Reasons for Increased Market Competition

Markets can become more competitive due to a variety of factors that influence the balance of power between businesses and consumers. Two significant reasons for this increase in competition are globalisation and advancements in technology.

Globalisation, facilitated by free trade agreements and reduced barriers to international trade, has opened up markets to a wider range of competitors. This means domestic businesses are no longer just competing with their local counterparts but also with international companies offering similar products or services. For example, the automobile industry has seen increased competition from Japanese manufacturers like Toyota and Honda in Western markets, forcing domestic companies to innovate and improve efficiency to remain competitive.

Similarly, advancements in technology, particularly the rise of the internet, e-commerce, and social media, have significantly lowered barriers to entry for new businesses. The internet allows businesses to reach a global customer base without the need for expensive physical stores, while social media provides cost-effective marketing channels. This ease of entry has led to a surge in online businesses, increasing competition in sectors like retail, entertainment, and education. For instance, the rise of online retailers like Amazon has revolutionised the retail industry, putting pressure on traditional brick-and-mortar stores to adapt and compete.

In conclusion, globalisation and technological advancements are two major factors contributing to increased market competition. These forces compel businesses to adapt, innovate, and offer better value to consumers in an increasingly interconnected and dynamic global marketplace.

**Sources:** * Sloman, J. (2016). Economics. Pearson Education Limited. * (Add any other relevant textbook or resource you have used)