Increased Competition

Definition

Increased competition refers to the growing rivalry among businesses in a market, which can lead to more options for consumers and pressure on companies to improve their products and services. This phenomenon is often driven by globalization, which opens markets to new entrants and encourages innovation as firms strive to differentiate themselves and attract customers.

5 Must Know Facts For Your Next Test

1. Increased competition drives businesses to innovate, leading to improvements in technology, customer service, and product offerings.
2. Globalization facilitates increased competition by enabling companies to enter new markets and compete with local firms.
3. The rise of online travel agencies and digital platforms has intensified competition in the hospitality and tourism sectors.
4. Price wars often occur in highly competitive markets as companies seek to attract customers by lowering prices.
5. Increased competition can lead to greater consumer benefits, including lower prices, improved quality, and enhanced service levels.

Review Questions

• How does increased competition influence innovation within the hospitality and tourism industry?
  • Increased competition forces companies in the hospitality and tourism industry to innovate in order to stand out from their rivals. Businesses are motivated to improve their services, adopt new technologies, and enhance customer experiences to attract more guests. This constant push for improvement can lead to advancements in areas such as sustainable tourism practices, digital booking technologies, and personalized guest services.
• Discuss the impact of globalization on the level of competition within local markets in the hospitality sector.
  • Globalization significantly increases competition in local markets by allowing international brands to enter and operate alongside local businesses. This creates a more diverse marketplace where consumers have access to various options from different cultures. As global brands bring their own standards and practices, local businesses must adapt by enhancing their offerings or finding unique ways to appeal to their target customers in order to remain competitive.
• Evaluate the long-term effects of increased competition on small businesses in the hospitality and tourism industry.
  • Increased competition can have both positive and negative long-term effects on small businesses in the hospitality and tourism industry. On one hand, it encourages them to innovate and improve their services, helping them differentiate themselves from larger competitors. On the other hand, intense competition may lead some small businesses to struggle with pricing pressures or operational costs, potentially resulting in closures or mergers. Ultimately, those that adapt effectively can thrive by leveraging their unique qualities and personalized services that larger competitors may overlook.

Related terms

Market Saturation: A situation in which a product or service has become widely available, resulting in limited growth opportunities for businesses within that market.

Globalization: The process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture, leading to more interconnected economies.

Consumer Choice: The range of competing products and services from which a consumer can choose, often influenced by the level of competition in the market.