Competition Commission of the United Kingdom - Essay Example

TOPIC: Competition is generally regarded a good thing for any economy. Agencies like the Competition Commission are working hard to ensure competition within UK. Yet we see that global competition has forced many British manufacturing firms to shift their production to China causing unemployment at home. If this is the case, would you still give your stamp of approval on competition INTRODUCTION Competition is what keeps the market move at such a volatile pace. There will always be a winner and a loser in a competitive environment. There are many agencies, however, like the Competition Commission of the United Kingdom and other competition watchdogs of the European Union that very hard to ensure competition within UK fair and square. Competition is discussed well below. BODY Fang Lee Cooke in his book(Cooke, 2005) entitled HRM, Work and Employment in China He stated that "China has one of the largest labour forces in the world with a population of nearly 1.3 billion, over half of whom were in employment in 2002. About two-thirds of them are rural workers. China also has one of the highest labour participation rates in the world (over 80 per cent). As one of the largest exporting countries and the second largest beneficiary country of foreign direct investments (FDIs), China presents itself as one of the economically(Slavin, 1989) most important nations in the world. However, China's increasing interdependence with the world economy has been achieved through a period of political, social and economic change over the past twenty-five years." Because the factory laborers from China are paid very much lower per hour as compared to factory labourers that are doing the same jobs in factories located in the United States, United Kingdom and other European countries, there is a strong demand for the United Kingdom companies to outsource the manufacturing of goods to china. This means that the United Kingdom company is encouraged to put up a manufacturing facility to produce cars and other high value finished goods in China and other countries where labour rates per hour. Many companies have reduced its workforce because some of the work can be done by the computer. Computer generated work is, in most cases, replaced by the computer. Many companies have downsized their work environment(Irwin, 2000) by replacing many human being processed work with a computer or robot. This scenario has erupted into lay-offs as well as early retirement for currently working employees because the company wants to save on salaries that will be paid on a regular basis. The unemployment rate has been increasing because. According to Malthus, the population will increase faster arithmetically as compared to the growth rate of the basic food which is geometrically. The increase in the population will result, in all probability, an increase in the unemployment rates. COMPETITION. Competition is one of the pillars of capitalism because it will stimulate innovation, encourage efficiency or drive down prices. Competition can, in some instances may equally lead to waste because a job could be repeated and thereby increased costs and prices in some circumstances. In the supply and demand curve in economics, if there is so many competing products that are similar, then the customer has more choices to make. The competitors will then try to lower prices in the hope of cornering juice customers. On the other hand, in a monopoly economic situation, the sole supplier of goods can jack up the sales prices to generate profits and increase the sales. The customers have no other alternative but to follow. On the other hand if the demand for a product increases because of lack of finished products, then the prices of goods sold will increase for the customers will prefer to spend more and have the goods now or today. D. G. Goyder stated that (1998) "Competition is the relationship between any number of undertakings which sell goods or services of the same kind at the same time to an identifiable group of customers. Each undertaking having made a commercial decision to place its goods or services on the market(Etzel, 2001), utilizing its production and distribution facilities, will by that act necessarily bring itself into a relationship of potential contention and rivalry with the other undertakings in the same geographical market, whose limits may be a single shopping precinct, a city, a region, a country, a group of countries, the entire European Community, or even the entire world. Whilst competition law tends to focus more on the activities of, and relationship between, sellers, it logically applies equally to the like activities and relationships between buyers, who also find themselves in contention in particular product and geographic markets." The Treaty of Rome ensures that the competitors in the internal market is not distorting competition issues. The above Goyder explanation encompasses the entire competing market. It explains that in order to compete, the company must have quality production of goods and services that will sell goods that are needed by the general public. This prices of these goods must be reasonably prices or even sold that prices which is lower, if possible, than the competitors. The tables 1 and 2 in the abstract section describes competition based on the supply and demand theories. Table 3 in the abstract section shows the list of benchmarks of most competiting cars. This shows that there are cars that are not making good in the competitive marketplace and there are winning car manufacturers like the Japanese cars. ADVANTAGES OF COMPETITION. There are many advantages of implementing a free competition mark. One such advantage of competition is that the customer will have many alternatives or substitute products to choose from. This, in most instances, will then trigger a lowering of prices of commodities. Another advantage is that the competitors, in their aim to capture and maintain its market share must outdo the competitors in terms of quality of raw materials used and also in terms of which has the lower prices. DISADVANTAGES OF COMPETITION. When products that are produced in China will compete with products that have been produced in the United Kingdom, the prices of goods coming from China will, in all probability, be sold at lower prices than products produced within the United Kingdom territory. The United Kingdom produced products cannot compete, in most instances, against the China produced products because of the production cost of China factories are lower than the products produced in the United Kingdom. The salaries of factory workers in China are lower than the salaries of factory worker in the United Kingdom factories. Another disadvantage is that the company is forced to sell its products and services at prices that is a little higher or a little Lower than the selling prices of the competing products. William Bratton stated that(1996) "The increased emphasis on competition has generally had a negative impact on existing regulatory processes, for a variety of reasons. Intense competitive jockeying for market access causes traditional regulatory requirements to be seen as costs and barriers. This view applies to a wide swathe of regulation, from product safety and other consumer protection laws, to disclosure requirements for firms and issuers of securities, as well as probity and capital adequacy conditions for financial services firms, and antitrust or competition laws and policies applied to business" This means that the market place is a wild jungle where the only rule is survival of the fittest. If your products are of poor quality as compared to the competitors or if your selling prices are too high as compared to the selling prices of competitors that sell the same quality and units of a product, then such company may wake up one way with all its current customers leaving them to buy the higher quality goods and services from the competitors that have a much better before sales, during sales and after sales services. CONCLUSION Based on the above discussions on the definition of competition, the advantages of competition and the disadvantages of competition, it is clearly evident that competition is generally regarded a good thing for any economy. Competition makes sure that the customers are offered the best quality products at the lower or more reasonable prices. It is therefore for the good of the customers of the United Kingdom companies directly and the suppliers and manufacturers of these goods to give a BIG stamp of approval on competition. As for the employees that will be displaced when the manufacturing plants are moved to China, the displaced employees can always find another company to work for or to shift to a new type of work description. This is because in competition, some will win and some will lose in the aim that the end users of the products, the customers, will be given high quality goods and service. The Transfer to China will decrease production cost and increase profits for the company. REFERENCES: Cooke, Fang Lee, HRM, Work and Employment in China, Routledge,. Place of Publication: London. Publication Year: 2005. P. 1 Bratton, W., International Regulatory Competition and Coordination: Perspectives on Economic Regulation in Europe and the United States, Oxford University Press, Oxford, 1996 P. 10 Goyder, D., EC Competition Law, Oxford University Press, Oxford, 1998, P. 9 Slavin S., Economics, Irwin, London, 1989 Irwin, D., On Target, Achieving Best Business Performance, Thompson Press, London, 2000 Etzel et al., Marketing, McGraw-Hill, London, 2001 ABSTRACT Table 1 Table 2 Table 3 Comparative data of Competing Cars Industry Center | Industry Index | Leaders & Laggards Click on column heading to sort. Download Spreadsheet Description 1 Day Price Change % Market Cap P/E ROE % Div. Yield % Long-Term Debt to Equity Price to Book Value Net Profit Margin % (mrq) Price to Free Cash Flow (mrq) Sector: Consumer Goods -0.25 2690.1B 24.06 17.84 2.07 1.31 -11.81 7.10 84.78 Industry: Auto Manufacturers - Major (More Info) -0.80 419.6B 35.10 6.80 1.12 1.88 1.75 1.40 -30.40 Companies Chicago Rivet & Machine Co. (CVR) 0.00 22.1M 20.13 4.58 3.20 NA 0.91 2.61 45.94 Daimlerchrysler AG (DCX) -1.98 60.8B 12.85 10.03 3.10 2.19 1.26 1.54 -58.54 Ford Motor Co. (F) -1.05 16.1B NA -58.88 2.30 16.85 1.76 -14.14 -11.28 General Motors Corporation (GM) 0.45 17.7B NA -57.84 3.20 3.84 1.58 -0.19 -1.12 Honda Motor Co. Ltd. (HMC) -0.29 127.2B 23.72 15.63 1.40 0.85 3.38 4.86 260.99 MotivNation Inc. (MOVT.OB) NA NA NA NA NA NA NA -70.53 NA SORL Auto Parts Inc. (SORL) NA NA NA 33.54 NA 0.48 NA 8.30 NA Tata Motors Ltd. (TTM) 0.32 7.2B 16.76 NA 1.50 NA NA 6.96 NA Toyota Motor Corp. (TM) -0.90 190.7B 14.07 15.26 0.00 1.03 2.01 6.96 NA Tunex International Inc. (TNEXE.OB) NA NA NA -99.54 NA NA NA NA NA ZAP (ZAAP.OB) NA NA NA -149.44 NA 0.44 NA 11.55 xxxxxxxxxxxxxxxxxxx Competition is generally regarded a good thing for any economy. Agencies like the Competition Commission are working hard to ensure competition within UK. Yet we see that global competition has forced many British manufacturing firms to shift their production to China causing unemployment at home. essay must be your own work. Whichever essay you choose to write, it will require you to provide some empirical evidence (such as facts and figures) in support of your argument which should be coherent and consistent. You MUST use at least one key economic concept taught in this unit as a core element of your argument. In other words, you should present your argument within a framework constituted by one or several key concepts learned in the unit. Wherever necessary or useful, supplement your verbal argument with graphs. Deadline: 2006-11-29 00:20 Style: APA Language Style: English (U.K.) Grade: n/a Pages: 5 Sources: 5 Read More