Category: Competition

Introduction

Business competition constitutes a major operational problem that organizations face. Every typical firm works to fulfill client needs to accomplish its objectives and goals. Consequently, corporate executives use both long-term and short-term plans to carry out the businesss ambitions. Addressing competition is among the organizations improvement initiatives since it directly influences a companys growth, relevance, and dominance (Ren and Jackson, 2020). For example, alongside addressing competition, there is a greater emphasis on product differentiation, employee mentoring, customer motivations, and a comprehensive assessment process to assess performance and employee engagement (Kim et al., 2021; Zameer et al., 2018). In addition, a company works on staff motivation and optimizing processes, for example, competition for greater profitability and productivity.

Companies from different sectors globally have faced competition in the modern business world. For example, Coca-Cola has faced imminent competition from Pepsi, but only the organization with a competitive advantage always thrives within the business environment (Tengblad, 2018). Competitors providing similar services or items always face fierce competition. The one offering these items or services at lower rates or with more advantages proliferates, reducing the other firms influence. The fundamental responsibility is to create a sustained competitive advantage by resolving workplace difficulties, developing a strong brand, and addressing issues that can raise human capital (Aust et al., 2020). In the wake of the novel Covid-19 pandemic, businesses have been competing against each other to remain relevant and maintain their profit margin.

Describing the Problem

For a comprehensive description of the competition, this essay uses McDonalds, a multinational organization that offers fast food, to explore competition as an operational problem that requires an improvement initiative. According to Sharif et al. (2021), competition in business is the contest or rivalry among businesses selling similar products and/or targeting the identical target market to induce more sales, increase revenue, and gain more market share as compared to others. As mentioned, competition is an unavoidable aspect of operating a business, and many companies encounter it through location, design, pricing, sales, quality, and practically every other company function.

McDonalds is a fast-food company located in the United States that confronts tremendous competition from international, local, national, and regional food shops. Price, product quality, accessibility, services, and menu diversity are all factors in its competition (Camilleri, 2018). Competitors created competitive obstacles by, for example, launching healthier dishes and giving coupons and discounts. This organization faces direct and indirect competition in the United States and global markets. Wendys, Dominos, Burger King, and Starbucks are among the direct competitors that want a share of the market. These organizations offer the same food items, for example, burgers, pizza, salads, and many more.

The most direct competition between McDonalds and its competitors is seen in the food composition, service delivery, cost, and location. For example, most of its competitors, Subway, boasts of cheap calorie food items, and McDonalds faces counterblasts regarding the elevated calorie level in their food items (Farfan, 2019). Additionally, location-wise, McDonalds has faced competition as competitors establish their businesses near them. This always results in the share of market profit and competitive pricing loosening the market grip of McDonalds.

On the other hand, indirect competition occurs when firms services and products are not identical but can meet exact customer demands. McDonalds is identified by its fries, chicken, and burger; additionally, it offers coffee, tea, and related beverages. Companies like KFC that offer fries and chicken offers substantial indirect competition because even though the food items are unique, they can satisfy customer needs. Other competition difficulties comprise the rise of fast-casual eateries and the adoption of innovative coffee techniques.

Addressing the Problem

The firm dealt with the issues by employing various techniques, including operating cafes and eateries over the weekends and holidays and heavily advertising coffee, tea, and beverages. McDonalds has advanced its competitive strategy by using public health concerns. Public health difficulties arose the following: its food items lead to overweight and the same as other rival fast-food businesses. Since then, the organization has replaced its preparation methods and procedures for food items, therefore reducing calories.

Furthermore, the corporation pondered upon a strategic topic of if clients were interested in pricing, flavor, or accessibility. According to the company findings, buyers seemed more worried regarding price and food quality. To be on the cutting edge of competitors, McDonalds gives coupons, discounted family packages, and price-friendly offers on all food items (Akram et al., 2020). Additionally, food quality has been improved and customers can choose their food flavors. Food items currently provide nutritional data, providing customers autonomy and more options.

Geographical position and convenience, major competition factors, have been addressed by ensuring that McDonalds is located as far as their competitors. Any new outlet is established in a niche that promotes growth and development. The organizations proactive business approach is predicated on the concept that its outlets should be strategically situated. The optimal positioning of McDonalds is a major boost in price control as it eliminates price competition from rival businesses. A region with the same business from different companies shows less price differentiation (Marchet et al., 2018). Generally, fellow competitors are also keen on countering these same approaches McDonalds applies, and the operations manager must ensure that there are constant strategic plans and changes to the re-address competition.

Conclusion

There are various options available for improving and gaining a competitive edge against rivals. First, the company should answer the demands (health, price, and accessibility) of the common target markets better than their competitors (Camilleri, 2018). To find out precisely what the clients desire when utilizing business food items, they can ask their customers open-ended inquiries. Issues from these inquiries should be addressed promptly in the most professional manner, whether positive or negative. In issues related to health, the company should establish an international advisory group tasked with offering dietary advice.

Second, McDonalds should establish an affordable price for its food items. This can be achieved by doing market research to find their competitors current prices of the same items (Liu and Atuahene-Gima, 2018). Based on the results, the organization can settle on prices that attract customers. Lastly, providing excellent and remarkable service to customers is an excellent strategy to establish client commitment and distinguish McDonalds from its competitors. The organization should ensure that customer service is at par. This means that the customer care staff should be respectful, grateful, and courteous while handling customers. The organization should establish training services for customer care teams (Shen and Tang, 2018). Customer satisfaction retains customers eliminating competition. In conclusion, the company should implement a strong branding strategy with robust marketing and product awareness. McDonalds should digitalize its marketing strategies to reach the wide consumer population in the dawn of new technology.

Reference List

Akram, U., Ansari, A.R., Fu, G. and Junaid, M., 2020. Feeling hungry? lets order through mobile! examining the fast food mobile commerce in China. Journal of Retailing and Consumer Services, 56, p.102142.

Aust, I., Matthews, B. and Muller-Camen, M., 2020. Common Good HRM: A paradigm shift in Sustainable HRM?. Human Resource Management Review, 30(3), p.100705.

Camilleri, M.A., 2018. Market segmentation, targeting and positioning. In Travel marketing, tourism economics and the airline product (pp. 69-83). Springer, Cham.

Farfan, B., 2019. McDonalds Highest Fat Content Menu Items. [online] The Balance Small Business.

Kim, K.C., Hornsby, J.S., Enriquez, J.L., Bae, Z.T. and El Tarabishy, A., 2021. Humane entrepreneurial framework: a model for effective corporate entrepreneurship. Journal of Small Business Management, 59(3), pp.397-416.

Liu, W. and Atuahene-Gima, K., 2018. Enhancing product innovation performance in a dysfunctional competitive environment: The roles of competitive strategies and market-based assets. Industrial Marketing Management, 73, pp.7-20.

Marchet, G., Melacini, M., Perotti, S., Rasini, M. and Tappia, E., 2018. Business logistics models in omni-channel: a classification framework and empirical analysis. International Journal of Physical Distribution & Logistics Management.

Ren, S. and Jackson, S.E., 2020. HRM institutional entrepreneurship for sustainable business organizations. Human Resource Management Review, 30(3), p.100691.

Sharif, M.S.M., Akbarruddin, M.N.A., Yusoff, A.M., Hashim, N.F. and Norsalim, P.M.N., 2021. Challenges and Uncertainty: The Impact of Covid 19 on Segi Seri Group Sdn. Bhd. International Journal of Academic Research in Business and Scocial Science.

Shen, J. and Tang, C., 2018. How does training improve customer service quality? The roles of transfer of training and job satisfaction. European management journal, 36(6), pp.708-716.

Tengblad, S., 2018. Organizational Resilience: Theoretical Framework. In The Resilience Framework (pp. 19-38). Springer, Singapore.

Zameer, H., Wang, Y., Yasmeen, H., Mofrad, A.A. and Waheed, A., 2018. Corporate image and customer satisfaction by virtue of employee engagement. Human Systems Management, 37(2), pp.233-248.

Video Game Console Market: Introduction

The video game industry has become very competitive over the years. Though the initial market was teenagers oriented, it has developed to include young adults in the age bracket of twenty-five years to thirty-three years. This development has seen a major boost in the video game industry. This, in extension, has broadened the demographic base of this industry and has been the major factor pushing the competition in the industry to high levels. The major players in the industry have continuously developed new-generation games in order to capture the growing market, in addition to making competition fair in the industry (Gamble 2007).

Gaming Console Industry: Structure

It is worth knowing the different segments of the video game industry. This is vital because they represent the areas of concentration and specialty for different video game manufacturers. The first and major segment is Consoles. They are most popular because of their higher profit margins and its less diversity in game types.

They are the largest segment of the video game industry and are contested by fierce competition by the major players in the industry. Three major manufacturers, Nintendo, Microsoft, and Sony, are the controllers of the industry, and stakes are high since the software and hardware levels are controlled in an oligopolistic market structure the examples in this segment are Xbox 360 and Wii by Microsoft and Nintendo respectively (Williams, 2002).

Handheld video games are the segment that is marketed mainly to pre-teens and feature simple games. In Contrast, to the console or PC systems, the handheld systems are targeted for the large market of the small young kids who are mainly influenced into becoming gamers and are starters. This makes the handheld systems have a high volume of sales. They are portable and easy to learn. The handheld segment is a near-perfect monopoly dominated by Nintendo although other manufacturers have tried to break this trend, it has proven quite difficult to oust Nintendo from this segment. The example of game in this segment is a popular Game Boy by Nintendo, and Sega also produced various games, but they must have been kicked out by competition (Williams, 2002).

Lastly but not least is the PC Games. They are common because the gamers in this segment are mainly gamers of the consoles. They share similarities, but they are quite different in their structure and market. To begin with, this segment is free because of the universal knowledge of the computer platform. This makes the manufacturers for PC games be imaginative programmers who are not restricted by any kind of manufacturers licensing fees. The development fees are relatively lower, thus making this segment open to risk-takers. This analysis of the structure enables us to understand the economics behind the gaming industry and the battle of supremacy in the industry (Williams, 2002).

Video Game Console Industry Analysis

The market for games is well understood by the vertical stages of the industry. This stage is where Production of the games takes place and in which games are conceived created and programmed. It is followed by the publishing stage, where there are rights-holders for the games. The game is delivered by a developer (internal or external), then the publisher is given the responsibility for marketing the products launch and the manufacturing process.

Distributors are the custodians of the finished game products and usually lay the ground for the sales effort. The distribution stage is very vital for its role in the growth process of the game industry. They established exclusive contracts with the major retail chains to be their game suppliers, and this played positively for the growth of the video game industry (Williams, 2002).

Microsoft was the first company to venture into the video console games market. This was in November 2005. It was followed by Nintendo and Sony in November 2006. These companies developed games with interesting features and visual effects that were the factors that influenced the market for both traditional and contemporary gamers. It was projected that the sales would shoot from $3.9 billion in the year 2005 to $5.8 billion in the year 2010.

The three major players in the industry are involved in a fierce competition that is aimed at acquiring a greater share of the projections of the year 2010. The companies have employed different strategies and business models to generate profits and also to gain a competitive advantage in the market (Gamble 2007).

This competition has resulted in Micro-soft setting the trend with 10 million Xbox360 units sold by the end of January 2007. On the other hand, Sony developed Play station 3, with units standing at just over 2 million within the same period. Nintendo, on their side, had been able to sell more than 243 million units of Wii video game consoles between November 2006 and January 2007 (Gamble 2007).

An analysis of the video game industry reveals a steady growth in business, marked by, among other things, the steady growth in the customer base. Nintendo, Sony, and Microsoft had a major challenge that they had to overcome, a challenge emanating from their position in the video gaming market. This is the challenge of keeping up with the market demand and, at the same time achieving high sales.

They had to come up with strategies to address this challenge. One such strategy adopted is the introduction of online games (Gamble, 2007). This had a significant effect on console-based games. Nintendo Wii launched the new wireless controller. There was a decline in the sales of console-based games and an increase in online-based games (Gamble 2007).

This was an indication that there was a major shift in the methods used to meet demand in the video game industry. This model of using digital distribution was successful in making the sales of video games to grow by a huge margin. This has led to the development of online gaming and mobile gaming. The development of online games emanated from enabling consoles to have Ethernet ports and the increased broadband access in homes. These remain the major contributors to high revenue generated by the video game industry. Microsoft transformed from Xbox 360 to Xbox Live, and they realized huge turnouts (Gamble 2007).

The marketing strategy was coupled by partnership with Burger King, who availed the Xbox 360 game to the customers who purchased a burger. There was also a partnership in advertising with Kellogg Company. This was a cooperative advertising strategy. These activities made Microsoft generate huge profits from video games. This was especially so given the fact that the company was one of the earliest in the industry. They are factors that contributed to Microsofts lead in the industry.

Sony launched Play station one and Played station 2 in 1995 (Gamble 2007). These two games registered instant success. They were able to attain sales close to 100,000 units in their first weekend in the stores and 1 million units within six months. This was an extremely good and encouraging market response. Nintendo launched 64 bit Nintendo a year later, but it never survived the competition because it had limited game categories (Gamble 2007).

The target market of Sony enabled the product to ride in the market successfully. Its game specifications were suited for preteens, teens, and young adults. This is as opposed to Nintendo, which was focused on small children. With this competitive advantage, it was able to add more features that developed the PS2. It played DVDs and could connect to the internet. After successful control in the consol based systems, the company also developed the Play Station Portable.

They were also successful in marketing the handheld devices because they had many features. It was noted that they were just a replica of the consoles. They developed the Play Station 3, which had far better and special features. But the launching was not well-timed as the game was launched earlier than planned. This resulted in many complications in its marketing and distribution strategy. It did not make it to the market on time. The production and supply chain problems complemented with the high costs associated with the production of the games hindered the success of the Play Station 3 (Gamble 2007).

Nintendo could not venture into the already consolidated market of other products. They chose to stick to game consoles, handheld systems, and game software. This was to enable it to operate at break-even or even profitability. The company produced gamed suitable for their target market; the children. The primary goal of Nintendo was to increase the gaming population.

It was not successful with the Game Cube since it had no appealing features as compared to Play Station 2 and Xbox 360. Nintendo did not make a lot from the Game Boy and DS. It developed the WII, which was targeting to come up with an interesting but cheap console. It would have features that would be appealing to no gamers. The strategy Nintendo used in developing this game was the low cost incurred in development. Game developers were interested in developing games for this platform, and they made it sell than it was anticipated (Gamble 2007).

The cooperation in advertisement and merging of retailers and producers in the making of online games and marketing with the use of platforms such as Facebook, My Space, and other websites enabled more sales to be realized. The companies also made revenue from adverts on their online pages. This is the vertical system of marketing employed, and it was successful, especially for Sony and Microsoft (Gamble 2007).

The video game industry is influenced greatly by competition. Michael Porter explains an approach to understanding a framework of business models. He says the industry is influenced by five forces. This model can help a business manager to have the edge over his competitors by understanding the industrys dynamics. The five forces shaping the industry in relation to the video game industry are outlined below.

Macro Environment

The macro-environment is the general fabric of the industry environment. It is consistent with the environmental factors which influence the industry. The PESTEL framework, on the other hand, is used to identify the future trends which are likely to have adverse effects on the video gaming industry. It, therefore, identifies the key drivers of change in the industrys environment. Porters five forces framework helps us to understand the competitive dynamics in the video game industry and their likely impacts on the companies (Cipd 2008).

Nintendo PESTLE Analysis

This identifies the environmental factors influencing the industry. They are mainly political, economic, social, technological, environmental, and legal. Using PESTEL analysis on the video game industry, the factors were found to have the following impacts;

Political

Taxation policies by the government, trade regulations, and social welfare policies influence the industry. Video games are for entertainment, and they influence the emotions of the people. This can create a problem of incitement or violent situations because of the scenes in the games. This threatens the peace and law of a country. Therefore, the government can decide to put checks on the contents of the video game industry and impose a ban on unfavorable games (Cipd 2008).

Economic

Countries with large video game businesses enjoy a favorable contribution of this industry to economic development. The consumers buying behavior is controlled by their incomes. Low-income earners may not be able to enjoy the pleasure of video games. Microsoft and Sony products are often quite expensive, whereas Nintendo incurs low manufacturing costs, and it makes it possible for it to sell its games at an affordable price. This increases Nintendos sales (Cipd 2008).

Social

The social factors include population, demographics, religion, and income distribution. There are games that people who are Muslim can not play because of their faith. The size of the population influences the video game industry. For example, a large population means a greater market niche. It is also important if the large section of the population is able to spend on games. They should have a moderate income. Games also have an influence on peoples culture; they may incite aggression. The video game industry is mostly affected by the population and income distribution (Cipd 2008).

Technological

Technology is the backbone of many industries. Video gamers look for more innovative and indulging games, and this fact makes the technology very vital in this industry. Companies in this industry benefit from competitive advantage, and it is mostly as a result of technological efforts to develop unique features. Every new feature uses new technology. Nintendos development from playing cards to videogames, the improvement from Xbox 360 to Xbox live, all required technological innovation. There are factors that limit this innovation, such as high costs of hardware. The online capabilities of many game types are the major leap in technology for the video game industry (Cipd 2008).

Environmental

The video game industry uses components that have an impact on the environment. It requires a lot of power since they are played on television. The video game industry has to find a way of reducing power consumption by game consoles. The environment is a great concern for many. It is important to try and conserve the environment. The inclusion of games that are environmental concerned is an aspect the video game industry needs to consider (Cipd 2008).

Legal

The legal factors that affect the video game industry are simple and important to understand. They include trademarks, copyrights, licensing, online ownership, revenue recognition, and demands of intellectual property. These are factors that guide the companys existence in the business and protect it from unnecessary lawsuits (Cipd 2008).

Five Forces Analysis of Video Game Console Industry

This helps one to analyze the industry and identify the source of competition in the video game industry. These tools of the analysis indicate the video game industry to be very competitive. It is also profitable as the returns are high but subject to other factors like competition in the industry, which is a fierce battle to control the market. Big players like Sony, Nintendo, and Microsoft try to battle it out for domination. The threat of new entrants into the industry is not a big influence since there are main players, but electronic arts is also coming up strongly (Dibb 1991).

There are no substitutes for video games. The power of buyers in the industry is low, explaining the few successful companies in the video game industry. This results in having a small variety of video games available to the buyers compared to the power of suppliers, which is very high. This is so because there are more suppliers available to a handful of companies in the video game industry (Cipd 2008).

Competition in the video game industry is a cut-throat level. Each company has a product that rivals another companys product. The competition is also as a result of the difficulty in product differentiation. They all develop game consoles, which are only differentiated by their features. The concept is the same, and this is a source of fierce competition. The firms ensure they have a competitive advantage over their competitors in order to outdo the levels of competition set by the market (Cipd 2008).

A case in point was, for example, when Microsoft had a one year head start with the next-generation technology. This was an advantage over the other companies. By the time the other companies launched their products, Microsoft had already consolidated the market, and it was hard to catch up with them. This one year head start was an advantage for Microsoft. It got the best out of the market. Another case of competitive advantage is the development of the Wii by Nintendo. It was developed at a very low cost, and it had features that attracted non gamers (Dibb 1991).

This was a field Sony and Microsoft had not targeted. The lack of wires was a factor likely to attract many. Targeting the non gamers is Nintendos competitive advantage. This enables the different companies to consolidate their market share and compete for the small niche that is not yet taken. Consumer power has an impact on a companys product (Cipd 2008). Consumer power gives an opportunity for buyers to influence the prices downward.

The influence lies in the buyer mass and the role of every individual buyer in the market and the cost of their choice for another product by a competitor. In most cases, few buyers with a high purchasing power influence the prices of a commodity. The customer base of the video companies does not dictate the price (Dibb 1991). They are quite many and scattered. They do not influence the prices of video game consoles. They do not have power.

The supplier power is the direct opposite of consumer power. This is the capacity suppliers have to influence the level of prices in a market. This is influenced by the number of suppliers of the inputs, such as labor, components required in production, and other supplies. This coupled with other factors such as their strength above the buyers, the product identity, and their ease of changing from one market to another, gives them supremacy to influence the price. A narrow source of suppliers gives them more influence than when they are many. The video game companies have many suppliers of their resources for production, yet there are few companies in the industry (Cipd, 2008).

Video Game Industry Competitive Analysis

Opportunities

Microsoft Xbox 360 has partnerships with Hollywood studios. It has an opportunity to penetrate the new markets and untouched markets in the economy. The product launch was great and well covered. These two products have nearly the same opportunities since they have the same trends. Wii is focused on new gamers (Royalty Universe, 2007).

Threats

Sony and Microsoft games face a threat of a low-cost competitor, which is from Nintendo. Wii is developed at low cost and thus sold at a low price, whereas the Xbox 360 and Sony Play Station3 have expensive hardware. It is also faced with the weakness of having very expensive games. Sony Play station 3 faced a threat of delay in production, and the distribution was also poor. The price was high, making it not to sell. Wii faces a threat of a lack of interesting features. It is blank and not sophisticated (Royaltyuniverse, 2007).

Survival and Success Factors

The factors that support the industries survival are the absence of substitutes of video games and the lack of threat of new entrants. These factors contribute a lot to the survival because the industry will maintain its big players, and there is no new entrant into the industry to bring competition. The video games customers have no substitutes. The success of the video game industry can be attributed to the innovations and new technologies involved, together with the lack of power by the buyers. This is the pillar of the industry towards success. (Gamble 2007).

Microsoft Xbox 360 has a financial strength because it has a lower price than most comparable competitors like Play Station 3. The latter is expensive in terms of hardware and software. Nintendo is developed cheaply; thus, it is affordable. The industry, in general, requires a good investment to manage the development of the game consoles. Nintendo has a top expense of joysticks (Gamble 2007).

Value Chain

The increase in levels of technology and innovation in the video game industry has changed the trend of the value-chain. The game developers are asking for more money and time for game development. This has made publishers develop their own studios.

Comparison of other Competitors

There are other competitors, such as Electronic Arts and Konami. They also hold a significant position in the Video Game Industry. They are among the biggest market shareholders compared with Sony, Microsoft, and Nintendo. There are other competitors who seek to enter the video gaming industry from other industries. They are likely to become a challenge in the long run.

Cultural Capability Organization

The video game industry has few companies. These companies are competing on a global basis, and thus, they require huge amounts of capital. They enjoy specific advantages from economies of scale in manufacturing, marketing, distribution, and advertising. The industry has the same trends as those followed by other industries, such as controlling the retail and distribution chains and also marketing sites on the web. This ensures total product visibility and availability. The industrial analysis in performance may be doctored to imply there is growth potential in the industry. It is usually important to forecast changes in the industry. Family income- levels translate to their spending power, and it is a factor that is important in the planning of a marketing campaign to identify these income levels.

Skills Competencies and Core Competencies which Electronic Art Needs to Succeed

The key skills and competencies that Electronic Art needs to succeed can be, for example, acquiring content creation capabilities and combining it with the core competencies. These core competencies are, for example, technical expertise, proper marketing, and securing the vital distribution channels. Electronic Art needs to apply its strengths to the video gaming markets that have the potential to grow and seek to control a venture of Multiplayer gaming, which is not yet dominated by anyone (Ching-Ping, Wensi, and Chang-Chien n.d).

Gaming Console Industry: Recommendations

Recommendations to Microsoft

Microsoft should launch a new type of console and increase features such as better hardware, one which can download and play high definition videos. It should be strategically targeting a particular group of customers. They should also try to check on their prices. They should also try to expand their markets to areas where there is the potential growth of the gaming population. This will represent the potential growth of the industry.

Recommendations to Sony

Sony should try to make their play station available and do away with the weaknesses associated with the production and distribution of Play Station 3. This was what made them lose out in the market. Venturing to untapped markets will also increase volumes of sales. This will lead to their supremacy.

Recommendations to Nintendo

Nintendo needs to improve on their videos and feature. They should be able to involve a bit of the new technology and move from simple games. This will create a better customer base since everyone will be interested to see their new product. More technology and expansion to untapped markets and winning new gamers may be a path for Nintendo. They should develop game consoles that have less peripheral features.

References

Ching-Ping, J., Wensi, X., Chang-Chien, G., n.d. Electronic Arts,[online]. Web.

Cipd. , 2008. Pestle Analysis, Cipd [online].Web.

Dibb, K. P., 1991. Marketing Concept and Strategies European Edition, Houghton: Mifflin Publishers, 567-598.

Gamble, J.E, 2007. Competition in video game consoles Sony, Microsoft and Nintendo battle for Supremecy, Alabama: University of Alabama, 284-299.

Royaltyuniverse 2007, SWOT Strength Weakness Opportunity Thread of Gaming Industry: Royaltyuniverse, Web.

Williams, D., 2002. Structure and Competition in the U.S. Home Video Game Industry, The International Journal on Media Management, vol.4, no.1, pp. 41- 51

Being a risk taker, being principled, and being caring are traits that both Rudy and the MYP learner profile traits have in common. At the start of the movie, Rudy shows that he is a risk taker by traveling to South Bend in the middle of the night to see if there is any way he could play on the football team (Anspaugh). He took the risk to leave his job and his family and everyone he knows and loves to go and try pursue a career in football, a topic which he is very knowledgeable in, which is yet another MYP learner trait. Rudy shows excellent principles and determination when he continues to go to practice and go to all the games, even though he’s smaller than everyone else and is constantly being pushed around by his fellow teammates, and when he sees that his girlfriend is with someone else, he takes it with dignity and accepts that it was his fault for running away and leaving her all alone (Anspaugh).

Rudy also shows excellent balance by accepting and realizing that in order to excel at football, he must also excel in education, and continuously gets good grades throughout his time at Notre Dame. While Rudy portrays and excels in many of the MYP learner traits such as balancing, being principled, and risk taking, he fails to exhibit other traits such as reflecting and communicating. While at practice, Rudy fails to reflect on his abilities and that ends up with him getting injured multiple times because of his refusal to accept his limitations. Rudy also fails to exhibit communication, as he is seen lying to a girl he likes and constantly trips on his words. Overall, Rudy exhibits many MYP learner traits, he fails to exhibit all of them.

Competition is often seen as either good or bad with little to no in between, with the good aspect often being ignored in order to highlight the bad. Having competition at a young age can help encourage and teach kids about valuable lessons such as persistence, how to cope with stress, and healthy relationships (Admin). However, competition, like everything in life, is good in moderation but too much can lead to dangerous consequences.

Competition has so many positive influences on people, and the example of positive influence of competition is myself. From ages 2-14, I was in a competitive soccer league that helped shape who I am today. I am a naturally competitive person and I absolutely loved being able to go out on the soccer field and be better than everyone else on the field and be the best midfielder on the team. Soccer have me the ability to get out my anger and it made my push myself to be the best I could be, and

I made some of my best friends on my soccer team. However, the most important lesson I learned from soccer was how to lose, and that has helped me throughout all of my life, knowing that I will not always be the best and that I cannot win everything in life and being okay with it is one of the most valuable life lessons I have ever learned and helped me push myself to be the best I could be.

While competition helped me in so many ways, it doesn’t always have a positive influence on people. Katherine DeWitt was an exemplary student and gold medal track star at Penn University who contemplated suicide after a 60 on her calculus final resulted in her inability to major in mathematics like she had planned. She was not the only Penn student who thought that suicide was the only way out, as there was a string of 6 Penn student suicides in a 13 month stretch. All the deaths occured because the stress and competition of good grades got to student to the point that they felt death was the only way out of their situation (Scelfo).

Competition is often viewed as good or evil, with little in between. Little kids thrive of of competition and it allows them to try and be their best in a healthy and carefully observed way, and it helps teach them how to lose, a very important skill. In the movie Rudy, Rudy has an unyielding will and dream of being able to dress for and it is the competition that drives Rudy to be the best he can be and eventually leads to him achieving his dream of dressing for a Notre Dame game (Anspaugh).

Unlike adults, children are unable to truly understand how truly competitive the worlds is. From job interviews to college applications to getting in line at the grocery store the quickest, everything in life is a competition, regardless of whether or not it has a major impact on your life (Draisin). Healthy competition should be encouraged in youth by means of sports teams, extracurriculars such as speech and debate, or mental sports such as chess and puzzle competitions, but it should never push children past their comfort limit or feel as if the competition is the only thing that they have to live for.

Competition should not be the main driving point in a person’s life, instead it should be more like Rudy. Rudy had competition as a driving force and helped him accomplish his dreams, but he never pushed himself to the extreme causing himself to severely injure himself (although some minor wounds were inflicted). Overall, competition is absolutely necessary in children and adults, and a healthy amount of competition in later life is highly beneficial to a healthy and balanced lifestyle.

A study conducted by Jean Twenge revealed the rampancy of depression among high school and college students, which is five times more than that of the number during the era of the Great Depression in the 1930’s. “This is a very dangerous time for our young people. We’re seeing more anxiety and depression in children of all ages,” Kathy Harms, a Staff Psychologist at Kansas City’s Crittenton Children’s Center, said to Portland Press Herald.

One of the reasons identified for the spike of depression and anxiety cases among students is the presence of competition in education. Studies conducted in China, Europe and the Americas concluded that under competitive conditions, students are more likely to compromise and even sacrifice learning opportunities, for the sake of proving one’s competence and superiority over others (4). Such leads to surface learning, and disrupts the learning process of students (1).

As recognition of who performed best, who performed worst, and who performed just the average is not a new story to tell in competitions, students are usually left with feelings of discontent and inferiority which were concluded by Gilbert et al, as the links to depression and anxiety. As cases of depression related to academic pressure continue to rise, increase in suicide rates among youth is probable as depression stands as the major cause of suicide attempts (McCarthy et al, 2008).

Effects of competition also extend from the competitor himself, to the manner he interacts with his fellow competitors. According to T Dong, the social atmosphere in classrooms is greatly affected by competition. Pressure, and tension even, are likely to arise between and among students whose views about competition differ. Learning and development gaps among students can also exist, as not all students are comfortable and effective under competitive learning settings (5).

Despite the downsides of competition in education, many still argue that with proper and mindful application, competition can be healthy. Competitions in various disciplines is one of the strategies educators use to make learning engaging, discourage complacency and encourage improvement as everybody’s goal (10). Hence, students under competitive learning settings have increased motivation and determination, and exerts more effort and participates actively in class endeavors.

“Small disappointments help children become more resilient,” Tamar Chansky, a child psychologist said. More than competition challenges the intellect and skills of students, competition also tests their resilience and self-regulation. In such way, students’ interpersonal skills (3) are developed- their ability to take delays in satisfaction, resist frustration, and adjust with the demands of certain situations. Moreover, with the presence of competition in all aspects of life, its presence in the education system prepares students to become adaptable and flexible of the competitions ahead of them, as professionals and drivers of economic growth.

In Rizal High School, students of all grade levels are involved in different forms of competition, from class-based rankings to multi-level competitions held inside and outside of the school. Thus, it is important to address if competition provides a conducive learning environment for Rizalians, or disrupts their emotional health and learning capacities. The researchers have chosen this topic to promote effective and healthy learning environments for students, where they get to receive holistic development, towards being intellectual and emotionally healthy individuals.

Introduction

In 1956 Charles Tiebout in his article “A Pure Theory of Local Expenditure” introduced the notion that decentralization leads to superior variation in the provision of local public goods (goods that are tailored to better suit local population). He introduced the Tiebout model, a model that seeks to attest that decentralization is the solution to the “free rider” problem in local governments and that interjurisdiction competition leads to the provision of public goods at a peak level, as it places competitive pressure on local jurisdictions.

Boyne (1996) defines interjurisdiction competition as; competition that is promoted by a fragmented structure that has many authorities, competition that is enhanced by a high level of local autonomy that will encourage innovation and diversity and competition that is strengthened by local authorities who are heavily reliant on local sources of revenue.

Interjurisdiction competition motivates local governments to do more than just provide public goods, it helps them fight corruption, reduce waste of resources and curb spending on non-productive public goods, so as to provide more growth thus promoting infrastructure and attracting mobile capital.

In contradiction to the rewards of local government competition scholars also argued that the fear of capital outflows restricts governments from providing welfare services, environmental regulations, and non-productive public goods that citizen’s value. Tanzi (1996) argued that there exist many imperfections in the local provision of services that may prevent the realization of benefits from decentralization. Dillinger and Webb (1999) found that decentralization in Columbia has created enormous fiscal problems by creating unsustainable fiscal deficits for both the national and subnational governments. Decentralization has also been unable to mitigate corruption in the country caused by drug cartels. (Dillinger & Webb, 1999)

However, Capital mobility is said to promote a “race to the bottom” mentality in social and environmental policy, both among subnational governments within decentralized states and among countries competing. For good or ill, competition for capital is thought to shift government priorities away from non-productive public spending toward business-friendly investments.

China, for example, has a centralized political authority but keep their economy decentralization. Leaders in Beijing use political incentives to achieve local compliance with their ruling strategy and specific policies. The core of political centralization lies in the Chinese Communist Party’s (CCP) monopoly of authority over the management of political and economic elites at all government levels. The personnel system determines the distribution of power in this one-party state, and scholars argue that it serves as an effective mechanism to align local leaders’ incentives with the preferences of top Party leaders (Zuo, 2015).

Effects of Interjurisdiction competition.

By granting local governments the power to autonomously raise and distribute revenue, or by allowing subnational leaders to adapt national policies to local contexts, authoritarian states can build more efficient economic institutions that cater to local strengths. County governments will form and divide executive and legislative duties differently to suite their unique needs.

Different government forms may lead to different development policies, reflected in industry recruitment efforts. Counties that chose to hire independent professional managers for executive functions may enjoy greater technical knowledge or professionalism than those relying upon elected officials to fill these roles.

Financial burden can provide counties with the drive for aggressive industry recruitment. Counties with financial burdens value economic development more highly as their alarming financial distress will motivate them to adopt reductions and introduce incentives in an attempt to relieve their financial distress by more aggressively pursuing for economic development.

However pursuing industry recruitment does not mean that the counties are aggressively pursuing economic development. Budgetary pressures only make counties value economic development more highly, greater fiscal distress increases the probability of adopting related incentives but financially constrained governments are unable to sustain the short term cost of the offered incentives, such as recruitment effort, that are needed to obtain the longer term development benefits.

Local Governments with a higher rate of unemployment or a rising rate of unemployment are expected to benefit more from industry recruitment than the better placed Counties as the counties faced with the challenge of unemployment value economic development more highly and this will force them to invest in efforts that will increase recruitment.

Interjurisdiction and the Economic Development of Kenya

Decentralization has different characteristics, policy implications, and conditions for success. Differences among the frameworks for decentralization of public functions are, however, not clear – cut. Instead, they comprise of a continuum – ranging from a centralized framework to the federal system. Devolution is one form of decentralization framework that lies within the continuum. Devolution is generally defined as a process of transfer of political, administrative and fiscal management powers between central government and lower levels of government, primarily operating at city and region levels (Potter, 2001). It is not just a linear process of power transfer from national to sub – national level but also involves some degree of cooperation between the different levels of government. Other frameworks that lie between are the de – concentration and delegation frameworks. The level of decentralization is determined by several factors. These include; (i) the degree to which the sub – national unit can exercise administrative powers, in terms of recruiting and controlling employees, responding to citizens’ feedback and altering services and budgets to match local preferences; (ii) Ability of the local government unit to exercise political authority in terms of initiating policy and overseeing its implementation; and (iii) the local government influence on revenue and expenditure decisions.

In Kenya the government had a unitary system and structure of government and this meant that planning and administration was mainly done at national level. However when the Kenyan government implemented its new constitution in August 2010, it began to actively implement efforts to decentralize its administration and planning thus creating local authorities and districts whose main purpose would include the provision of easy access of government services for its citizens (Sunkuli, 2011).

The new constitution of Kenya at article 1(3) and (4) establishes two levels of government; the national and county levels of government . Decentralized government give powers of self-governance to the people and enhance the participation of the people in the exercise of the powers of the state and in making decisions affecting them. The constitution thus promotes social and economic development and the provision of proximate, easily accessible services throughout Kenya and it ensures equitable sharing of national and local resources throughout Kenya for poverty alleviation and employment creation. The national government will be responsible for policy functions such as revenue collection and security.

Unlike Kenya who voted for the new constitution that lead to decentralization. In 1998 Mozambique through the United Nations Development Programme (UNDP) created a pilot project of decentralized district planning and financing in Nampula province. The project sought to strengthen the capacity of provincial and district administration and communities to plan, finance, implement, and monitor development as well as promote popular participation in the process.

The projects long run objectives were to achieve sustainable planning and financing of local development programs, improve local governance, promote social economic development and poverty reduction in selected rural districts and to generate insights to inform the national debate on decentralization and democratization.

The Mozambican government later took ownership of the project and local communities’ participation in the project through their consultative councils strengthened citizens’ sense of project ownership. By decentralizing through the project there was a link that was formed between local communities and district administration thus helping local communities understand the work of district administrators and their own civic rights and obligations. The problems and needs of the district were better articulated and the overall result being improved governance.

Project implementation generally promoted the Mozambican government’s ownership of the project. In turn, local communities’ participation in the project through their consultative councils strengthened citizens’ sense of project ownership. Project implementation created a link between local communities and district administration thus helping local communities understand the work of district administrators and their own civic rights and obligations. The problems and needs of the district were better articulated and the overall result being improved governance. After evaluation was done the project resulted in sustainable livelihoods and more capital assets (Juma, 2011).

Fiscal decentralization improves the efficiency of the public sector and it leads to economic growth. In Kenya the success of fiscal decentralization can be measured by investigating the rate of flow of resources from the central government to the sub-national governments (Menon, Mutero, & Macharia, 2008).

Conclusion

Economic development has been shown to be the only way in history to save people from widespread poverty and discontent, as it empowers citizens economically as well as politically. Poor governance undermines civic and business groups, which can in turn lead to even worse governance as these members of civil society are ill-equipped to provide a proper check on governments. Because of this chain of events, it is no surprise that poverty and bad governance are highly correlated. This potential vicious cycle makes promoting better governance a vital goal for citizens as well as the international community.

In Kenya, it is important to scale up the decentralized initiatives that are working for greater and faster successes. A government report on fast tracking the achievement of MDGs rooted for strengthening of Coordination, reporting and monitoring systems between government departments and development partners and communities.

Abstract

Mergers and acquisitions are regular and necessary phenomena of the business world and is the bone of contention with respect to the competition law which is studied in this very paper. Mergers and acquisitions have their own advantages such as they help to achieve economies of scale, operating efficiencies, management efficiencies. Mergers and Acquisitions are the modes of corporate restructuring and the synergy is the foremost incentive for it. Synergy is generated by strategic integration of two entities ensuing economies of scale, cost cutting, spreading risk, tax sops, elimination of competition, gaining access to new technology and expanding product of service offerings etc.

Mergers and acquisition are methods of corporate expansion. However there is a continuous debate on the subject matter with respect to competition in the market. There are two sets of arguments one is that mergers increase power of reducing competition or swallowing the business competitor, this type of merger is known as horizontal merger. Merger also increases bargaining power of a company. However other argues that mergers and acquisitions are integrations which help companies in diversification of business areas and exploring new vistas in new sectors etc. Therefore an effort has been made to analyze mergers and acquisition as to whether there are adverse effects of corporate mergers and acquisitions, which leads to monopolies and to what extent mergers and acquisitions should be controlled and its interplay with the competition law in India i.e. how and to what extent Indian Competition Law helps in striking a balance between corporate consolidation and protection of economic interests of the society.

In nutshell it is aimed to find advantages and disadvantages of mergers and acquisition with respect to competition in the market and whether competition law plays a complementary role in the process of corporate consolidation. Mergers and acquisition are advantages for the organization as a tool of corporate restructuring and for the market also, and competition law plays a complimentary role in the furtherance of merger and acquisition and does not unnecessarily act as an impediment in the way of mergers and acquisition.

Introduction

Mergers & Acquisitions (combinations) mean any situation in which the ownership of two or more enterprises is joined together. In business world joining of ownership may take many different forms, and may be either amicable and consensual, or unwelcome and hostile. In India Mergers are regulated under the Companies Act and also under the SEBI Act. With the enactment of the Competition Act in 2002, mergers also come within the ambit of this legislation. Does it not appear that too much of legislations on one topic? It does appear so yet there is necessity for having different legislations to regulate mergers differently. In the Companies Act mergers between companies inter alia essentially tries to protect the interests of the secured creditors and in the SEBI Act it tries to protect the interests of the investors. Apart from protecting the interests of private parties, the objective of them is different or mutually exclusive. In the Competition Act the objective is much broader. It aims at protecting the appreciable adverse effect on trade-related competition in the relevant market in India (AAEC).

Let us consider an illustration. Air India and Indian (erstwhile Indian Airlines) have combined. Consequent upon that, the market share of the combined entity has increased considerably. The enhanced market share may cause:

• i) barriers to entry to other competitors; (competitors may not have market to trade)
• ii) rise in passenger fares;
• iii) poor quality of service

On the contrary, it may not cause any concern at all if we look at the following factual issues: i) passengers have wider choice (Jet Airways, Spicejet, Kingfisher, Air Deccan, Indigo, Go Air, foreign airlines etc.); ii) with wider choice, the combined entity may not be able to create entry barriers; iii) in order to maintain an optimal passenger base (for successful and viable business venture) the combined entity may have to provide competitive level price for tickets and maintain highest or at least similar levels of quality of services that its competitors would extend. So, in Companies Act and SEBI Act, though both are mutually exclusive yet aim to protect the interests of private individuals. Whereas, in the Competition Act, the impact of combinations directly affects the market and the players in the market including the consumers. We may, therefore, safely say that apart from the fact that all these legislations are mutually exclusive, the Companies Act and the SEBI Act are the sub-sets of Competition Act in so far as legal scrutiny of mergers are concerned.

Background and Evolution of Competition Law in India

Monopoly imposes heavy costs in every society. It is a conspiracy against the public to raise prices. It hates competition because competition lowers prices to a level which is fair, honest and earned under competitive environment. Adam Smith spoke of ‘the wretched spirit of monopoly’, the ‘mean rapacity, the monopolising spirit’ in which ‘the oppression of the poor must establish the monopoly of rich.’ Monopoly is exercised through market shares gained by buying up or bullying the present competitors out of, and the potential from, the market. The purpose is to earn maximum profit at the cost of consumers and rival competitors, more than the natural profit which the fair and free competition endures. It also destroys efficiency and discourages innovation. On the other hand, competition enhances consumer choice and promotes competitive prices, with the result society as a whole benefits from the best possible allocation of resources. That’s why most countries in the world have enacted competition laws to protect there free market economies-an economic system in which the allocation of resources is determined solely by supply and demand.

The competition law of India was previously contained in the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act). This Act was formed as a result of ‘command and control’ policies adopted by Indian government after independence. The government intervention and control pervaded almost all areas of economic activity in the country as India followed the strategy of planned economic development. The companies needed license for everything from setting up an industrial understanding, to its expansion or layoff of workers and closing it down. The era was also known as ‘License-Raj.’ The out come of the ‘License-Raj’ system was restriction of freedom to entry into industry which ultimately resulted in concentration of power into few individuals or groups.5 Thus, MRTP Act came into existence in 1969 to control such monopolies. The word ‘socialist’ in the Preamble to the Constitution of India has been embodied with a high object. The principal aim of a socialist state is to eliminate inequality in income, status and standard of life.6 The genesis of this Act is traceable to the Preamble of our Constitution and Article 38 and 39 of the Directive Principles of State Policy.

Mergers under The Competition Act:

The term Merger has been used broadly in the competition act as to include amalgamation and acquisition of shares and control over the assets and the voting rights of an enterprise. Merger is a kind of event which brings tremendous change in the management of the affairs of one enterprise by another enterprise. Through merger one enterprise is entitled to exercise control over the significant part of the assets and the decision making power of the other enterprise. Merger is an ordinary activity which takes place between the business entities in order to expand their business. Merger is considered to be a significant activity for the enterprise as it provides the enterprises to run their business on a large scale.

But there are certain mergers which are considered detrimental and adversely affect the competition. The most negative impact of merger is that it leads to the reduction of competition in the market by reducing the number of entities in the market. Merger between entities also leads to the increase in price of the goods and services which prejudicially affects the interest of consumers as the merged enterprises exercises full control over the market and restrain the entry of new players in the market which confers on them the advantage of limiting the output and restricting market access.

Kinds of Merger

• Ø Horizontal merger –This type of merger takes place between the enterprises that are engaged in the trading of similar goods and services. It mainly takes place to improve the market share and to carry out the operations of the enterprises on a large scale. This kind of merger has an adverse affect on the competition as it creates collaboration between the enterprises pertaining to pricing of the good and limiting the output.
• Ø Vertical Merger -Vertical merger is a kind of merger in which enterprises are engaged in different stages or levels of production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services.
• Ø Conglomerate Merger – Conglomerate merger is a kind of merger where two enterprises that merge together are involved in different kind of business.

The significance of conglomerate merger is that it helps the merging companies to enhance their activities and strengthen their financial position. There are two kinds of conglomerate merger, the first one is known as pure conglomerate merger which basically takes place between the companies who are doing business which is not related to each other. The other kind of conglomerate merger is known as mixed merger which is a kind of merger in which the main object of the enterprises are to expand their business and to gain market access and to increase the range of their products.

Reason Behind Mergers And Acquisitions

In the recent years mergers between the enterprises has rapidly increased. The point listed below discusses the main reason behind increased mergers taking place:

• i) Market share- Companies amalgamate to reduce competition and to gain dominant position in the market. The increase in the market share helps the enterprises in exercising their will and limiting the production and increasing the prices.
• ii) Large economy- One of the most important significance of merger is that the scales of the business entities are enlarged and they carry operations on a large scale which in turn leads to the generation of huge amount of revenue.
• iii) Diversification- Diversification leads to the increase in the trust of the consumers as diversification yields fruitful earnings for the companies.
• iv) Tax consequences- Companies amalgamate to evade tax. So it is one of the major factors which are considered while granting the order to merge as tax evasion creates loss of revenue to the government and prejudicially affects the economic development of the country.

Merger Control in India

Though the competition act came into force in the year 2003 but the provisions pertaining to anti-competitive agreements, abuse of dominant position came into effect in the year 2009. In the year 2011 proposal for the amendment to the provisions to the merger control was made by cci after consulting law firms, business entities and the stake holders.

In India Merger as a part of the combinations has been defined in section 5 of the competition act and the provisions relating to the regulation of the combination is defined in section 6 of the Act. Merger is an ordinary practice in the business world. It has several advantages like increasing efficiency and economy but there are several detrimental effects of merger. The effects are so severe that there was need felt to control merger. Any merger is considered to be prejudicial if it causes “Appreciable Adverse Effect” on competition. The term appreciable adverse effect has not been defined in the Competition act but any kind of merger having this effect is prohibited under the competition act. Section 20(4) of the Competition Act, 2002 provides the substantive test whether the combination has or is likely to have ―appreciable adverse effect on combination -. The substantive test encompasses examination of certain factors incorporated in the above section.

Some of the factors are:

• a) Restraining entry of new players in the market
• b) Advantage of the combination to the economy of the country
• c) Extent of elimination of competition from the market.
• d) The availability of substitutes in the market.
• e) Whether the benefits of combination outweighs the adverse effect on competition.

Analysis of The Role of Competition Commission

Competition commission of India is a significant body of the Government of India. It is accountable for the enforcement of the competition act, 2002. Competition Commission plays an imperative role in preventing adverse effect on competition in India. Competition commission acts as a market regulator of all the sectors and primarily draws focus on curbing the anti-competitive practices which is detrimental to the competition. Competition Commission of Indiais empowered to take cognizance of the anti-competitive practices prevailing in the Indian market.

The Competition commission was established on 14 October and came into effect on May 2009.

Duties of Competition Commission

Competition commission has been entrusted with several duties under the competition act 2002. The primary duties of the competition commission are:

• To eliminate practices having appreciable adverse affect on competition
• To maintain competition in the market.
• To promote freedom of trade and eliminate any constraints in the entry in the market.
• To protect the interest of the consumers and to eliminate all the practices prejudicially affecting the interest of the consumers.

To persuade new entities to enter in the market for producing better quality of good and delivering better services. Competition commission is also required to give its opinions on vital matters affecting competition or any reference made to it by the statutory authority. It is also the duty of the competition commission to create consciousness among the public and impart training facilities on competition issues.

Section 18 of the competition act deals with the duties of the competition commission of India.

Conclusion

Combinations whether in the form of mergers, amalgamations or acquisitions are very important for a developing country like India. They provide numerous advantages to an economy like India in the form of diversification of business, increased synergy, accelerated growth, tax benefits, improved profitability etc. They enable foreign collaboration through cross-border mergers and enable companies to withstand global competition. But on the other hand, they may lead to monopoly or create barriers to entry and similar anti- competitive practices. Therefore, they need regulation. The need to swiftly permit such mergers which are beneficial to the economy and prohibit anticompetitive ones has led to the formulation of merger control regime all over the world. In India, mergers were regulated under the MRTP Act, 1969. But the Act had become obsolete in the light of international economic developments and was replaced by the Competition Act, 2002. The provisions relating to combinations came into force recently on 1 June 2011. The CCI also notified the implementing combination regulations effective from the same date.

The Act and the Regulations together constitute the merger control regime. The gradual succession from the MRTP Act to Competition Act is one of the most important milestones as far as economic reforms in the field of competition law in the country are concerned. By shifting the focus from the stage of merely ‘curbing monopolies’ in the domestic market to ‘promoting competition’ the competition regime in India has attained recognition for its progressive ways.

It provides for pre-merger notification, review and remedies in the form of modifications which if applied effectively can play a crucial role in regulating mergers. The merger control provisions are designed in such a way to prevent mergers that are likely to have an appreciable adverse impact on competition.

With the FDI policies becoming more liberalized, Mergers, Acquisitions and alliance talks are heating up in India and are growing with an ever increasing cadence. They are no more limited to one particular type of business. The list of past and anticipated mergers covers every size and variety of business — mergers are on the increase over the whole marketplace, providing platforms for the small companies being acquired by bigger ones. The basic reason behind mergers and acquisitions is that organizations merge and form a single entity to achieve economies of scale, widen their reach, acquire strategic skills, and gain competitive advantage. In simple terminology, mergers are considered as an important tool by companies for purpose of expanding their operation and increasing their profits, which in façade depends on the kind of companies being merged. Indian markets have witnessed burgeoning trend in mergers which may be due to business consolidation by large industrial houses, consolidation of business by multinationals operating in India, increasing competition against imports and acquisition activities. Therefore, it is ripe time for business houses and corporates to watch the Indian market, and grab the opportunity.

References

1. Agarwal, M. and Bhattacharjea, A. (2006), “Mergers in India: a response to regulatory shocks”, Emerging Markets Finance and Trade, Vol. 42 No. 3, pp. 46-65.
2. Ahluwalia, M.S. (2002), “Economic reforms in India since 1991: has gradualism worked?”, Journal of Economic Perspectives, Vol. 16 No. 3, pp. 67-88.
3. Akbulut, M.E. and Matsusaka, J.G. (2010), “50+ years of diversification announcements”, Financial Review, Vol. 45 No. 2, pp. 231-62.
4. Alguacil, M., Cuadros, A. and Orts, V. (2011), “Inward FDI and growth: the role of macroeconomic and institutional environment”, Journal of Policy Modeling, Vol. 33 No. 3, pp. 481-96.
5. Armour, J. and Lele, P. (2008), “Law, finance, and politics: the case of India”, Working paper no. 107/2008, European Corporate Governance Institute.
6. Athreye, S. and Kapur, S. (2009), “Introduction: the internationalization of Chinese and Indian firms–trends, motivations and strategy”, Industrial and Corporate Change, Vol. 18 No. 2, pp. 209-21.
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8. Barbopoulos, L., Paudyal, K. and Pescetto, G. (2012), “Legal systems and gains from crossborder acquisitions”, Journal of Business Research, Vol. 65 No. 9, pp. 1301-12.
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1. Introduction

We were all accustomed to the traditional taxi services, but this sector was not showing signs of evolution and users have to accept the service as it is. Then, the situation changed when online-enabled car transportation service like Uber appeared. Uber provides a service, which connects drivers with passengers by using a mobile app. The consumers download the Uber app and can use it to find a driver which is located close by. It has benefits over taxis such has track the location of the car until it arrives and get an alarm when the car arises. However, it’s not only benefits… this brought some problems that we can’t ignore. We propose to present this problems and try to answer them.

First of all, we have to understand Uber business model to see the legal nature of the services that Uber provides to their clients. So, we will see if we have a real transport service or otherwise services of the information society. Then, we will see if we have any problems or concerns with Uber that should involve antitrust authorities. And at last, we will analyze the polemic question “Uber vs. Taxis” and linked problems, such as if we have or not a taxi monopoly.

2. Uber Business Model

Uber makes their users lives much more easier. However, there’s no consensus about its characterization. But, we can say that “it evokes the phenomenon of the sharing economy because it fully exploits resources that would otherwise be underutilized. It provides transportation services without being subject to parts of the national regulations governing taxi services. It can be considered an ‘information society service’ because of its digital platform.”[footnoteRef:1] However, we have to say that “sharing” is not the perfect description of the services on digital platforms like Uber.[footnoteRef:2] In Fact, Uber matches drivers with those who needs a taxi driver, which allows enables individuals to communicate and collaborate more effectively and efficiently.[footnoteRef:3] In fact, unlike online stores, Uber doesn’t directly provide a service. But, the true is that the users pay and drivers work for gain. Uber is not a web page or a mobile app hosting the transactions between drivers and consumers. What Uber does is provide an electronic payment system, ensuring that the price works dynamically, charge a fee for every exchange and ensures quality of service for both partes. “In other words, Uber falls somewhere along a spectrum between purely hosting platforms and direct service providers”.[footnoteRef:4] [1: MARGHERITA COLANGELO and MARIATERESA MAGGIOLINO, Uber: a new challenge for regulation and competition law?, In: Market and competition law review, Vol. 1, nº2 (Oct. 2017), page 2.] [2: GIANA M. ECKKHARDT and FLEURA BARDHI, The Sharing Economy Isn’t About Sharing at All, Harv. Bus. Rev. (Jan. 28, 2015), https://hbr.org/2015/01/the-sharing-economy-isnt-about-sharing-at-all.] [3: TALIA G. LOUCKS, Travelers Beware: Tort Liability in the Sharing Economy, 10 Wash. J.L. Tech. & Arts 10 (2015), pages 329 and 330.] [4: VANESSA KATZ, Regulating The Sharing Economy, 30 Berkeley Tech. L.J. 30 (2015), pages 1067, 1071-1072.]

Maybe this incorrect between Uber platform and sharing economy is like a scape to avoid the regulation for off-line services. It may be that the new technologies have actually deprived of meaning some of the rules set forth by the existing regulatory schemes and thus encouraged a change in the mindset of regulators.[footnoteRef:5] [5: NATHAN CORTEZ, Regulating Disruptive Innovation, Berkeley Tech. L.J. 29 (2014), page 175.]

2.1. Transport services or services of the information society?

When we are talking about Uber services, to know what rules should be applied, the main question is if are looking for a transport service or for a service of the information society.

If we evaluate Uber as information society, then it can benefit from Article 1 Number 2 of Directive 98/34/EC32 which defines information society service as a normally provided service for remuneration at a given price, through electronic means, from a distance on an individual request of a recipient.[footnoteRef:6] [6: European Parliament: Directive 98/34/EC of the European Parliament and of the Council, available online: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1998L0034:20070101:EN:PDF.]

“Uber platform, through which it operates, meets all of the parts of this definition: the service is provided upon an individual request of a recipient (rider submits request through a platform, driver also notifies of his/her availability through the same platform); the services are provided for remuneration (rider pays the fair for a ride, from which driver receives 80% and the rest is deducted by Uber); the service is provided at a distance (driver and rider communicate through virtual platform); and the service is provided by electronic means (Uber application via internet).”[footnoteRef:7] Although Uber doesn’t have any car, there are some features that make it more than a “simple” information society. Actually, it’s not wrong to say that Uber drivers are not independent contractors but employees of the company, because it’s Uber who fixes the prices, so Uber drivers have no control on the price mechanisms. The payments are made through the app, so they can’t request more than what is stipulated. So, driver receives his payment through Uber and not the opposite. “This shift of control over the remunerations, as well as Uber’s complete control over the prices shows that Uber’s involvement in transportation providing processes goes beyond just facilitation of information exchange. Uber’s role should not be interpreted in a formalistic way, but looking at its overall policies.”[footnoteRef:8] [7: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, page 14.] [8: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, page 15.]

This totally shows us that Uber should not be considered just an information society but also a “cash distributor”. Uber should not be considered a truly information society, not should be seen as a truly intermediary and, because of this, we have to mention it as a service linked to transportation.

3. Uber Antitrust Law

“Uber exists and grows because, by matching users and drivers via its platform, it exploits the interdependencies that occur between these two different demands: the demands of transportation and the demand of driving. The antitrust analyses suggests that Uber platforms are a system of interoperable software combined in a complex architecture that is nevertheless flexible enough to embrace new components.”[footnoteRef:9] In other words, Uber can diversify its business like it did when created Uber eats. They can add associate other products and services to the platform, which produces different consequences. In a way, this means that the competition occurring in digital markets is dynamic because platforms can easily enter new markets by offering new and innovative functionalities.[footnoteRef:10] In other way, “the same capacity of developing new services may permit Uber to profit from preemptive strategies that produce exclusionary, though not necessarily anticompetitive, effects.”[footnoteRef:11] [9: MARGHERITA COLANGELO and MARIATERESA MAGGIOLINO, Uber: a new challenge for regulation and competition law?, In: Market and competition law review, Vol. 1, nº2 (Oct. 2017), page 10.] [10: JEFFREY EISENACH and THOMAS M. LEONARD, Competition, Innovation and the Microsoft Monopoly: Antitrust in the Digital Marketplace. Boston: Kluwer Academic Publisher, 1998.] [11: MARGHERITA COLANGELO and MARIATERESA MAGGIOLINO, Uber: a new challenge for regulation and competition law?, In: Market and competition law review, Vol. 1, nº2 (Oct. 2017), page 10.]

Uber, by entering in transportation markets, with already established base of costumers, raise their rivals costs and force them to use less efficient and lower quality technologies that make their offer less valuable than the new offer.[footnoteRef:12] But, actually, the antitrust law can’t say anything about the prices charged by Uber. In fact, the prices practiced by Uber, or in technical terms the ‘dynamic price system’, turns out to be a market where prices adjust almost instantaneously, according to supply and demand. This dynamic price change with different factores like: (a) company internal metrics; (b) competitors prices; (c) matching of supply and demand in real time; and (d) other elements that might affect the transportations. [12: STEVEN C. SALOP and DAVID T. SCHEFFMAN, Raising Rivals’ Costs, The American Economic Review 73 (1983), page 267.]

A different issue, connected to prices, is whether the pricing system of Uber works as a “hub and spoke” tool, that is, as a central instrument – the “hub” – that coordinates the prices that drivers – the “spokes” – apply.[footnoteRef:13] This theory basically explores if the Uber’s algorithm was manipulated to reduce competition between drivers, to fix their prices. But, if this algorithm work as Uber decelerate it works, that is reflecting how the market demand and supply change over time, no kind of collusion occurs and the case of two drivers charging the same price should be regarded as a coincidence and not as a behavior resulting from collision. [footnoteRef:14] [13: MAURICE E. STUCKE and ARIEL EZRACHI, Virtual Competition. Harvard: Harvard University Press, 2016, pages 50-55.] [14: MARGHERITA COLANGELO and MARIATERESA MAGGIOLINO, Uber: a new challenge for regulation and competition law?, In: Market and competition law review, Vol. 1, nº2 (Oct. 2017), page 11. ]

Uber offers certain services to its users, as we have already analyzed. And while it offers these services and people are adhering to them, it collects data from its users, which ends up withholding them. Thus, the more data you can collect, the better your ability to improve service and earn money. But does this fit into the antitrust law? Well, we have to say no. Because we are talking about market features that don’t depend on business practices. And because that data collected is a byproduct of an activity, which aims to improve the service and consequently consumer comfort. And so, because of this, it can’t be forbidden by antitrust law.

A final and big important question is directly related with competition authority itself. The antitrust law has no great concern with the question of whether or not consumers are well informed. We can not deny that in fact there were situations in which the antitrust authorities intervened against the counterfeits that appeared in the market, but we are talking about cases where the wrongdoing has already occurred. What should happen is prevention, education and empowerment by these authorities, because this falls within the scope of antitrust law. In fact, the information is a product and because it’s a product, antitrust law can be used to prosecute firms that explore the market power damaging its proper operation by reducing the quantity and the quality of the information conveyed to consumers. [footnoteRef:15] So, if it were proved that Uber manipulates its systems, should be an intervention by the antitrust authorities, because we would be towards a dominant position. [15: MARK PATTERSON, Antitrust law in the new economy. Harvard: Harvard University Press, 2017, pages 33-38. ]

We can’t deny that Uber changed the competitive dynamics in the transportation but we can’t say that should be a concern by the competitive authorities, as we analyzed in this point.

4. Uber vs. Taxis

It was not a long time ago that Uber appeared, changing the transport industry. This made taxi drivers upset and created a lot of conflicts. We can’t deny the benefits of Uber against taxis. Uber presented different options for different type of users and this made transport market reach another level.

One of the main reasons that led to the displeasure of taxi drivers was the different treatment between Uber and taxi drivers. Taxi drivers are subject to very strong regulations, being one of the most heavily regulated in the majority of countries all over the world, with varying degrees of difference in the forms of quantity regulation, quality regulation, market conduct regulation and price regulation.[footnoteRef:16] However, taxis fares always remain expensive while the service quality changes between drivers. The biggest concern is the control of entry by authorities setting the maximum number of taxi operators. The idea is that if the entry was not controlled, then we would have an excessive number of taxis. And an excessive number of taxis would create a competition out of control between them, what would be bad for the market itself, affecting the quality of the service. And would cause congestion and pollution, what would be terrible for everyone. [16: OECD, Taxi Services: Competition and Regulation, 2007, page 19.]

In most countries, regulation has failed to achieve expected results in this sector. First, because the control over the entrance led to a lack of service provision, especially at peak hours. Secondly because such tight control over prices and quality of service has meant that taxi companies did not improve their service. But, the results that come from the deregulation that has been tried in some countries are not unanimously shared by economic literature, even if the majority are in favor of it.[footnoteRef:17] [17: ADRIAN T. MOORE and TED BALAKER, Do Economists Reach a Conclusion on Taxi Deregulation?, Economic Journal Watch 3 (2006), page 109.]

When Uber appeared it got worse. Through technological advances Uber created a new way of operating in the transport market, questioning the taxi service, which led to a need to reform the rules. The use of internet mobile technology to match drivers with users has created unprecedented competition in the taxi industry.[footnoteRef:18] Taxi operators claimed that Uber competes unfairly with them for failing to comply with regulatory requirements. [18: JUDD CRAMER and ALAN B. KRUEGER, Disruptive Change in the Taxi Business: The Case of Uber, American Economic Review 106 (2016), page 177. ]

4.1. Taxis Monopoly

First of all, we need to understand what is a monopoly, what “taxi” means and which services could compete in the same market.

We can defy monopoly as a dominant state of a particular business operator, which is either the only subject providing a particular service of its kind, or its share of the market of particular product/service is close to 100%.[footnoteRef:19] [19: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, page 12.]

As we have already mentioned, the regulations imposed on taxi market normally involve a restriction on the number of taxis operating and competing with each other in a certain place, but not in a way that there is only one operator, which would mean that there was no competition. So, whenever authorities establish a certain number of taxi licenses for a particular location, there is always more than one to maintain competition. Those taxi companies that got a license, still have to compete with each other, despite the limited number of licenses. So, we can say that regulating taxi market itself doesn’t automatically mean granting a monopoly.

Even so, we have to question whether there is a monopoly granted to taxis, allowed by governments through compulsory licenses by the means of imposing mandatory licensing, as a of picking up individual passengers by individual cars and transporting them for remuneration to their individually requested destination.[footnoteRef:20] So, by prohibiting new companies such as Uber from transporting individual passengers in individual cars to their destination, which are therefore the same as taxis but not covered by the licensing criteria established by the authorities, are authorities allowing a monopoly of taxis? This “monopoly” would be allowed to justified by social questions, safety, comfort and access for passengers during all day even in uninhabited areas. [20: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, page 12.]

We can’t use the term “monopoly” for this. This term is used to describe individual business, economic subjects, entities dominating a certain market with no or very few and weak competitors and not to describe a group of entities competing with each other.[footnoteRef:21] So, taxi companies competing between themselves as a group, can’t be considered as a monopoly, even if they are protected by some sort of regulation, which means they don’t have to face more and new competitors over time. [21: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, page 13.]

We can not deny that these regulations limit competition to a certain level, but not at a monopoly level, unless they eventually form a cartel or merge, and start to operate a single identity.

4.2. Uber, Taxis and Antitrust Law

Other relevant question that we have to explore: supposing that taxi regulations were applied to Uber, should antitrust law act against Uber because it doesn’t comply with regulations of taxi services? Uber’s services have increased the ‘catalog’ of available transport, with the benefit of lower prices than traditional taxis. Thus, we conclude that the existence of Uber and its economic activity is not anticompetitive within the meaning of antitrust law, because it does not harm the consumer. And this does not change even if Uber’s business harms taxi drivers. This doesn’t mean that antitrust authorities support those entities that act beyond the law. We can say that Uber and taxis should act on the same plan. This doesn’t happen because authorities have limited powers. They can forbid anticompetitive agreements, mergers, and monopolistic practices, but they cannot force Uber to comply with taxi regulations through commitments or obligations, or exempt taxi drivers from those regulatory obligations to which Uber is not subject. Thus, we conclude this point saying that when the authorities can actually do something, they do, they act. However, there are issues there are not in their power.

4.3. Relevant Norms

“Under the “Services Directive”[footnoteRef:22], Article 9 Number 1, which provides that Member States should not make access to a service activity or its exercise “subject to an authorization scheme unless the following conditions are satisfied: (a) the authorization scheme does not discriminate against the provider in question; (b) the need for an authorization scheme is justified by an overriding reason relating to the public interest; (c) the objective pursued cannot be attained by means of a less restrictive measure”. These 3 conditions are cumulatively mandatory for the state in order to be legally allowed to impose an authorization on service providers under EU law. Prohibiting Uber, and especially its individual partner drivers from picking up passengers, while other taxi services could perform such tasks under certain conditions, does constitute discrimination. Even though this restriction on provision of services could be justified by public need, however, there still are less restrictive options available. Rather than banning, the authorities should design appropriate regulations to accommodate new developments on the market. Therefore, Uber bans are illegal under the directive mentioned in this paragraph.”[footnoteRef:23] [22: European Parliament: Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, available online: http://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:32006L0123&from=EN. ] [23: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, pages 15 and 16.]

According to the Article 49 of Treaty of the Functioning of the European Union (TFEU)[footnoteRef:24], any citizen of EU member state is free and allowed without restrictions to set up and establish state branches or subsidiaries in any other member. Even though it is operating in another member state, instead of the citizenship of the person, should be applied the same laws and regulations as undertakings established by local citizens. Thereby, Uber branches that are established in one EU member state and are expanding to another, have the right to compete with other locally established in there. By this, we can say that when a court forbids new competitors from entering the market, because of taxi regulation preventions, is a violation of Article 49 of TFEU. [24: European Union: Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU), available online: http://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:12012E/TXT&from=DE.]

According to the Article 102 of the TFEU[footnoteRef:25] abuse of dominant position on the market by an undertaking or a group of undertakings, which may directly or indirectly result in setting up unfair prices, hindering technological developments on the market, is prohibited. “Even though the situation of those taxi firms that have obtained licenses amount of which was artificially limited by the national or local authorities, does not amount to a monopoly, as their situation does not result from their internal agreements, but just from the decisions of the authorities and as they still compete among each other, however, it still might amount to dominance and its abuse, especially if the regulator has set a maximum charge rates. The artificial reduction of potential competitors on the taxi market results in unfairly high prices, as well as in limitation of production. These practices are violations of Article 102 of TFEU.”[footnoteRef:26] Nowadays, in Portugal, Uber is already regulated, but there are other places that don’t have our scenario. In this countries, where Uber still operates with no regulations, while traditional taxi firms still have to comply with licensing requirements, we can say that we have a reversed abuse of dominance by Uber, because it competes with others on which it has benefits. But, the true is that Uber didn’t took advantage from this increasing the prices. Anyway, by doing this, governments passively grant exclusive rights to Uber. So, the governments should equalize this situation to avoid violation of article 102 of the TFEU, because taxis and Uber are both transport services, as we have seen. [25: European Union: Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU), available online: http://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:12012E/TXT&from=DE ] [26: LAURA BARAINSKY, ESMA GUMBERIDZE and MOHAMMAD NURUL, Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?, page 17.]

5. Conclusion

In this paper we had the chance to analise the impact that Uber caused in transport market and as a primary issue, the conflicts with taxi drivers. Uber created a new way of operating in the transport market, questioning the taxi service. But, before we analyzed Uber business model and we concluded that we are dealing with a a transport service and not with a service of the information society, because it ceases to be a true intermediary from the moment that establishes prices, which means drivers are not independent as genuine service providers. Then, we understood that Uber shouldn’t be a concern by the competitive authorities. While Uber offers certain services and people add to them, it collects data from its users, which ends up withholding them. And the more data you can collect, the better your ability to improve service and earn money. We saw that this doesn’t fit into antitrust law because this is market features that don’t depend on business practices. This aims to improve service and consequently consumer comfort. And so, because of this, it can’t be forbidden by antitrust law. Authorities should improve prevention, education and empowerment, because this falls within the scope of antitrust law.

We also analyzed that we don’t have a taxi monopoly, because taxi companies competing between themselves as a group and the term monopoly “is used describe individual business, economic subjects, entities dominating a certain market with no or very few and weak competitors and not to describe a group of entities competing with each other.”

We conclude that the existence of Uber and its economic activity is not anticompetitive within the meaning of antitrust law, because it does not harm the consumer. And this wouldn’t change even if Uber’s business harms taxi drivers. We also conclude that Uber and taxis should act on the same plan and this doesn’t happen because authorities have limited powers. They do what they can do!

Amazon is considered to be the biggest e-commerce platform that specializes in online retail, cloud computing, digital content and competes in thirty other industries. Amazon was established by Jeff Bezos on July 5, 1994, and began its venture as an online book shop, however later it extended to selling video/music content, computer games, hardware, clothing, furniture jewelry, toys, and AI services. Recently in 2017, Amazon has acquired Whole Foods Market chain for around 14 billion US dollars. It’s believed that Amazon acquired Whole Foods in order to compete with Walmart. The company currently has around 647000 employees and this number keeps increasing due to the rapid expansion through different industries. Amazon was able to attract lots of customers due to its fast delivery service and lowered prices. The company was able to thrive because it was based online and there were no expenses for space rent as in the cases of brick and mortar stores. Amazon’s formula of success belongs to the ability to embrace innovation and creating new markets that never existed before. Amazon Inc. competes against many firms including Walmart, Google, Apple, Microsoft, and Home Depot. Due to its massive success, Amazon was even declared to be a Business killer due to the fact that it led to Toys R Us to declare Bankruptcy. The President of the United States, Donald J. Trump tweeted many times about how Amazon is hurting companies, avoiding taxes and taking away jobs. A few companies that are affected by Amazon are Barnes & Noble, Macy’s, Blue Apron, Foot Locker and many other brick and mortar stores.

The Wall Street Journal recently published an article about Amazon’s Food Delivery falling short and affecting customer loyalty. The author of the article, Heather Haddon gave an example of how Amazon can’t meet the requirements of their newly implemented grocery shopping available through Whole Foods by stating that: “Kelly Hills ordered a sour-dough loaf from Whole Foods recently but was offered a jalapeno cheese bread instead. Her so-called shopper either a contract worker employed by Amazon or Whole Foods staff member tasked with compiling delivery orders had opted to put decaf coffee in her bag instead of whole roasted coffee beans and celery instead of celery root and single seltzer flavor rather than a variety.” Ms. Hills said that if she was very frustrated by these bizarre substitutions. The problem is that Amazon wasn’t able to come up with a new and improved inventory-management system and opted to use the old inventory system that Whole Foods had before. This problem might also be a result of Amazon.com running separately from the newly acquired Whole Foods.

Throughout the years the company has competed against multiple strong competitors. As Porter’s Five Model suggests, during this analysis, all five forces are going to be discussed and broken down. The competitive rivalry is considered to be a strong force and a great player in Amazon’s day to day business. Most retail companies are aggressive and show competitive power against each other. For instance, Walmart is a direct competitor of Amazon due to the rapid expansion of Walmart in the e-commerce sector. In addition to that Walmart has the brick and mortar stores, a fact that directly affects Amazon. No everyone is comfortable with online shopping and therefore Walmart is able to serve both markets, online and offline. Now that Walmart has established its online presence it can compete with Amazon through low switching costs online. Because of the extreme external factors, Amazon needs to put more emphasis on competition and thoroughly analyze the company based on the Five Forces.

Amazon is often affected by its suppliers that control the products that are sold on Amazon.com. Based on Porter’s Model this is the bargaining power of Amazon inc’s suppliers and is considered to be a moderate force. For instance, when Amazon is promoting its own line of clothing (Amazon Basics) it is launching a promotion campaign that advertises the items online at a very low price. If the suppliers change their mind and increase the price of manufacturing or impose a higher minimum purchase quantity then Amazon will be directly affected by this and forced to sell the product at a price that creates enough revenue. Porter’s Five Forces Model describes this force as a moderate threat but combining all the suppliers together it’s clear that this becomes a strong force. In order to avoid such problems, the company has to take care of the external factors develop strategies that can lock in deals with all suppliers. Due to the fact that Amazon’s mission statement is all about the customer-centric approach, this also makes the company vulnerable in front of its customers (Bargaining power of Amazon’s Customers/Buyers). The low-rated products are the ones that have problems or quality issues and therefore it affects sales. In order to prevent this strong force, Amazon is listing the best products to come up as first during a product search and even has a badge that says “Amazon’s choice”. Amazon considers this strong force as a major one and takes all the responsibility through a very responsive customers service and low priced products.

Another point from Porter’s model is the threat of substitutes or substitution and is considered to be a strong force. It’s well known that Amazon competes with eBay, Etsy, and Walmart. It’s been proven that customers can easily switch from one online retailer to another if they find better prices. Most of the millennials compare prices between online shops before making a purchase. There is a huge list of smartphone applications such as ShopSavvy, BuyVia or Honey that allow comparing prices across multiple websites and finds the lowest price possible. Nowadays online shoppers look at price and delivery time as the two most important factors that contribute to their decision. This is why Amazon is now trying to create its own delivery company in order to make this process even faster. To make shipping even faster, Amazon is experiencing with new ways of shipping such as Drone Air Shipping that could bring down the shipping time to hours or even minutes depending on the location. Full-scale drone testing projects are currently taking place in the UK and Europe. Amazon understood that the fourth point of Porter’s model can play a big role in the long-term success of the company.

Last but not least, the Threat of New Entrants is considered to be a weak force because Amazon is a well-established e-commerce platform with years of experience and rich knowledge about its customer’s needs. It’s very hard for new entrants to compete on price with Amazon because Amazon has become an empire with its own manufacturers, warehouses and so on. It would probably take many years and billions of dollars to create a new company that would directly compete with Amazon and even if that happens, Amazon might have an eye on these companies from their early stage. Therefore, the fifth force of Porter’s model represents a minor issue for Amazon’s success.

In conclusion, Amazon remains to be one of the biggest players in the online retail industry. The fact that it is one of the oldest companies in this sector of the economy gives it a major competitive advantage. Even though the company is very successful in the online retails, it still needs to create new methods that could improve the Grocery shopping service because not taking care of this problem will only hurt the customer loyalty. Developing new strategies and adopting a new inventory-tracking system is a must for surviving in this competitive world.

The company might also partner with Instacart Inc. which is the biggest grocery delivery service. Being aggressive and trying to dominate each sector of the economy isn’t always the best way.

In a world outside the bubble of childhood, real-life challenges enter into people’s paths whether they like it or not. It is something inevitable, and it happens in every single person’s life. For this reason, being prepared of losing helps us face the harsh reality of life. Whenever kids join competitions or contests, most of them spend time and effort preparing for these academic events. However, no matter how much effort and time they all put in, there should only be one winner who excels and brings home a trophy among them all. The concept of giving trophies to everyone would only lead to giving less significance to the concept of winning. In the event of a person losing, they learn real-life lessons that not everything moves and works the way they want them to. They can’t have everything they want in life, no matter how much they yearn for it. There are always times when people tend to not get what they want. Trophies for all diminish the value of actually getting a trophy for winning, convey an inaccurate message that all kids should be marked as winners, and lessens the true value of effort.

Losing teaches young children to exert their best efforts to reach their goals. Teachers usually say, ‘Practice until you get it right.’ Kids would not actually try and get things right because they tend to lose the eagerness of reaching the first place, knowing the fact that they get rewarded no matter how well they do. As time flies by, people tend to fail on reaching the goal of building a strong mindset toward winning. According to Vivian Diller, ‘The problem isn’t the profusion of positive reinforcement kids get nowadays, but rather the failure to distinguish the accomplishments that deserve it, from those that don’t.’ Giving and teaching lessons are more important to one’s life, rather than handing out trophies as consolation prizes. Trophies are only for the winners who actually deserve them, and giving these to all removes the prestige that they have.

The relentless training and practices lead to a performance of a lifetime. Esteem and pride come along from doing what athletes and competitors actually love to do. Not even a trophy can define how big of a winner they are by actually just doing their best in each game. In source one, Klein says that playing is already intrinsically rewarding and that one should not get a trophy just because one played well. Rewarding trophies to all is often misunderstood by children and all can be immediate winners just by participating and showing up to competitions. It is undoubtedly unfair for an individual to receive equal acknowledgment from those who win. Allowing children to lose would help them sustain actual battles later in life. Them keeping in mind that they will win no matter what place, sets them up for failure in the long run. If it were not for failures, no one could ever surpass challenges in life.

Everyone loses at some point in their lives. Children should be taught proper qualities to take these losses with honor as they grow up. Believing that they have always won will only result in pride and failed efforts. Children would come to think that they can go through life being mediocre and still receive recognition in whatever they do. True winners have always gone through losing. In source three, Vivian Diller states that not giving participation trophies teaches kids about both success and failure. Nowadays, only selected people put their hearts out to earn the trophies that they truly deserve. In fact, providing participation trophies bring out people’s inner indolence by not wanting to work hard if they get rewarded for something below their best. In facing life challenges, people lose their dedication to overcoming obstacles that come their way. Kids should be reminded that as they grow, working hard is the key to success.

Trophies should be associated with victory in the competition and not just by showing up. However, Lisa Hefferman’s ‘In Defense of Participation Trophies: Why They Really Do Teach The Right Values,’ states that giving out participation trophies is important for the reason that they symbolize the remembrance of experience in competitions. Although kids put time and effort to prepare for competitions, they should also learn that people do not always get what they want. Outside competitions, challenges arise, and people do not surpass these just by giving an effort. Participation should be recognized but celebrated with words of enlightenment instead of trophies. In addition to that, young competitors should keep in mind that defeat is a motive to make room for improvement. Without trophies, kids would give their best effort to strive for gold.

The idea of providing a trophy to every competitor minimizes the worth of earning a trophy, sends a false message that everyone is a winner, and reduces the pure sense of working hard. Coping with failure is one problem kids have, although it serves as an important aspect of life. Winning and losing go beyond sports and activities as they mature. Kids who are used to getting everything they want tend to lack discipline and the inner drive to focus on what comes along their journey in life. Participation trophies are not advisable for young kids to practice the significance of winning by giving their best efforts. As young children grow and slowly mature, they need to experience loss and learn from the lessons that come with every situation. Alongside this, the value of hard work and success would be essential and very much prevalent in their lives.

Businesses in the modern market are required to continuously adapt and adjust to the changes in the market in order to stay competitive. Competition is an important aspect of a market and is widely known to be the process of operating in a market concurrently with other competitors in order to gain profit (Riggs, 2015). In order for competitors to stay competitive, they complete through various means which will be discusses in this paper. However, if a monopoly is introduced into a market, this can significantly hamper other competitors’ ability to compete. The purpose of this paper is to explore how competition operates in the free market, what it means for a business to have monopoly powers, ways and reasons businesses use political means to gain a competitive advantage, and finally discuss whether governments should act to create monopolies to encourage competition.

According to Stucke, some consumer benefits that competition contributes may include lower costs, higher quality goods and services, more variety, etc. (Stucke, 2013). Thus, it is essential for an entrepreneur to discover the gaps in the market which they consider have not been satisfied in order to maximize their profit (Heyne et al., 2014). Entrepreneurial profit is the gain that an entrepreneur receives for satisfying consumer demands in a market (Heyne et al., 2014). This can be achieved through entrepreneurs engaging in arbitrage which involves rearranging products to where they are more highly valued (Heyne et al., 2014). Also, they can use innovation to earn profit by constantly investigating better ways to satisfy consumer demand through improving quality of goods and services, lowering costs, etc. (Heyne et al., 2014). Lastly, entrepreneurs often imitate other entrepreneurs who were successful in the hopes that it will reciprocate the same benefits (Heyne et al., 2014). Although competition may seem beneficial, there are some downsides that need to be considered for both the consumer and the producer. Some downsides to competition for businesses may include being obligated to lower prices to the point where expenses are exceeding income, as well as, becoming overwhelmed with too much capital that is not earning them any profit which could be allocated elsewhere (Gartenstein, 2018). In addition, competition may be a disadvantage to consumers as it may lead to producers exploiting or manipulating customers to believe that their product is of better quality because of its high price (Stucke, 2013).

Moreover, since competition is highly relative to consumer demands, businesses compete by serving consumers better than their competitors (Heyne et al., 2014). However, businesses often pursue restrictions to sustain their profit opportunities, a common this is achieved is through the creation of a monopoly (Heyne et al., 2014). A monopoly is known as a market structure where there is a sole seller, with no close substitutes for the product produced and there are barriers to entry (Koutsoyiannis, 1975). Most often, they occur because the government has involved itself to provide one firm the exclusive rights to produce a particular good or service (Gans, King & Mankiw, 2012). If a firm has monopoly power, this means that they have the capacity to control supply and price regardless of the market (Galbraith, 1936). As a result, there is no supply curve for a monopoly because a monopolist is a price maker, and so it would not be useful to consider the number a firm would produce, because they set prices at the same time as they choose the quantity to supply (Gans, et al., 2012). Governments can create monopolies through regulation and taxes which constricts competition (Paul, 2016). Big businesses are able to better comply with government regulations as they can afford the costs as well as hiring lobbyists to assure that any new laws or regulations favor them (Paul, 2016). Patents, copyright laws and trademarks are all examples of the government creating a monopoly in order to serve public interests (Gans et al., 2012). Businesses use political means to hamper or eliminate their competitors because a monopoly allows them to produce any quantity for any price chosen (Gans et al., 2012). Big businesses often attempt to use political means to hamper their competition through interacting with the government which leads to “lower costs, enhanced bargaining power in supply relations, trade promotion and protection, and protection from entry and product substitution” (McWilliams, Van Fleet & Cory, 2002).

Furthermore, monopolies can be attained in a free market through natural monopolies. A natural monopoly develops when a one business is able to supply a good or service to the whole market at a lower cost than multiple other firms (Gans et al., 2012). Most often, firms operating in a natural monopoly are not overly worried about new entrants penetrating their monopoly power, rather they are concerned with ensuring that the government is protecting them in order to maintain their monopoly position (Gans et al., 2012). This is because potential entrants are less likely to be able to produce that the same low costs as the monopolist, therefore, they will only have a small effect on the market (Gans et al., 2012).

There is considerable debate surrounding whether governments should act to create monopolies in order to encourage competition, or to take no action either way. Monopolies have been shown to be detrimental to smaller businesses, however, as long as the government is acting to serve the public interest, there will be benefits for the market (Gans et al., 2012). An example of this can be seen where the Australian government, up until October 2001, gave monopoly of the .com.au interest addresses to the Melbourne IT company which is beneficial for the market because it ensures consistency (Gans et al., 2012). In addition, another widely accepted reason why governments should act to create barriers to entry is the requirement of licenses for different business ventures (Manier, 2010). Licenses are vital as they protect the public’s interests as well as protecting existing businesses from potential competition (Manier, 2010). On the other hand, creating monopolies could negatively affect consumers as monopolists can provide lower quality goods for a high price because they dominate the market and so they are not threatened to produce better and cheaper goods or services (Leigh, 2019).

To conclude, free market competition can be beneficial to the consumer in a number of ways and thus entrepreneurs can earn profits by ensuring that these benefits are improved and maintained. Businesses often seek to restrict competition in order to preserve their own profit opportunities and this can be down through creating a monopoly by providing businesses with grants. However, the grants are beneficial to competition if they aim to protect the public’s interests.