It is needless to explore the benefits of competition. But how far a sector can withstand competition? Or how much competition is good for competitiveness? John Kay said,
In telecommunications your choice for 100 years was to take what the local telephone provider offered or to leave it. But consumers now have a bewildering variety of choice. They certainly don’t need more. The priorities of public policy should be directed elsewhere – to promoting investment and innovation. Global competitiveness, not domestic competition, is what matters. Government departments and regulators have been more and more ready to accept these arguments.
Well, that may be the case across the developed world. But I am reluctant to agree when John says:
The brand managers of Procter & Gamble, Unilever, Kraft and Nestlé obsess over the details of packaging and product. But companies must work hard to maintain differentiation precisely because the differences are inconsequential to users. And so it is that accountants, banks and mobile phone companies see themselves as engaged in intense competition while customers think they are all the same. Competition as businesses perceive it is not at all the same as competition as consumers perceive it.
People doesn’t hastily change Banks or accountants. But the consumers are merciless to the mobile industry. Instead of complaining about bad service, the Asian consumers just dump one operator and jump for another. This is known as “churn” in the industry. Read John Kay’s article here.
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