Competitive Forces and the Effect of AdaptabilityMost companies are currently being subjected to a powerful competitive trend: Hyper-competition. Hypercompetition is a term that describes intense competition. Some companies prosper in a high competition and others are unable to find the correct mix of business offerings and IT infrastrcuture. Hyper-competition is caused by a number of factors that work together.
- Customers have increased choices and are becoming more powerful and mobile.
- Business initiatives are becoming more dependent on information systems.
- Accelerating technology skills enable competitors to duplicate others strengths.
- Deregulated markets and low barriers to entry increase competition dramatically.
- The ability to sustain an advantage declines.
- Numerous, wealthy competitors that can weather poor market conditions and continue to pose threats to the strengths and advantages of others.
In the top left diagram, competition is low, so companies can achieve a large advantage and maintain it easily. This is the competitive behavior in monopolies. In the top right diagram, an advantage is decreased over a period of time because a few other companies compete in the same indstry sector or markets. This situation provides some level of choice for customers, but not excessive levels of choice. In the lower left diagram, advantages are small and short lived because there are many other companies that can duplicate another company's strengths. This situation leads to extensive consumer choice which in turn, creates more competition.
These factors force companies to reinvent themselves and their business processes continually in order to retain customers. In hyper-competitive markets, flexibility is a powerful and effective force vis-a-vis competitors. Companies that are able to quickly adjust business systems can acquire larger customer bases.