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Business Competition

Friday December 10 2004 09:16 IST

By Karmayogi

The free market is the surest mechanism to ensure economic democracy. USSR tried command economy administered by the State.It only stifled growth.

The rules of the market are a powerful antidote to the greed of men.

Before the private phone companies entered the market in India, phone calls were costly and service was poor. One paid Rs 24 for a three-minute STD call to Madras from Pondicherry. Phone repairs had to wait for days and demanded several reminders. Still the workmen had to be paid extra.

Now when the competition is allowed, service is readily available and call charges are more than halved.

Competition is necessary for keeping the market healthy. Even such a competition turns unhealthy often. Those who are flush with money reduce the price of the product below the cost price with a view to wiping out the smaller fries in the market. They die in vast numbers and quickly too.

In a field where there are about a hundred small producers, unhealthy competition wipes out most of them, sometimes all of them, except one or two.

Coca-cola faced such opposition from Pepsi Cola. Each year the cola wars have their own season. Smaller fries quickly vacate the field.

Competition ensures fair price to customers. It stimulates the opposition to become efficient. The unhealthy price wars are ruinous to cash-starved companies. Also, ill-organised companies cave in under the mighty blow of an adversary armed with efficiency, enormous capital and unscrupulous motives.

Is it all? Is there something beyond it? As usual, there is more than meets the eye.

A fully ORGANISED company cannot die whatever the competition is, however unscrupulous they are. Organisation is health, vitality. It is healthy irrespective of the environment.

There are various levels of organisation. The company that faces stiff competition will survive if it is organised enough to survive in the environment. A company that is integrated with the society will be vibrant.

Any society is moving on certain lines. On those lines, the society will carry great force, as the Indian society is moving towards greater education and greater prosperity.

To minister to THOSE needs consciously is to be vibrant. That vibrancy is a vibration of growth. Strong competition will stimulate that vibrancy.

At a time when companies are dying like flies crushed by the competition, a vibrant company will find itself growing. Competition is a welcome stimulus for an organised, vibrant company.

Forty new entrants in the scooter market twenty years ago struck terror in the heart of Bajaj. That year, he grew 100 percent.

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