What is a competitor? Definition and meaning

A competitor is a person, business, team, organization or entity that competes against you, your company or some other entity.

The term is not limited just to business: competitors exist in sports, politics, acting, music, literature, etc. In business, a competitor that is of similar size and makes a virtually identical product or service is called a rival.

If two companies are leaders in their field, they may be referred to as arch rivals. Beverage giants Coca-Cola Company and PepsiCo make virtually identical products and have very similar market share – they are arch rivals. In December 2005, for the first time in 112 years, PepsiCo surpassed Coca-Cola in market value.

Competitors Coca Cola versus PepsicoCoca-Cola Company and PepsiCo are beverage competitors. Their products are virtually identical, each one with a different name and labeling. As they both dominate the soft drinks market globally, they are arch rivals.

Competitors target similar customers

Competitors do not only make similar products, they also sell them at similar prices. For example, in the automobile market Ford is a competitor of Toyota, while Bentley Motors is a competitor of Rolls Royce Motor Cars. However, Toyota and Rolls Royce are not competitors – even though they both make and sell cars, they are not targeting the same customers.

Competitors form a vital part of a free-market economy. Their presence in an industry helps drive down the price of goods and services, while at the same time ensuring top quality. If two companies offer virtually identical products at similar prices, the customer’s decision  to buy will be influenced by quality.

If a company has no competitor it has a market monopoly. Monopolies exist either in a command economy (communism), or a free market where the most successful business either destroyed all its competitors and/or acquired them.

In order to prevent monopolies, most free-market democracies have government departments that either approve or turn down major mergers and acquisitions from going ahead.

Competitors in the free market economy

In the United States, the Federal Trade Commission’s Bureau of Competition enforces the country’s antitrust laws. Certain large mergers and acquisitions need to notify the government and wait for a review. The equivalent government department in the UK is the Competition and Markets Authority (CMA).


Bill Gates vs. Steve Jobs

Human competitors abound in the world of business. Since the early 1980s, Bill Gates and Steve Jobs have been considered as arch rivals.

Gates versus Jobs competitors

Two High Tech leaders – Steve Jobs and Bill Gates – were arch rivals in the eyes of the media for three decades. While some said the winner was Jobs, others backed Gates, pointing to his phenomenal business success and unrivaled wealth – he has been the richest (or 2nd richest) person in the world for several years.

Gates and Jobs became opposing poles in a frantically-expanding computing revolution.

The first two decades of their rivalry were dominated by Gates, overseeing Window’s dominance as the world’s default operating system.

In a free market economy, competitors compete for market share by offering the best price and quality possible. Free market economies have fared considerably better than communist systems over the past 100 years. In fact, the communist states have had to build walls to stop their citizens from emigrating.

During the last 15 years of his life, Jobs flipped the switch on Gates, and broke into the smartphone, tablet and music player markets in a huge way.

Both men were reluctant to praise each other and swift to criticize. According to Jobs, Microsoft’s main problem was ‘a lack of taste’. Gates, when summing up the iPad – arguably Jobs’ greatest commercial achievement – said ‘It’s okay.’

Writing in Fortune, Adam Lashinsky said the winner was Steve Jobs.

Video – Why do competitor stores set up next to each other?

Why do competitor gas (UK:petrol) stations position themselves next to each other? Why can you travel for miles without seeing one coffee shop, and then suddenly find three all next to each other? This video explains why, using two ice-cream sellers on a beach as an example.