Do we know who our enemy is?
4 February 2010Normally companies are clear about their competence, but an overly narrow view of the situation may have unintended consequences.
The data provides us with the National Competition Commission, we illustrate the problem happened in the trade. We have heard for years the battle of small businesses against large surfaces, in which the first felt at a disadvantage to the latter, and demanded restrictions (in Catalonia is one of the major political battles, the defense of the small trader).
However, the current legislation, which has thirteen years of operation, but has managed to contain the rise of supermarkets, which have risen from 30% to 22.5%, has failed to improve the shopping district, as the surface of such trade has increased from 13% to 4.4%.
Who has left the winner of this battle? Medium surface, i.e. supermarkets.
And in many cases large areas are not as direct competition for small shops, located in the outskirts (and in some cases, depending on who is located, including the city attracts people from the region, bringing in some cases may have a positive effect, consider for example the power of attraction in a city a median Ikea, an English Court …).
However, supermarkets do compete directly with the stores close, and have enough power to impose structure, and they have many limitations of openness. As a result, bad “choice of the enemy” has had an unexpected result.
In other sectors, the same thing can happen, especially if we consider the substitution products, which are said to have an economy that cross-price elasticity’s positive.
What’s this? That when change in the price of a product affects in the same direction to the amount to be buying another product.
For example, if the price rises of olive, bought sunflower oil, because they are substitutes. And so are also, somehow, competitors.
There are many such examples. Airlines compete not only among themselves but against other means of transportation (it is estimated that the high speed train, at distances of about 600 kilometers, is a better choice, and indeed the AVE Madrid and Barcelona has become more of half the market in just over a year).
The movie not only fight among themselves, but also Internet, consoles …
Analyze the market in this way provides a much broader conception of things, and can detect threats that can come of these substitutes, and opportunities that can be exploited by the company.
