Competition- this is a struggle between producers for the most favorable conditions for the production and sale of goods and services, between consumers for the goods of producers, as well as producers and consumers for sources of income.

Competition comes in several forms.
From the point of view of the functional manifestation, competition can be =

• industry (between manufacturers of the same industry)
• intersectoral (between manufacturers of different industries that compete for consumer money).

If sellers influence demand through a change in price, then competition acts as price. It boils down to the economic suppression of the rival (to his ruin) through price cuts.
In non-price competition, sellers focus on distinctive features its product, its quality, promotion, packaging, delivery, service.

The type of competition is called pure (free), or perfect competition.

Free competition means unlimited "war of all against all".

Competition features:
1. Competition promotes the establishment of an equilibrium price. So, if the market price is set above the equilibrium price - the supply of goods exceeds their demand - an excess of goods is formed. As a result, the confrontation among sellers who seek to sell their goods at a higher price escalates. In this struggle, the seller who sells his goods cheaper than others wins, i.e. it stimulates demand by driving down the price of the product. If the price falls below the equilibrium point - demand exceeds supply - there is a shortage of goods.
2. Competition maintains socially normal conditions of production and sales of products. Due to competition in any industry, at any given moment, a common (equal) price is established for homogeneous products that have the same quality.
3. Competition stimulates scientific and technological progress and increased production efficiency. Only the producer who spends less resources per unit of output, who has higher quality, can get more income.
4. Competition intensifies the socio-economic stratification of market agents. Commodity producers with unequal economic strength participate in competition. The rivalry between sellers and buyers significantly changes the entire structure of the market economy.

Rivalry in the market unfolds on three “fronts” -

• among sellers of goods,
• among buyers
• and between sellers and buyers.

Imperfect Competition, in contrast to the free, perfect, is limited by the influence of monopolies and the state.
There are several models of imperfect competition:

• 1) pure monopoly
• 2) monopolistic competition
• 3) oligopoly.

From this article you will learn:

• What is the difference between price and non-price competition?
• What are the advantages and disadvantages of using non-price competition
• What are the forms of non-price competition?
• What methods of non-price competition are used in a modern market economy

From an early age, each of us falls into the harsh circumstances of competition in various fields life. Competition in the economy can definitely be called one of the toughest types of struggle. Here at stake - and wealth, and luck. In business, there are two types of competition - price and non-price. More often than not, low cost actually leads to victory. And yet non-price competition of products helps to achieve greater success.

What is non-price competition

Competition is the struggle of individuals in various areas of the life process. First of all, it means economic sphere. Figuratively speaking, competitors are the owners of nearby shops who seek to get as many visitors as possible. But it's not just the number of buyers that matters. It is also important to sell your goods and services on the most profitable terms. Scientists believe that it is competition that spurs modern world to develop at such a rapid pace. And at the same time, it is also the basis of the instability of the world economy.

Exist two ways of economic rivalry: price and non-price. The difference between price and non-price methods of competition is quite serious:

1. Price competition- This is a type of struggle with rivals by reducing the cost of goods. Most often, this method is used where demand is greater than supply. Another option is when the competition of customers is quite large. Also, this option is used when there are prerequisites for pure competition (many manufacturers offer a product of the same type). This way of competing with competitors cannot be called the most effective. After all, rivals can at one time set prices of the same level, or even lower. In this case, both the entity itself and its competitors lose their earnings. Despite all the disadvantages, this option is nevertheless widely used, especially in cases where you need to introduce products to a new market. Such measures should be taken very carefully. You need to know for sure that a decrease in value will really result in an increase in profits, and not losses.
2. Non-price competition suggests more progressive and modern techniques. Among them - the isolation of their products among similar products from competitors, the introduction of special characteristics, expanding the range, improving quality, increasing the cost of advertising and warranty service. The use of non-price competition methods generates conditional monetary stability. Essential positive moment also is that competitors often fail to retaliate immediately, giving the rival an advantage. If innovations are successful, all spending on non-price options for competition not only pays off, but also serves as a source of income.

In order to successfully apply the methods of non-price competition, companies and organizations must be aware of the latest developments in their market and continuously develop, which leads the country's economy along the path of progress.

Non-price competition is a type of competitive rivalry tactic. Various methods are applied here, with the exception of reducing the cost of goods and services. Non-price competition involves the use of more advanced ways of competing for a buyer, such as creative advertising or improving the quality of a product. Improving the quality goes in two ways: by working on the technical indicators of products or by increasing its flexibility according to the wishes of customers.

Non-price competition allows you to focus on the path of progress and increase sales without price fluctuations. Non-price competition indicates a higher quality level of interaction in the market.

There are a number situations where non-price competition is applied:

• The value cannot be reduced due to the limits set by the market controller.
• A punitive agreement was signed that does not allow for a reduction in value. The meaning of such a document is the stabilization of a specific level of profitability.
• The firm has invested so much money to produce goods for a new market that cost reduction is economically pointless.
• The cost of distributing goods is high.
• In the market, demand exceeds supply, which means: the client will buy products at any price.
• The company relies on improving the quality characteristics of manufactured goods - by improving the technical properties of products (the so-called product competition).

Non-price competition is typical for those industries where the quality factor of the product, its uniqueness, packaging, appearance, brand style, additional service, and off-market ways of influencing the buyer are of key importance. All these points are not directly related to the cost, or even have nothing to do with it. For the 80-90s, the first positions in the list of non-price criteria were:

• reduced energy consumption and low metal consumption;
• minimal harm to the environment (or lack of it);
• the ability to hand over the goods as a starting fee for a new one;
• advertising;
• high level of warranty service (as well as post-warranty service);
• indicators of related offers.

Example non-price competition . Sony, at the start of global sales of its products in Russia, encountered difficulties in terms of non-price competition. The problem was that according to current regulations company, customers are only allowed to return broken products after five attempts to fix them. The law in our country, in turn, gives the customer the right to return the goods immediately after the discovery of problems. This condition is observed by all firms in the Russian Federation. In order to boost sales, Sony has not only changed the warranty regulations according to the local model, but also significantly reduced the warranty period by analogy with the most popular models. As a result, the company strengthened its position in the non-price sphere of competitive rivalry.

What are the advantages and disadvantages of non-price competition?

Key Benefits non-price competition are as follows:

• Price fights have a negative impact on all market participants. Bonuses go only to the buyer. Price competition can lead to monopoly and economic decline. The more powerful the firm, the longer the period of time it can sell goods at a reduced cost. Medium and small companies will lose out in competition with leading brands.
• Competent differentiation is a more productive way of competition than dumping. For the desired product, the client will pay the price set by the company.
• When done right, non-price competition is less costly than price competition. A good promotional video can be made for little money, the main thing is to find a creative and tempting idea. The same applies to product properties: even a minimal design improvement can attract the attention of buyers.
• With non-price competition, the firm has a huge field for activity: you can get superiority with the help of any successful find.

However, there is also a number of shortcomings non-price competition:

• The firm is deprived of that group of buyers for whom the cost is in the first place.
• Dependence on the professionalism of managers and ordinary workers, because they must develop competent competition tactics and systematically monitor the compliance of the real state of affairs with plans.
• Many firms use illegal methods of non-price competition (poaching personnel, manufacturing counterfeit products, industrial espionage).
• Cash injections are needed, often permanent.
• Large spending on trade marketing, advertising and PR.
• You need specifics in positioning, thoughtfulness of actions, the correctness of tactical moves.

What types of non-price competition can be used and which ones should not

There are different types of non-price competition:

• legal;
• semi-legal;
• containment of competitors using the levers of state regulation and support.

Legal Methods of Competition suggest:

• product rivalry. In the course of work on the existing assortment, new product, which has a new price;
• competition for the provision of services. It is especially relevant for the market of machinery and equipment. The service package includes the supply of advertising materials, the transfer of technical papers (which facilitate the use of products), training of the client's employees, maintenance during the warranty period (and after it).

Semi-legal forms competitive rivalry means:

• economic espionage;
• bribes officials in the state apparatus and in rival companies;
• carrying out illegal transactions;
• activities to limit competition. Here, the firm has a vast arsenal of methods at hand, the application of which can lead to the dictatorship of the monopoly company in the market. These include, for example, activities to impose intra-brand standards, promotion of convenient conditions for the sale of rights to trademarks or patents.

The most common forms of non-price competition

The most common forms and methods of non-price competition are:

1. Product differentiation

The purpose of product differentiation is to offer the buyer products of various types, styles, brands. This, of course, gives the buyer serious bonuses, expanding the choice. However, pessimists caution that product differentiation is not an absolute good. The rapid growth in the number of product names often leads to the fact that the buyer cannot make a competent choice, and the purchase process takes a long time.

Differentiation of goods is a kind of reward for those negative phenomena that are characteristic of monopolistic competition.

Types of differentiation:

• Product differentiation- production of goods of higher quality and attractive appearance than those of competitors. With regard to typified products (petroleum products, metal), there is almost no possibility of product differentiation. With regard to sufficiently differentiated goods (electronics, motor vehicles), such tactics are a matter of course.
• Service differentiation- is to provide a higher class service compared to competitors. It can be installation and after-sales service, speed and security of deliveries, training and consultations for buyers.
• Personnel differentiation- the desire to ensure that the company's employees do their job more productively than the employees of a competing company. Team members should have such qualities as friendliness, professionalism, commitment.
• Image differentiation consists in working on the appearance, style of the company and (or) its products in order to highlight them best sides compared to competitors and/or their offerings.

2. Improving products and services offered

Another method of non-price competition is the improvement of the goods and services offered by competitors. Improving the quality characteristics or user parameters of products leads to an increase in sales. Competitors who don't care about improving their product step aside. This way of competition leads to favorable consequences, the main of which is customer satisfaction. In addition, other firms are also beginning to take steps to offset the temporary success of the rival, and this contributes to scientific and technological progress.

Competing companies seek funds to improve the product or to create a new position. All these measures provide an opportunity to strengthen production and increase profits.

Some companies, instead of conducting fair competition, conduct imitation (imitative) activities. Most often, at the same time, they stop at a small modernization of the product. This is about external effect. Such firms pass off apparent changes in the product as real, and also introduce obsolescence into the improved product. This approach can lead to massive customer frustration.

3. Advertising

According to foreign researchers, goods from the manufacturer to the buyer go through a path that can be illustrated by the formula:

commodity + distribution + scientific activity + resellers + transport + advertising = sale

• provides the customer with product information;
• increases the demand for products and forces to increase the pace of its production. It is not uncommon for a manufacturer, having a small income, by advertising in non-price competition to increase the level of sales at times, which leads to a large income;
• intensifies competition;
• enables the media to be independent, bringing them a certain profit.

Advertising reduces marketing costs. Firstly, advertising contributes to a faster turnover of goods. Secondly, it provides products with dissimilarity among similar ones. This makes it possible for buyers to track the cost of products in various stores and thereby restrain the arbitrariness of sellers in setting a margin. Products that are briskly advertised will pass through the distribution channels with minimal markups.

4. Other methods of non-price competition

The group of non-price methods includes: providing a wide range of services (including employee training), free service, handing over a used product as an entry fee for a new one, supplying equipment on a “finished product in hand” basis. Reduced metal consumption, the absence of a negative impact on the environment, reduced energy consumption and other similar parameters have become the main advantages of goods or services today.

At present, many companies are marketing research. They provide an opportunity to find out the desires of the buyer, his opinion about various products. Knowing this information helps the manufacturer to design the market environment and reduce the chance of misses.

Methods of non-price competition: 3 main groups

Methods of non-price competition are divided into several groups.

First group are techniques aimed at achieving competitive superiority through improvement various parameters products.

These include:

• launch of new product positions;
• the introduction of products that have new consumer characteristics, for example, higher quality, improved appearance, more attractive packaging (this process is called differentiation of consumer properties of goods).

These methods are used when:

• the company wants to improve consumer characteristics of products;
• the company wants to increase the market segment of its products;
• the company wants to become known with a wide range of manufactured products in a limited market sector;
• the company is working on the timely introduction of new service conditions (sales and aftersales) in order to interest new groups of customers, make them purchase products more often and pay for more positions (most often with the help of large discounts and promotions).

Second group These are methods of stimulating the buyer to buy. Most often these are short-term promotions, sales, etc. Incentive goals in this case, there is an increase in the number of customers or an increase in the number of goods that the same customer purchases.

Sales promotion tools for consumers are:

• draws and lotteries, discounts, coupons, promotions;
• trial samples (samplers, testers, as well as tasting);
• contests and games;
• sales;
• various "label events";
• consumer clubs.

The sales agent is the link between the manufacturer and the buyer. It is necessary to stimulate a sales agent in order to form a bright image of the product, make it easily recognizable and widely known, and increase the number of positions in the distribution network. It is equally important to "warm up" the agent's interest in high sales volumes of a particular brand.

Sales promotion tools various awards and presents, all kinds of compensation for advertising expenses, exhibitions and sales, prizes, trade booklets, souvenirs, etc. are offered to sales agents.

For the successful operation of the company, it is necessary to constantly look for alternative ways to sell products, as well as index the size of discounts in accordance with the current market situation.

Nevertheless, non-price competition works primarily by improving the quality characteristics of goods and production technology, modernization, patenting and branding, as well as competent "serving" of sales. This type of competition is based on the desire to get a part of the industry market (or a significant segment of it) by producing new products or improving already known products.

Competition is rivalry, economic struggle, rivalry between sellers - manufacturers for the right to obtain maximum profit and between buyers when buying goods for a greater benefit.

Competition contributes to the efficient use of limited resources. Resources are distributed by industries and types of production in such a way that the products obtained from these resources bring them profit. It is the regulating force in the market conditions. Adam Smith called it "the invisible hand".

Competition performs the most important function in a market economy - it forces producers to take into account the interests of the consumer, and hence the interests of society as a whole. In the course of competition, the market selects from a variety of goods only those that are needed by consumers. They are the ones that sell. Others remain unclaimed, and their production is reduced. Competition is a specific mechanism by which the market economy solves fundamental questions: what, how and for whom to produce?

Competition plays an important role in market relations. It stimulates the development of the economy and the workers themselves, the activity of independent units. Through it, commodity producers, as it were, control each other. Their struggle for the consumer leads to lower prices, lower production costs, improved product quality, development scientific and technological progress.

Competition is the rivalry of subjects economic activity to achieve the highest results in their interests. As an economic law, competition expresses a causal relationship between the interests of business entities and the results in the development of the economy.

In the presence of competition in the market, manufacturers are constantly striving to reduce their production costs in order to increase profits. As a result, productivity is increased, costs are reduced, and the company is able to reduce prices. Competition also encourages manufacturers to improve the quality of goods and constantly increase the variety of goods and services offered. Thus, manufacturers are forced to constantly fight competitors for buyers in the sales market by expanding and improving the range of high-quality goods and services offered at lower prices. The consumer benefits from this.

The main conditions for the emergence of competition:

complete economic (economic) isolation of each commodity producer;

complete dependence of the commodity producer on market conditions;

opposition to all other commodity producers in the struggle for consumer demand.

Competition - essential element market, which plays a role in improving the quality of products, works and services, reducing production costs, in the development of technical innovations and discoveries.

Competition directs limited resources to those industries and activities for which there is a demand for products and services. This is called the allocation function or allocation function.

The innovative function of competition is to stimulate the introduction of scientific and technological achievements, new technologies, the release of new types of products and services, improving the quality of products and services, etc.

The function of competition, which consists in creating conditions for the receipt of income and profit by the most successful enterprises and leading to the bankruptcy of an enterprise whose products and services are not in demand by the consumer, is called distribution.

Competition is a tool (means) that prevents the emergence and existence of sustainable monopoly power in the market. For example, a monopolist may charge a price. At the same time, competition provides the buyer with the opportunity to choose among several sellers. The more perfect the competition, the fairer the price. That is, competition has a controlling function.

Competition contributes to the establishment of an equilibrium price, the equation of supply and demand. In a purely competitive market, individual firms exercise little control over the price of products, have such a small share of the total volume of production that an increase or decrease in its output will not have a tangible effect on the price of the goods. The manufacturer, as well as the buyer, must always be guided by the market price. Thus, competition contributes to reaching a compromise between sellers and buyers. Here it can be noted that competition creates the identity of private and public interests. Firms and resource providers seeking to increase their own benefit and operating within the framework of a fiercely competitive struggle, at the same time as if directed by an “invisible hand” - contribute to ensuring state or public interests

Competition maintains socially normal conditions for the production and sale of goods and services. It seems to suggest to commodity producers how much capital they should invest in the production of this or that commodity. Let us suppose that one seller spent more money on the production of some commodity than another. In such a situation, when the equilibrium price is established in the market for this species goods, the last seller, that is, the one who produced the goods at a lower cost, will have more profit. And with an excess of this type of product, as already noted, a sharp drop in prices will occur, and the seller, who has spent a lot of money on production, will suffer losses. Thus, competition maintains normal conditions of production for the whole society. McConnell notes that "under pure competition, profit-driven entrepreneurs will produce every good up to the point where price and marginal cost equalize." It follows from this that under conditions of competition, resources are allocated efficiently.

Competition stimulates scientific and technological progress and increased production efficiency. Since competition serves as an "equalizer" of prices, it can be concluded that in market competition the one who has high-quality goods and the lowest possible cost will win. And for this it is necessary to constantly update the conditions of production, to spend large investments on improving technology. In on standing tense there are many resourceful entrepreneurs who are willing to take risks in the production of goods using new technology. Consequently, with the development of competition, the efficiency of production increases every year.

With the confrontation of market entities, their socio-economic stratification intensifies. The competition involves many small owners who are just starting to conduct their business. Many of them, without sufficient capital, modern means production and other resources, cannot withstand this rivalry and after a while suffer losses and go bankrupt. And only a few of them increase their economic power, expand their enterprises and become full-fledged and quite significant and respected market participants.

3.1.1. The concept and functions of competition

The key role of competition in a market economy was shown in the 18th century by Adam Smith in his work An Inquiry into the Nature and Cause of Nations. The novelty of A. Smith's theory of competition is as follows:

• for the first time, the concept of competition was formulated as rivalry that raises prices (with a reduction in supply) and reduces them (with an excess of supply);
• the main principle of competition is defined - the principle of "invisible hand", according to which the "hand" displaces firms engaged in the production of products unnecessary for the market;
• a flexible competition mechanism has been developed that instantly responds to any changes in the situation during external environment;
• the main conditions for effective competition are defined: a large number of sellers, comprehensive information, the impossibility of each seller to have a significant impact on changes in the market price of goods.

Thus, the main “miracle of the market economy” is that it allows people to act guided by personal gain, but at the same time forces everyone to do what is beneficial for society, that is, human behavior, as A. Smith wrote, is determined by the rule “ invisible hand”, by which he understood the mechanism of the market.

Despite the fact that the work of A. Smith was published in the 18th century, at the present time there is no established single definition concept of "competition".

The following definitions of competition exist:

• competition- this is a process by which people receive and transfer knowledge (F. Hayek), (too narrow definition);
• competition- this is the desire to satisfy the criteria for access to rare goods as best as possible (P. Heine), (too general definition, since it does not include the seller, the buyer and the product itself);
• competition- this is the presence in the market of a large number of buyers and sellers, the ability to freely enter and exit the market (K.R. McConnell and S.L. Brew), (a broader definition, although it does not take into account the conditions for entering and entering the market) ;
• competition- a dynamic and evolving process, which results in new products, new ways of marketing, new production processes and new market segments. (M. Poter), (limited definition, since it does not explain what the competition process itself is, but characterizes only its result);
• competition- this is a rivalry in any field between separate legal entities and individuals interested in achieving the same specific goal (G.L. Alozoev), (there is no concept of a product in the definition);
• market competition- this is the struggle of firms for a limited amount of effective demand of consumers, conducted by them in accessible market segments (A.Yu. Yudanov).
• competition- this is the competitiveness of economic entities, when their independent actions effectively limit the ability of each of them to unilaterally influence general terms and Conditions circulation of goods in the relevant commodity market (Law of the Russian Federation "On competition and restriction of monopolistic activity in commodity markets);
• competition- this is an economic commitment to achieve the best results in the field of any activity, the struggle of commodity producers for more favorable business conditions, obtaining the highest profit.

Despite the fact that there is no single concept of “competition” in the world, all economists agree that competition is the driving force behind the development of society, the main tool for saving resources, improving the quality of goods and the standard of living of the population, as well as the main incentive for adapting to changes, that is, the introduction of changes, the improvement of the structure of the enterprise.

Competition has the following defining features:

1. is a backbone component of market relations, determining the totality of their inherent elements (production costs, price formation, adaptability of enterprises and organizations to market requirements, satisfaction of demand for goods and services, etc.);
2. serves as the foundation of market methods of managing the economy, the basis for the formation and manifestation of the competitiveness of products, the economic law expressing the objectivity of the categories of competition (competitiveness) between market entities, affects the nature and forms of relationships between them;
3. manifests itself in the system of reproduction of technical and economic parameters of products at all stages of its design, manufacture, pre-sales and after-sales service and consumption (operation).

Positive features of competition are that:

• it contributes to scientific and technological progress, rational use of resources;
• helps manufacturers to respond responsively to changes in demand and make adjustments to production;
• helps to reduce production costs, and hence prices;
• creates favorable conditions for the manifestation of initiative, stimulates entrepreneurship.

Negative features of competition you can call it:

• competition leads to an increase in income differentiation, creates social tension;
• causes instability of business and leads to the ruin of a number of entrepreneurs;
• causes crises in the markets.

Competition in a market economy does whole line functions. Competition features:

• regulatory- affects the supply of goods and services so that it meets the needs of consumers;
• allocation- ensures the concentration of resources where they will have the maximum return;
• innovative- forces all firms to focus on increasing labor productivity in order to increase efficiency and achieve the optimum of the firm;
• motivating – provides firms with positive and negative sanctions, that is, enterprises that offer better quality products or produce them at lower costs are rewarded in the form of profits, and enterprises that do not respond to the wishes of customers or violate the rules of competition receive losses and are forced out of the market ;
• distribution, insofar as competition not only includes incentives for higher efficiency, but also allows the distribution of income among enterprises and households in accordance with their effective contribution, that is, with the principle of reward for results;
• controlling- helps to ensure that no single supplier and buyer can take a dominant position in the market.

3.1.2. Mechanism of competition

Competition- this is a form of interaction between market entities, a mechanism for regulating market proportions, a set of methods, an economic process.

As a form of interaction between market entities, competition is a multifaceted process, which is accompanied by rivalry for increasing production volumes, expanding sales markets, and for sources of raw materials and materials.

Acting as a mechanism for regulating proportions, competition makes it possible to determine the magnitude of economic regulators, which are prices, the rate of profit, the rate of interest on capital, and a number of others.

The starting point in the study of competition is the study of the content of its mechanism.

The mechanism of competition modern market deeply revealed by Harvard Business School professor Michael Porter.

The extended concept of rivalry introduced by Porter proceeds from the fact that the ability of an organization to realize its competitive advantage in the underlying market depends not only on the direct competition that it faces, but also on the role played by various competitive forces, therefore, the essence of competition, in his opinion, expressed by five forces:

1. The threat of new competitors.
2. The threat of substitute products, or the threat of substitution of products and services.
3. Supplier rivalry, or the ability of component suppliers to bargain.
4. The rivalry of buyers, that is, the ability of buyers to bargain.
5. The rivalry of existing competitors among themselves, that is, the struggle between existing competitors.

Together, these forces determine the inherent attractiveness of the long-term profits that can be made in the commodity market. It is the interaction of these five forces that ultimately determines the profitability potential of the product (service) market.

3.1.3. Types and methods of competition

For an in-depth study of the category of competition, its detailed detailed classification is necessary. The classification of competition is necessary in order to identify its specific features and take adequate measures to participate in the competition and win it.

Can be distinguished intra-industry and intersectoral competition.

Intra-industry competition- this is the rivalry between producers of one type of goods for the most favorable conditions for production and marketing, for a large share of the market for this product,

Interindustry competition- this is a struggle between manufacturers in different industries for the most profitable areas for capital investment. As a result of intersectoral competition, funds from low-profit industries rush to highly profitable sectors of the economy.

Competition may be due to natural factors, and geographic.

Competition driven by natural advantages, can be caused, for example, by the presence of oil at shallow depths, or by the presence of great content iron in ore.

Competition driven by geographic advantage, for example, the presence of lower costs for the transportation of products, etc.

Moreover, competition is subject, subjective, functional, specific, direct, expected.

Functional competition arises due to the fact that different goods or services can satisfy the same need in different ways, for example, the necessary transportation can be carried out by road or rail.

Species competition arises in those cases when goods designed to satisfy the same need differ from each other in their properties that affect the degree of such satisfaction.

Subject competition manifests itself in the case when enterprises offer customers almost the same goods, for example, cars of the same class.

Subjective competition arises between firms whose stable position in the market is ensured by the chosen field of activity.

Expected Competition begins already at the stage of development or mastering the production of new products that will be supplied to an already mastered or new market.

Direct competition arises in the case of competitive relations without intermediaries.

It is also customary to single out internal and external, regional and interregional, bona fide and unfair, price and non-price, perfect and imperfect competition .

In addition, competition can be classified according to:

• objects of competition
• subjects of competition
• degree of civilization
• functioning
• degree of openness
• market conditions
• nature of competition
• the number of participants;
• competitive situation.

;

To price methodscompetition relate:

• price reduction by reducing production costs, while the quality and range of goods and services offered remains unchanged;
• price discrimination, that is, the sale of goods at demand prices (first degree), the use of a discount system (second degree) and consumer segmentation (third degree).

Price methods of competition are widely used in the oligopolistic market. However, in addition to price discrimination, which is widely used in the modern period, monopolistic competition brings to the fore the methods of non-price competition.

To the main methods of non-price competition relate:

• release of goods of higher quality or goods with qualitatively new properties;
• creation of fundamentally new products;
• improvement of services and after-sales service;
• the formation of new needs and the development of products to meet them.

A special place among the methods of competitive struggle is occupied by methods and means of unfair competition, which include:

• unauthorized use of someone else's trademark;
• acquisition of a competitor's trade secret;
• dissemination of information about a competitor that could harm its reputation;
• incorrect comparison of own goods with the goods of a competitor in advertising, misleading consumers regarding the quality of goods and their properties.

Along with the methods of unfair competition, there are methods prohibited by antitrust laws (for example, the Sherman laws of 1890, Clayton of 1914 and Robinson-Patman of 1936), the so-called methods of monopolistic competition.

To methods of monopolistic competition relate:

• imposing on buyers a compulsory assortment of purchased goods and services (“load trading”);
• prior agreement between companies to raise or lower prices;
• preliminary conspiracy between producers to reduce the volume of production;
• establishing discriminatory business conditions for clients and partners.

Unfortunately, the methods of monopolistic and unfair competition have been widely used and are being used today. The state must strictly suppress attempts to use such methods of competition. Without this, the formation and development of full-fledged processes of competition in the economy of the country is impossible.

3.1.4. Strategy and competitive factors

The main element of the business strategy is innovation. All other elements of the strategy depend on it: any of them has a chance of significant and long-term success only insofar as it relies on the use of product innovations already “approved” by the market. The logic leads to the fact that it is legitimate to consider the innovation strategy as a reference for the whole range of problems solved by commodity producers. Competition is main factor susceptibility of the enterprise to product and technical innovations.

Competition in the innovation sphere has the following features:

• it contributes to the fact that entrepreneurs are trying to master products of higher quality at market prices in order to retain consumers;
• stimulates the use of the most efficient methods of production;
• forces the entrepreneur to constantly look for and find new types of products and services that consumers need and can satisfy the needs of the market.

Analysis of the distant environment of producers should be supplemented by a study of the near environment, that is, the organization's competitors. Quantitative and qualitative data are used to analyze nearby competitors.

quantitative data- this is information about which firms are competitors; what products they sell; how and in what markets; who are their main customers; how goods are brought to market.

Qualitative characteristics are the fame of the enterprise, the qualifications of its personnel, the quality of goods, the commitment of consumers to the brand of the enterprise, the management system, the strategy of activity in the market and other non-formalized parameters, which are quite difficult to assess. Such information will always be subjective. In practice, the activities of competitors are analyzed in the same areas as the company's own activities.

Sources of information can be very different: statistical data; price lists; mass media; catalogs, brochures, promotional materials; annual reports of firms, opinions of experts and buyers, up to industrial espionage. This takes into account other important factors presented in Fig. one.

Rice. 1. Factors serving the actions of competitors

Assessment of the conditions of competition is the definition of factors affecting competition and their study. A market-oriented organization, according to M. Porter's broad concept of rivalry, must take into account all the factors of competition operating in the market.

To the most important competitive factors relate:

• number of firms and their sizes;
• product specifics;
• the nature of demand and prospects for the development of the industry;
• costs associated with switching consumers from one supplier to another;
• existence of barriers to exit from the industry;
• rivalry between competing companies;
• competition from substitute goods;
• the threat of new competitors;
• economic opportunities for suppliers and buyers, etc.

It is necessary to determine the rules of competition in the industry, evaluate intra-industry competition at the current time and in the future.

Competition encourages entrepreneurs to act effectively in the market, forcing them to offer more wide range of goods and services at lower prices and better quality, vigorously innovate, improve technology, make rational use of limited resources, improve investment efficiency.

3.1.5. Types of competitive behavior of the firm

The goal of any organization is to win the competition. Each firm chooses its own type of competitive behavior. There are three main types of competitive behavior of the firm.

The first type is creative type of competitive behavior, aimed at creating product, technological, organizational and managerial innovations that provide superiority over competitors.

The second type is guaranteeing. This is a type of competitive behavior based on the desire to maintain the previously achieved positions for the long term through non-price methods of competition.

The third type of competitive behavior is opportunistic. It is associated with a faster take into account changes in production and in the market situation and with the desire to get ahead of their competitors in adapting to new market conditions.

The most preferable for an active business is the first type of competitive behavior; moreover, it is necessary for the successful implementation of the company's innovative strategy.

3.1.6. Competitiveness and methods for assessing the competitive situation

Methods for assessing the competitive situation include assessment of competitiveness and assessment of competitive advantages .

In this regard, the concept of competitiveness should first be defined. To date, there is no generally accepted concept of competitiveness.

According to the "Dictionary of the Russian language" S.I. Ozhegov " Competitiveness is the ability to withstand competition, to resist competitors. Taking this definition as the concept of the Russian language as a basis, we can say that competitiveness is a complex multi-aspect concept that means the ability of a product and, accordingly, a commodity producer to take and maintain a position in a competitive market (markets) in the period under review when competing with other goods of a similar purpose. and their manufacturers. In the modern market, competitiveness is the ability to get ahead of others, using your advantages in achieving your goals.

In the economic literature, the concept of competitiveness has different interpretations, is analyzed in different ways, in particular, depending on which economic object it is applied to.

When assessing the competitive environment in a particular market, it is necessary to distinguish competitiveness of goods and enterprises. The competitiveness of products and the competitiveness of the enterprise are related to each other as a part and a whole.

The ability of a manufacturer to compete in a particular product market directly depends on the competitiveness of the product and the aggregate economic methods enterprise activities. The competitiveness of a product does not have a clear quantitative definition, all its factors are relative.

There are a large number of definitions and methods of evaluation product competitiveness.

Usually, they understand everything that provides it with advantages in the market, contributes to successful sales in a competitive environment.

Product competitiveness- this is a relative and generalized characteristic of the product, expressing its advantageous differences from the product-competitor in terms of the degree of satisfaction of the need and the cost of its manufacture. According to the scientist I.M Lifits, product competitiveness- the ability of the product to ensure commercial success in a competitive environment. However, these definitions do not clarify the content this concept, stating the already obvious dependence of sales on competition.

Sometimes under product competitiveness only a complex of consumer properties, separated from value, is understood. Thus, the term "competitiveness" is identified with the concept of product quality, in the broad sense of the word. And although non-price competition, or quality competition, has now become the basis of competition, this does not mean that it is possible not to take into account the price of a product when assessing its competitiveness. In this regard, Russian scientists E.A., Utkin, N.I. Morozov and G.I. Morozov under product competitiveness is understood a set of its quality and cost characteristics, which ensures the satisfaction of the specific needs of buyers and favorably differs from competing goods for the buyer.

Under product competitiveness is understood as a characteristic that reflects its difference from a competitor product both in terms of the degree of compliance with a specific social need, and in terms of the costs of satisfying it. Thus, under product competitiveness it is necessary to understand the complex of consumer, price and quality characteristics of the product that determine its success both in the domestic and foreign markets.

When assessing the competitiveness of a product, the main factor is the sources competitive advantage.

Competitive advantage can be associated with almost any aspect of the company's activities: a special pricing policy, effective management of sales, profits, capital, costs, profitability of production, and others financial results, with the nature of innovation. Thus, competitive advantages are: low costs, high quality and a strong degree of differentiation.

In a market economy, an enterprise cannot occupy a stable position for a long time if its strategy is aimed only at the competitiveness of the product. When entering a new market, when deciding to expand and curtail production, when making investments, it is required assessment of the competitiveness of the enterprise itself.

Enterprise competitiveness indicator is a mirror that reflects the results of the work of almost all its services and divisions, as well as its reaction to changes in external factors of influence. If we consider the concept of "competitiveness" in relation to the enterprise, then it can be defined as the possibility of effective economic activity and its profitable practical implementation in a competitive market.

Enterprise competitiveness - the result of effective management focused on innovative type of development. The competitiveness of an enterprise is the ability to use its strengths and concentrate its efforts in the area of ​​production of goods or services where it can take a leading position in the domestic and foreign markets. At the same time, competitiveness is assessed only within a group of enterprises belonging to the same industry, or firms producing substitute goods.

The competitiveness of the firm can be defined as the ability to provide the best offer of goods, compared with a competing company.

The key concept of the competitiveness of an enterprise is its competitive advantage.

English economists M. Meskon, A. Albert and F. Hedouri consider competitive advantages as a high competence of the organization in any area, which gives it best opportunities attracting and retaining clientele.

Professor R.A. Fatkhutdinov believes that competitive advantage of the organization - these are any exclusive values ​​(tangible, intangible, monetary, social, etc.) that an organization possesses and which give it superiority over competitors. According to Fatkhutdinov, the implementation of competitive advantage is based on the essence of value, which was the source of obtaining the advantage.

In the interpretation strategic marketing, which underlies the modern concept of strategic management, the French scientist J. Lambin defines competitive advantages as those characteristics, properties of the product (brand) or other factors that create a certain superiority for the company over its direct competitors. These characteristics can be very different and can relate both to the product itself (basic service), and to additional services accompanying the basic one, to the forms of production.

Competitive advantages, according to the English scientist Richard Koch, these are the characteristics of the properties of a product or brand, as well as the advantages in the management system, which create superiority for the company over competitors.

The founder of the theory of competition M. Porter proposed a classification (hierarchy) competitive advantage in terms of their importance. Low Rank Benefits(available raw materials, cheap work force, the scale of production) give the company insufficient competitiveness, since they are easily accessible to competitors and are widely distributed. To higher order benefits include the firm's reputation, customer relationships, and the firm's investment attractiveness. An important competitive advantage can be the goals and motivation of the owners, managers and staff of the firm. To competitive advantage of the highest order M. Porter refers to the technical level of products, patented production technology and high professionalism of the staff.

Consequently, among the internal factors of the competitiveness of an innovative firm, the leading role belongs to the technological factor, and the most important source of creating and maintaining a competitive advantage is the constant renewal and innovative development of production.

The competitive advantages of a commodity producer are closely dependent on the strategy chosen by him and the success of its implementation, therefore, more and more attention is paid to the strategy of the enterprise.

The methodology for assessing the conditions of competition has been developed M. Porter and is based on the "national rhombus"(Fig. 2).

Rice. 2. National rhombus. Source: Porter M. International competition - M. 1993. - S. 149.

When assessing the conditions of competition, both the parameters of factors and the parameters of demand should be taken into account. The strategy of organizations, their structure and competition directly depends on these parameters. but, in turn, has a strong influence on them.

The success of enterprises, their competitiveness in the innovative market depend on many factors. A list of indicators reflecting the key success factors in a particular market allows an enterprise to assess its competitiveness relative to its main competitors. It is clear that the main forces that shape the competitive climate can change from market to market. On the interaction of these competitive forces, a model of the attractiveness of the industry and possible changes in it as a result of the action of objective economic factors is built.

Matrix methodassessment of the competitiveness of an enterprise, developed"Boston Consulting Group" describe the competitive situation using two main dimensions: the importance of maintaining competitive advantage and the number of potential sources of differentiation that maintain competitive advantage. Differentiation opportunities depend on each specific industry. In order to gain a competitive advantage, each firm must find its own ways to differentiate products.

The Boston Consulting Group Competitive Advantage Matrix distinguishes four types of areas of activity that differ in the number and magnitude of competitive advantages. AT rectangular system coordinates, a matrix is ​​built: horizontally, the growth (decrease) in the number of sales on a linear scale is plotted; vertically, the relative share of goods (services) in the market. The most competitive are enterprises that occupy a significant share in a growing market (Fig. 3).

Rice. 3. Assessment of the competitiveness of enterprises (as pictured in the dock)

In the presence of reliable information on the volume of sales, the method allows for a high representativeness of the assessment. However, the application of this method does not include an analysis of the causes of what is happening, which complicates the development of management decisions.

Matrix General electric “Market attractiveness – business efficiency » compares named categories, which, from a marketing point of view, are ideal for business evaluation. A successful firm operates in attractive markets, and its business is efficient enough to be successful. If at least one of these factors is missing, you can say goodbye to hope for positive results. To define these two categories, it is necessary to analyze the underlying factors, find a way to evaluate them, and determine the main indicators.

The method based on theory of effective competition, gives an idea of ​​the competitiveness of the enterprise, covering the most important aspects his economic activities. The method is based on the assessment of four group indicators of competitiveness: the efficiency of production process management, the efficiency of working capital management, the competitiveness of the product - the quality of the product and its price. According to this method, the most competitive will be those enterprises where the work of all departments and services is best organized. The effectiveness of their activities is influenced by many factors - the resources of the enterprise. Evaluation of the performance of each unit involves assessing the effectiveness of the use of these resources.

To assess the competitiveness of a company, methodological tools called "benchmarking" are increasingly used. Benchmarking - comparative analysis key success factors (business parameters) of the enterprise and its main competitors . In the process of strategic analysis, it is necessary to first identify the key success factors (KSF) of this industry, and then develop measures to master the most important success factors in competition, that is, determine the ongoing innovative mission in order to succeed in the creation and sale of a new product. CFU can be based on different areas enterprise activities: R & D, marketing, production, finance, management, etc. In practice, KFU can take a variety of forms: it can be highly qualified personnel, low production costs, high market share, effective advertising, company image, recognizable brand. The key success factors vary across the stages of the industry life cycle. All these indicators can be assessed by experts, but it is more preferable to use market monitoring data. Those factors by which the company lags behind competitors are its weakness, and by which it is ahead - strength.

The ratings given take into account the opinions of management services specialists. According to the table, you can find out who is the main competitor.

Method of multi-attribute assessments reveals strengths and weak sides, calculates their performance, numerically displays the value of the competitive advantage. It is a clear example for regularly monitoring changes in competitiveness. The matrix is ​​divided into nine cells, which make up three levels (Fig. 4).

Rice. 4. Market attractiveness and competitive position (in the dock)

The three cells in the upper left corner are occupied by firms with strong competitive positions. The cells going from the bottom left corner to the top right corner belong to firms with an average competitive position. Three cells in the lower right corner are occupied by non-competitive firms. The area of ​​the circle is proportional to the size of the market share, and the results are represented by arrows of a certain length and direction.

The advantage of this method, in comparison with others, is that it takes into account the most important factor affecting the competitiveness of the enterprise - the competitiveness of the goods.

As a disadvantage, it should be noted that there is no way to judge the advantages and disadvantages of the enterprise, since the competitiveness of the enterprise takes the form of the competitiveness of the product and does not affect other aspects of the enterprise.

Among the methods for assessing the competitiveness of a product deserves attention method "Price - quality". A method that uses as the main approach to assessing the goods of an enterprise, including a new one. The starting position of the method is that the competitiveness of the manufacturer is the higher, the higher the competitiveness of its products. The criterion for assessing the competitiveness of a product (service) is the ratio of price and quality. As an indicator that evaluates the competitiveness of a new product, the ratio of two characteristics is used: price and quality. The most competitive product that has optimal ratio these characteristics:

, (2.1)

ct- indicator of product competitiveness;

To- an indicator of the quality of the goods;

C- an indicator of the price of goods.

The higher the difference between the consumer value of the product (demand price) for the buyer and the price he pays for it, the higher the margin of competitiveness of the product, the share of the consumer (Fig. 5).

Rice. 5. Assessment of the competitiveness of the goods (in the dock)

The advantage of the method: it takes into account the most important criterion that affects the competitiveness of the enterprise - the competitiveness of the goods.

Disadvantages of the method: allows you to get a very limited idea of ​​the advantages and disadvantages of the enterprise, since the competitiveness of the enterprise takes the form of the competitiveness of the product and does not affect other aspects: market share, product quality, brand reputation; the effectiveness of product promotion, the possibilities and efficiency of production, the administrative apparatus.

Boole method is based on the calculation of universal coefficients, initially based on the "price-quality" ratio. Used to identify priority competitors and determine the strength of their positions. It classifies enterprises depending on the calculated indicators into groups of leaders, catching up and followers.

The indicator of competitiveness K is determined by the formula:

, (1)

T is an indicator of competitiveness in terms of technical parameters;

E is an indicator of competitiveness in terms of economic parameters.

(a), or (b) (2)

Ri- absolute value i- th technical parameter of the test material;

- absolute value i-th technical parameter, taken as the basic one (that is, for the comparison sample);

or - relative indicator of material quality according to i- mu indicator;

Li- weight factor i- th indicator (determined by experts);

n- number technical parameters that are of interest to the consumer.

From formulas (2.a) and (2.b), choose the one according to which an increase in the relative indicator corresponds to an improvement in product quality.

(3)

where: - private index of costs for processing the analyzed material relative to the base sample:

- cost share j-th type of costs in the price of consumption of the base sample (otherwise, the weighting coefficient of the j-th indicator);

- consumption price of the analyzed product;

Withj- costs in value terms for the acquisition and processing of the analyzed material;

- costs in value terms for the acquisition and processing of the basic sample according to j-th type of costs. The material is competitive if Toi 1.

Assessment of the competitiveness of an enterprise covers all the most important assessments of the economic activity of an enterprise, eliminates duplication of individual indicators, and allows you to quickly and objectively get a picture of the position of an enterprise in the industry market. The use of comparison of indicators for different periods of time during the assessment makes it possible to apply this method as a variant of the operational control of individual services.

findings

1. Despite the fact that there is no single concept of “competition” in the world, all economists agree that competition is the driving force behind the development of society, the main tool for saving resources, improving the quality of goods and the standard of living of the population, as well as the main incentive for adapting to changes, that is, the introduction of changes, the improvement of the structure of the enterprise.

   There are both positive and negative features of competition.

   Competition in a market economy performs the following functions: regulatory, allocative; innovative; motivating ; distribution; controlling.

2. Competition is a form of interaction between market entities, a mechanism for regulating market proportions, a set of methods, an economic process. Acting as a mechanism for regulating proportions, competition makes it possible to determine the magnitude of economic regulators, which are prices, the rate of profit, the rate of interest on capital, and a number of others. The extended concept of rivalry introduced by Porter proceeds from the fact that the ability of an organization to realize its competitive advantage in the underlying market depends not only on the direct competition that it faces, but also on the role played by various competitive forces, therefore, the essence of competition, in his opinion, expressed by five forces: Together, these forces determine the inherent attractiveness of the long-term profit that can be made in the commodity market. It is the interaction of these five forces that ultimately determines the profitability potential of the product (service) market.
3. For an in-depth study of the category of competition, its detailed detailed classification is necessary. The classification of competition is necessary in order to identify its specific features and take adequate measures to participate in the competition and win it.

   There are several types of classification of competition.

   It is possible to distinguish between intra-industry and inter-industry competition. Competition may be due to natural factors, as well as geographic. In addition, competition can be objective, subjective, functional, specific, direct, expected. It is also customary to single out internal and external, regional and interregional, fair and unfair, price and non-price, perfect and imperfect competition.

   Based on different types of competition, there are various methods of competition. They are divided into: price ; non-price; dishonest; monopolistic.

4. The most important factors of competition include: the number of firms and their sizes; product specifics; the nature of demand and prospects for the development of the industry; costs associated with switching consumers from one supplier to another; existence of barriers to exit from the industry; rivalry between competing companies; competition from substitute goods; the threat of new competitors; economic opportunities for suppliers and buyers, etc.
5. There are three main types of competitive behavior of the firm: creative, guaranteeing, opportunistic.
6. Methods for assessing the competitive situation include the assessment of competitiveness and the assessment of competitive advantages.

Competitiveness- this is a complex multi-aspect concept, meaning the ability of a product and, accordingly, a commodity producer to take and maintain a position in a competitive market (markets) in the period under review when competing with other goods of a similar purpose and their producers. In the modern market, competitiveness is the ability to get ahead of others, using your advantages in achieving your goals.

When assessing the competitive environment in a particular market, it is necessary to distinguish between the competitiveness of goods and enterprises.

The competitiveness of a product should be understood as a complex of consumer, price and quality characteristics of a product that determine its success both in the domestic and foreign markets.

When assessing the competitiveness of a product, the main factor is the sources of competitive advantage. Competitive advantages are: low costs, high quality and a strong degree of differentiation.

If we consider the concept of "competitiveness" in relation to the enterprise, then it can be defined as the possibility of effective economic activity and its profitable practical implementation in a competitive market.

The key concept of the competitiveness of an enterprise is its competitive advantage.

An analysis of the competitiveness of an enterprise and its product should begin with a study of the conditions of competition in the market.

The methodology for assessing the conditions of competition was developed by M. Porter and is based on the "national rhombus".

There are many methods for assessing the competitiveness of products and enterprises. The most important of them are the following:

• matrix method for assessing the competitiveness of an enterprise, developed by the Boston Consulting Group;
• General Electric matrix "market attractiveness - business efficiency";
• a method based on the theory of effective competition;
• benchmarking;
• method of multi-attribute assessments;
• method "price - quality";
• Boole method.

Questions for self-examination

1. Define the concept of competition.
2. Formulate the main signs of competition.
3. Assess the positive and negative sides competition.
4. Describe the functions of competition.
5. Name five competitive forces (according to M. Porter).
6. Describe all types of classification of competition.
7. Describe the main methods of competition.
8. Name the main factors of competition.
9. Describe the types of competitive behavior.
10. Define the competitiveness of an enterprise and the competitiveness of products.
11. Name the competitive advantages of the product and the enterprise.
12. Describe methods for assessing the competitiveness of products and enterprises.

Bibliography

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Title of the presentation

• Competition, its main types, advantages and disadvantages. Healthy competition. Unfair competition. Free competition.

Competition - economic rivalry between producers of goods and services for more favorable conditions for production activities, marketing of goods and services and thereby obtaining maximum profit. Competition encourages search profitable solution economic tasks, in particular the production of better products or services and their fastest implementation.

Advantages and disadvantages of competition

• Competition stimulates the rational use of material, labor, financial and other resources, forces manufacturers to constantly renew their assortment, closely monitor scientific and technical innovations and actively introduce them into production.

Benefits of competition for the consumer and the economy:

• no unjustified price increase;

• improving the quality of goods;

• engine of scientific and technological progress;

• improving competitiveness in world markets;

• growth of economic efficiency.

Cons of competition:

• someone else's product may be better;

• harder to attract customers;

• the risk of being "squeezed out" from the market;

• based on self-interest, and this strengthens the motivation for committing fraud and crime.

Types of competition

• functional competition - based on the fact that the same consumer need can be satisfied in different ways;

• specific competition is competition between similar goods, but different in design;

• subject competition is competition between similar products, but different in product quality and brand attractiveness;

• price competition - price reduction increases sales, leads to market expansion;

• hidden price competition: selling a personal product at a competitor's price, reducing the consumption price of a product

• illegal methods: anti-advertising of competitors' goods, production of imitators' goods (fake).

Healthy competition

The market economy is effective only under conditions healthy competition that cannot be achieved by self-regulation. In other other conditions, the market economy does not protect the interests of consumers, but drives them into a hopeless situation, when you have to choose expensive from expensive and bad from bad. Healthy competition is only possible if all participants in market relations comply with the rules of fair competition, when the regulatory authorities of the state act clearly.

An example of healthy competition in Ukraine can be competition in the market retail. Thus, there are large players on the market - Velyka Kyshenya, Silpo, Furshet, Megamarket, and smaller ones: Fora, Ecomarket, Chumatsky Shlyakh. Also in small towns there are very small sellers of goods, which does not prevent them from making a profit and competing with larger ones.

Unfair competition - violation of generally accepted rules and norms of competition. In this case, laws and unwritten rules are violated.

Also, unfair competition can be:

• bribing competitors' buyers to win them over as customers and keep their appreciation for the future;

• finding out the industrial or commercial secrets of a competitor by espionage or bribery of its employees;

• unauthorized use or disclosure of a competitor's know-how;

• inducing employees of a competitor to breach or terminate their contracts with an employer;

• threatening competitors with claims for patent or trademark infringement if done in bad faith and for the purpose of counteracting competition in trade;

• boycotting another firm's trade to discourage or prevent competition;

• dumping, i.e. selling their goods below cost with the intention of discouraging or suppressing competition;

• intentionally copying goods, services, advertising or other aspects of a competitor's business;

• encouraging breaches of contracts entered into by competitors;

• issuing advertisements that compare with competitors' products or services;

Free competition

• Free competition is competition in which the activities of individual entrepreneurs aimed at the production and sale of goods are not limited by state regulation and the existence of monopolies.

Benefits of free competition:

• contributes to a more efficient use of resources in the production of goods necessary for society;

• makes it necessary to respond flexibly and quickly adapt to changing production conditions;

• creates conditions for the optimal use of scientific and technological achievements in the field of creating new types of goods, introducing new equipment and technologies, developing more advanced methods of organizing and managing production;

• provides freedom of choice and actions of consumers and producers;

• directs manufacturers to meet a variety of needs and to improve the quality of goods and services.

Disadvantages of free competition:

• does not contribute to the conservation of non-reproducible resources (forests, wild animals, subsoil reserves, seas and oceans);

• adversely affects the protection of the environment;

• does not ensure the development of the production of goods and services for collective use (dams, roads, public transport);

• does not create conditions for the development of fundamental science, the system of general education, and many elements of the urban economy;

• does not guarantee the right to work, to income for rest;

• does not contain mechanisms that prevent the emergence of social injustice and the stratification of society into rich and poor.