Principles, Tools,

& Techniques
 01 Principles in Creating a Business
02 Tools in Evaluating a Business

03 Competition and Competitors

Sub 04 Business Competition

05 Types of Competition in Business

Topics 06 Customers
07 Suppliers
08 Substitutes
Competition and
Competitors
Business Competition
the contest between organizations that
provide similar products or services or that target
the same audience of consumers. Businesses
compete to convert and retain customers,
increase revenue and gain more market share.
Types of Competition
in Business
Direct Indirect
Competition Competition

Potential/Replacement
Competition
 Direct Competition
Direct competitors are brands or businesses that sell the
same products or services to the same target audience.
Factors in order to tell if two businesses are in direct
competition with each other:
• They operate within the same industry
• They provide the same or similar products or services
• They target the same audience of consumers
• They satisfy the same customer need
• They use the same channel of distribution
 Indirect Competition
Indirect competitors are vendors that sell products or
services that are not necessarily the same but satisfy the
same consumer need.
Factors in order to tell if two businesses are indirect
competitors:
• They operate in the same industry
• They satisfy the same need
• They target the same audience
Potential / Replacement Competition

Replacement competitors (or potential competitors) are

brands and businesses that have the ability to completely
replace existing organizations by producing new products
or services that better satisfy the needs of their target
audience.
Industry rivalry among companies of the same or related
industry is an inevitable part of the business world of any
business size. Intense competition leads to reduced profit
potential for companies in the same industry. Businesses
seek constantly competitive advantage.
Competitive Advantage
• is what sets your business apart from your
competition.

• highlights the benefits a customer receives when they

do business with you.

• It could be your products, service, reputation, or even

your location.
 Different Methods of Competitive Advantage

• Cost Leadership - an advantage occurs when business is able to

offer same products at a lower price
• Differentiation - Find attributes that is important and set them
apart from their competitors
• Defensive Strategies - used a defensive strategy to distance
themselves from competitors
• Alliances - advantage of seeking strategic alliance with other
within related or within businesses
Customers
 Customers
• Individuals or Companies who desires to possess or
make use of products and services.
• They play a huge role in the success of your business
• Customers likewise can force down prices, demand
higher quality or more service, and play competitors off
against each other - all at the expense of industry
profits
Suppliers
 Suppliers
Provide inputs that the firms in an industry need to create
the goods and services that they in turn sell to their buyers.
Suppliers can exert bargaining power on participants in an
industry by raising prices or reducing the quality of
purchased goods and services.
Substitutes
 Substitutes
• Goods/services that can be used in place for another.
These goods may, even if partly, satisfy the same needs of
a consumer such that the consumer may use one for
instead for another.
• substitute products or services limit the potential of an
industry.
 Substitutes
• Manufacturers try to differentiate their products from
their competitors so that the customers will develop
product loyalty from their brand
 Any questions?

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