarantee:
- product quality;
- the very fact of the existence of competition;
- the position of the price and quality of goods or services in the focus of competition;
- the proportionality of the price of services to other terms of the contract;
- the presence of trademarks that are protected by legal norms and confirm the quality of products ;
- time limit for patent protection (20 years).
In order to evaluate the competitiveness of an enterprise or company, it is necessary that in the process of competition fair methods of competition are used, besides which, as you know, there are less legal methods called unfair.
Methods of unfair competition include industrial espionage (aka economic); bribery and blackmail; fake competitors' products; reporting fraud; consumer fraud; concealment of defects in goods; etc. In addition, unscrupulous methods of competition, in which a true assessment of competitiveness cannot be carried out, include scientific and technical espionage. After all, as you know, the source of profit can only be a development that finds its embodiment in practice, that is, in the event that a scientific and technical invention or idea is embodied in production into a specific product or new technology.