Improved business environment due to higher competition has an impact on innovation and revenue, customer service and revenue, and the bottom line. A detailed coverage of the insights is presented below. Also, read the importance of supplier diversity in every business.
Table of Contents
1. Impact on Innovation and Revenue
- Increased competition creates a business environment that is good for businesses. Competition is good for both consumers and businesses. In the United States, competition through open markets and free enterprise is the foundation of the economy.
- In a highly competitive business environment, consumers enjoy the best quality, quantity, and prices of goods and services. The US antitrust laws nurture competition in the country’s business environment for the benefit of both businesses and consumers.
- The prosperity of the US economy is hinged on a dynamic market where new business can enter the market, reshape the economic landscape, and thrive.
- Competition helps in boosting innovation. With constant competition, businesses in any industry must continually provide new and exciting offerings to their target audience to remain relevant.
- The innovation ideas generated to ward off competition can push a company beyond expectations. In some instances, it can even lead to development of new industries.
- Statistics show that innovative companies generate annual total shareholder returns that are 3.6% higher on average compared to non-innovative firms. Based on such numbers, it is prudent to state that improved business environment through higher competition leads to increased share holders’ returns.
2. Impact on Customer Service and Revenue
- Improved business environment through competition also prompts companies to focus more on customer service. As a competitive tactic, companies in a competitive business environment place more value on customers themselves.
- With many alternative existing in the market or customers, companies must treat them with respect and due consideration. Improved customer service attracts more customers, leading to a significant rise in profits.
- Statistics show that companies that are customer service-oriented enjoy revenues that are 4-8% higher comparatively. Moreover, 80% of businesses with improved customer experience report increased revenue. Further, brands known for excellent customer service report 5.7 times more revenue than their peers.
- Such statistics demonstrates that improved business environment through competition has an indirect impact on revenue as competing firms focus on customer service.
3. Impact on the Bottom line
- Increased focus on business sustainability has also influenced competition in the business environment. Today, sustainability is more of a requirement than an option for companies in the United States.
- 62% of business executives observe that a sustainability strategy is imperative to be competitive today. They have also realized the interconnected nature of equality, sustainability, and poverty.
- By focusing on sustainability, businesses are attaining a competitive edge. Incorporating and positive environmental and human impact are strategic drivers that offer crucial competitive advantage.
- An improved business environment due to higher competition created through embracing business sustainability leads to improved bottom line and corporate reputations. A case study conducted in the US shows that high sustainability companies enjoy annual above-market average return that is 4.8% higher comparatively.
- Barron magazine reported that the most sustainable businesses in the US enjoyed a 29% share price growth in 2017. The growth surpassed the 22% growth reported by S&P 500 index.
- Based on the above statistics, it is evident that improved business environment due to competition created by focus on sustainability leads to improved bottom line.
