Governing Business Activity Essay Example | Topics and Well Written Essays - 1500 words

Governing Business Activity - Essay Example Therefore, organizations must ensure that they have a competitive edge that will guarantee prosperity of the firm. Notably, competitiveness varies with certain factors. First, the industry in which the entities operate. Secondly, the size of the firm affects competitiveness significantly. Evidently, these factors have significant implications on competiveness. This write–up will discuss competitiveness in relation to the size of the entity. This write-up will also relate competitiveness to adaptation of large or small organizations to changes in the business environment (Harry & Normand 1996, p. 122). Competitiveness encompasses the ability of an entity to manage factors such as government, suppliers, rivals and customers. Suppliers provide an entity with inputs required to create products. Therefore, an entity should manage suppliers to ensure that costs do not spiral out of control thus, reducing an entity’s profitability. The government affects an entity’s com petitive edge by the policies it enacts (Pfeffer 1995, p. 234). Higher taxation reduces competitiveness. Conversely, tax cuts increases competitive edge since they entity can offer its clients products at reduced prices. Rivals are other partakers in the sector that are in direct competition with an entity for clientele or any other factor that is central to the undertakings of an organization e.g. raw materials. Therefore, rivalry reduces competitive edge since some competitors may opt for price cutting strategy to eliminate competition. This is a strategy utilized by large monopolistic entities, which seek dominance. The above factors influence competitiveness immensely as revealed above. However, their impact on competitiveness varies owing to the size of an entity (Pfeffer 1995, p. 231). A large firm has massive resources. As such, the entity has an enormous bargaining power, large market segment, and it operates on a massive scale. The above factors contribute significantly to the competitiveness of an entity. A large entity has the resources to undertake a far-reaching marketing. This will enhance its chances of boosting its sales. In contrast, a small organization does not have the resources to fund such campaigns. This reduces the chances of such an entity boosting its sales. An entity requires input to create its merchandise. Acquiring such inputs is tricky for smaller firms. Suppliers prefer large-scale purchasers. Consequently, large firms receive discounts form supplier decreasing their overheads. Contrary, small firm incur the full cost of their purchases. This means they do not benefit from discounts from supplier. The suppliers also treat large-scale purchasers in preference. If a shortage emerges, the smaller organizations will not receive any inputs. Large firms operate on a colossal scale allowing the entities to capitalize on economies of scale. Consequently, such entities incur minimum cost per unit product (Pfeffer 1995, p. 123). This allo ws such entities to offer reduced prices since they incur minimal costs. However, smaller firms incur higher costs per product. This reduces the ability of such to offer reduced prices. This decreases the competitiveness of smaller firms. In the analysis of the competitive edge, it is essential to evaluate the competitive advantage of firms based on innovation. A large firm has the means to invest in research. The research will contribute