Pure Competition

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Pure competition is the ideal situation for business. If there is nothing to compete against, no customers, no clients, no new products, no sales, and no money in the bank, then no business will survive. But that is not what exists today. What exists is a myriad of small businesses, each with their own start-up capital, marketing budget, and business management style. While this is a natural occurrence, it creates significant problems for organizations when they attempt to use pure competition as their main source of market share.

Pure competition means there are no third parties (other than the company manufacturing the product) which can market your company's product. Because there is no middleman involved, no one is motivated to sell your products. Because no one is making an effort to sell you their wares, your sales efforts will naturally be directed toward those businesses that have established their own supply chain, have a proven track record, and have experience selling to your exact customer demographic. Consequently, you will find that many of your competing companies will choose to either "inspect" your business before making any type of offer or they will simply bypass your company completely and go straight to the manufacture. Both of these actions have obvious implications for your bottom line and should be a big enough concern for any company with significant investments in raw materials or inventory.

Pure competition can also apply to your warehouse. If there is only one major manufacturer in your industry, chances are very good that the manufacturer will send their own people to your warehouse to perform warehouse operations. You cannot be sure of the quality of their products and, therefore, cannot be sure that your company can keep up with them when they do a quality inspection of your entire production or distribution operations. If you have insufficient experience in warehousing or are simply unwilling to hire additional warehouse employees, then you may find yourself experiencing storage problems and excess inventory all because you are not paying close attention to the detail of your supply chain management.

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