GMAT Essays : GMAT AWA / AWM Issue
Points FOR Essay Topic 3

Issue Topic 3. Competition is invariably advantageous to a business because it compels changes to improve established methods.

Discuss whether you agree or disagree (partially or totally) with the view expressed providing reasons and examples.

Points FOR (in favour of) topic:

FOR Point 3.1. Competition forces a change in mindset. Corporate strategy is more focussed on consumer needs -- Operational and financial benefits for the company are given a lower priority.

FOR Point 3.2. Companies are forced to change to meet market realities, rather than wait for consumers to adapt themselves to corporate convenience.

FOR Point 3.3. Competition fosters growth through innovation. Companies are forced to come up with new and creative business models to forge ahead and stay on top.

Example 3.3. A good example is that of the airline industry. Companies such as Ryanair and EasyJet have slashed ticket prices to compete with the likes of British Airways, Lufthansa and other carriers. These low-cost carriers have seen phenomenal growth over the past decade! Rock-bottom prices, fast turnaround times and decent service have meant that these low-end carriers pose a serious threat to the larger players in this space.

FOR Point 3.4. As a result of competition, companies are forced to become leaner and meaner. They have to cut costs and become more efficient.

Example 3.4. Going back to Example 3.3...Competition from low-cost carriers has forced bigger players such as British Airways, Lufthansa etc to cut costs, reduce turnaround time, become more efficient and responsive to customer needs.

FOR Point 3.5. Competition sometimes results in companies adopting unconventional ways of doing business that support their survival in an intensely competitive environment.

Example 3.5. A classic example here is the Virgin Group. Headed by Richard Branson, this group of nearly 200 companies with a global presence has no central headquarters, no management hierarchy and minimal bureaucracy. Most of Branson's companies entered industries where they faced entrenched competition. But Branson found golden opportunities in markets in which customers have been ripped off or underserved or where competition has been complacent. A relatively unstructured organisational hierarchy makes Virgin more flexible and this allows it to handle competition more easily.