The ideal management of production is that all companies in one sector (Say Automobile, Textiles etc…) can join together and build one product and sell at a standard price. This will considerably. reduce the cost and benefit for the world customers. What is your opinion on my suggestion ?
I have already thought of your idea long back and and published a book “Sectorism : Country Management for Global Leadership” (ISBN : 978-3843389167). See at <http://drvsrs.com/store/page1.html#22
). According to this, every nation should organise themselves into production sectors like Automobiles, Textiles, Food products etc... and conduct election and administer the nation. Sector production optimisation and supply is ideal for the nation and the public.
But Competition is an important economic activity, which keeps the economy of the world growing. It is a tool behind research and development as well as a beneficial to the consumers. What you say happened in the communist country like the old Union of Soviet Socialist Republic (USSR existed between 1922 and 1991 in Europe). All products manufacturing were centralised at the state and private entrepreneurship was completely discouraged. The result was the failure, ultimately the communist nations dwindled and now the scattered nations are introducing the diametrically opposite private entrepreneurship, the seed for competition and growth !!.
Competition in general, is the effort of two or more suppliers acting independently, to secure the business from the customers by offering the most favorable terms.
The strength of product market competition plays an important role in economic growth and affects economic efficiency, the allocation of resources, and can also lead to improved labour market performance. Competition is not like a foot ball game, where one wins and other lose ! The one who offers the most favourable terms gains more share of the market and others proportionately loose their market share, without a total loss. Will the society benefit the economic freedom by the competition or
does it promote an imbalance to a extent that it is deleterious (harmful) to the society ?
An unilateral market share gain oriented competition attempts with price reduction and incentive/gift tags, as a leverage. This may benefit the trades to sell more products and gain a higher commission value. But it results in pumping lower quality, less durable products and thrusting unwanted products as gifts, which is harmful to the buyers. The best example for this type of competition is “Made in China” and “Made in Korea” products, at low prices, selling all over the world, in an exclusive place called “Burma Bazaar”.
B. ECONOMIC COMPITITION
On the other hand, economic competition encourages to make more quantum of products at planned price leverages, and a possibility for the expansion of the availability of the same product, and for every one.
B1. INTER DIVISION COMPETITION
In 1920s Alfred Sloan at General Motors (GM) created an internal economic competition to benefit the company as well as the customers. He deliberately created some areas of overlap between the divisions of
the GM, so that there is a competition between the divisions. Example : Chevrolet division compete with Pontiac division for certain market share. This motivated cost / wastage reduction, efficiency optimisation and improved service facilities to the customers. It improved the quality, performance and the brand images of GM as well as the availability of better and more products to the customers. This is the benefit of a typical economic competition.
B2. COMPETITION BY INNOVATION
In consumer goods, the competition for the supply of a given product is made attractive to the customers by improved performance, longevity and user friendly techniques. The example is a Pressure cooker.
Different firms offer cookers with faster cooking time, cooking facility for combined items (say rice plus vegetables), non-sticking features etc… The same applies to tooth brush with angular brush end,
replaceable brush tips, different brushing fibres, spring loaded handle, alignment methods etc…
This expands the type of goods to suit different customer choices and preferences. It also provides the same product at different price ranges commensurate with the expanded facilities.
B3. COMPETITION BY CREDIT
In case of high value products, the firms compete by providing attractive credit and instalment facilities. This could be seen in case of Refrigerators, Colour TVs, Microwave ovens, Motor cycles etc… This reduces the spot payment to a considerable minimum, and the monthly installments at affordable quantum. The products, considered as a luxury and affordable only by rich, are brought within the purchasing power and enjoyment range of middle class wage earners.
B4. COMPETITION BY TECHNOLOGY
The advanced technology is used as a leverage to compete for an item in the market. This could be seen in “Long life milk”. Milk is a product which has a very short shelf-life. Everybody needs fresh milk for daily use. But the scientific research has found a method to preserve the milk in a sterilised and vacuum pack for even 6 months ! This technique is used by large scale diaries like Lacknor, Amul etc… to supply milk at considerably lower price per litre. In fact the same firm supply both the fresh milk and the elongated life pack, at drastically different price ranges for the customers to choose and enjoy.
C. ECONOMIC COMPETITION – UNENDING DIMENSION
In the current millennium, there is no end for Economic competition, due to a rapid growth dimension in research and development in multi various areas. The best examples are the computer, internet facility and the mobiles. Now, even in a most under developed nations and in a rural nook and corner, people possess these facilities. Is it not sufficient to get a feel of the effect of wonderful economic concept of competition ?