You should acquire the most comprehensive information possible on the line of business, its operating methods and future prospects, as well as on the regional competitive environment and market situation. All investments in charting such information enhance your company’s possibilities of success.
Each new company will face competition, because its products or services respond to a customer need that can be satisfied through other options. Therefore, products that respond to the same need are competing goods or services in the same way as similar products.
In order to assess a company’s potential to succeed in the market, the firm must be compared with its competitors. Through its business idea, the company must find a way to satisfy customers’ needs better than competitors. The company must succeed in
identifying its competitors
evaluating the strengths, weaknesses and strategies of competitors
finding a suitable competitive strategy with regard to competing companies.
For you, as an entrepreneur, it is important to know your competitors, their products and operating methods, in order to differentiate your company through its profile, offering or marketing.
The market situation is a concept that goes beyond the competitive environment. For instance, it examines
the line of business
how deregulation, privatisation or openness of competition is influencing the industry
regionality – whether the enterprise operates in local, regional, national or international markets
the price level – the ratio between supply and demand; the general price level or availability of the product
the purchasing power of the customer base – how much are potential customers prepared to pay to satisfy this particular need?
chronological dimension – how business cycles vary and in what direction will the line of business develop in future?
A new enterprise must be able to plan its placement in the market within a certain line of business, locale and period of time. In addition, the enterprise must identify its competitive assets in a competitive environment shaped on existing terms.
A market analysis charts the potential for success of a certain product in the competitive environment. Such an analysis produces vital information for you on what kind of profile might help in gaining a foothold in your selected line of business and territory among potential customers.
The Competition Act forbids any competition restrictions that are generally considered to be detrimental to economic competition. Such restrictions include
misuse of dominant market position
contracts between competing companies and measures taken to restrict competition (cartels)
Companies in breach of the Competition Act may be issued with a penalty payment if proposed by the Finnish Competition and Consumer Authority. Businesses may make request the Finnish Competition and Consumer Authority to investigate if they suspect that their business partners engaged in forbidden restrictive practices.
Corporate acquisitions in excess of a certain net sales level must according to the Competition Act be reported to the Finnish Competition and Consumer Authority, and the acquisition is not allowed to be completed until a go-ahead has been received from the Authority. The purpose of monitoring corporate acquisitions is to retain a competitive structure in the market.
In addition to the Competition Act, EU's competition regulations also apply. Their key objective is not only to achieve healthy competition but also to ensure that any action taken by the companies will not prevent the free movement of goods, services and capital within EU member states.
For more information on competition issues, see below under the heading Other useful information. This section includes a link to the website of the Finnish Competition and Consumer Authority.