Why is it important to learn about the competition in the area where you intend to locate your business?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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It is important to learn about the competition in the area where you intend to locate a business so that you can have some idea as to whether there is enough space left in the market for you.  If you want to start a high-end clothing store, for example, it makes a great deal of sense to find out if there are other such stores in the area.  If there are already such stores, you need to find out how popular they are among potential customers.  If you try to push your way into a market that is already saturated with your product, you are likely to have a hard time.  By contrast, if you try to enter an under-served market, or one in which potential rivals have serious flaws, you are more likely to succeed.

Businesses need to have a customer base to succeed.  That customer base has to be shared with competitors.  Therefore, it is important to know how strong the competition is in order to determine if there is likely to be enough of the customer base left over for you as you start your business.

modamar1312's profile pic

modamar1312 | Student | eNotes Newbie

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Starting a business could be likened to staring a new life or openeining a new chapter in a book. There is so much excitment, but we must be careful not to get carried away.we must take into consideration the kind of business we are venturing into and at the same time the possiblity of that business booming in a positive way. A feasibility report is thereby required of the manager of the new business. A feasibility report involves a market survey where questions would be thrown and must be answered. Such questions include;where is the location for my business? Who are my customers? What is the level of their taste, are my services in high demand,has this particular business been setup already? If it has been setup,has it suceeded? Is there still room for me? These questions must be asked and answered. Also the new business needs to take into consideration what the other competitors have done and are still doing to survive and make profits. The new business manager must make sure that he does not follow in the steps of those who are failing in their business. Competition gives room for success and the innovation of more ideas

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