GMAT : Analysis of An Issue

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An Issue

51. The presence of a competitor is always beneficial to a company. Competition forces a company to change itself in ways that improve its practices.


Discuss the extent to which you agree or disagree with the opinion stated above. Support your views with reasons and/ or examples from your own experience, observations or reading.


We ordinarily think as the speaker does here that the presence of competition is always healthy for business because it sparks efficiency and innovation. While competition is generally good for business in these respects, the speaker here ignores the many problems that can accrue from attempting to keep up with or beat a competitor and that may be decidedly detrimental to a business.

Admittedly, competition among businesses can occasion all sorts of improved practices. The need for competitive product pricing can motivate effective micro- management of production and marketing costs. Competition for market share can spark invention and innovation in product design that lead to the cutting edge of technology. External competition is known to inspire team spirit within an organization thereby yielding greater productivity. And competition can challenge a company to streamline operations, thereby improving efficiency.

But taken too far, attempting to keep up with or beat competitors brings about detrimental results for a company. In some cases, companies compromise product quality by switching to inferior, less expensive materials in order to keep prices competitive. Other times, plant managers ignore important employees’ safety measures just to save money. And companies are even known to trade off consumer safety in the interest of competition. Perhaps the paradigmatic case involved the Ford Pinto where Ford management rejected an inexpensive retrofit that would have saved hundreds of lives in rear-end collisions, solely in order to shave a few dollars off the car's sticker price, thereby enhancing the car's competitiveness.

Competition can even bring about large-scale social change that some consider undesirable. For instance, the emergence of large, efficient factory farms has resulted in the virtual disappearance of family farming in the U.S. And it isn't clear that the factory farms always improve farming practices. In the case of the tomato, the old home-grown kind are far superior in taste and texture to the tough under ripe version that has been genetically engineered for machine picking in huge quantity.

In conclusion, competition frequently motivates changes that are beneficial in many ways. But competition is a double-edged sword that can also result in inferior or unsafe products and dangerous working conditions for employees. Moreover, large competitors can swallow up smaller concerns without yielding noticeably better product or practices.

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