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What is the competitive landscape?

Writer's picture: Ankur KapurAnkur Kapur
Nov 24, 20222 min read

Updated: May 11, 2023

As the level of competition and regulation in any sector increases, the fortune of that sector gets impacted.


Knowing the intensity of competition is the key

Type of competition


Perfect competition

Several large buyers and sellers provide similar products and services. For example, for oil marketing companies, HPCL or BPCL, it is hard to differentiate the product offered by these players.


Monopoly

There is only one player. For example, Power grid, a government-owned company is a monopoly in India’s power transmission space.


Oligopoly

In this, a small number of players collude. For example, Pepsi and Coke’s pricing strategy now arrives through collusion rather than a price war.


Monopolistic competition

This is between Perfect Competition and Monopoly. Here, many sellers offer products/ services that are similar but not perfect substitutes of each other i.e., differentiated. A company may earn an above-normal return on capital for some time, but competition soon catches up to drive down returns to the sector average. For example, Crompton Greaves Consumer Electricals Limited is one of the leading FMEG companies in India and enjoys a very high return on capital for now.


An investor must look at the intensity of competitive rivalry, just the number of players may not be indicative of the return.

Role of Regulation

This is a very critical factor to look at. There are sectors such as the power sector, airline, pharma, etc that are heavily regulated. But the IT sector is not heavily regulated. IT firms have more freedom in terms of how they operate. Although in the recent past big IT giants such as Google and Facebook have also come under the regulatory gamut. The cost of compliance increases and the freedom to operate reduces. These things have a negative impact on the return of the company.


Disclaimers

  • Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

  • The securities quoted are for illustration only and are not recommendatory.

  • Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Details of the advisor

  • Advisor: Ankur Kapur

  • SEBI RIA No.: INA100001406

  • BASL Member ID: BASL1337

 
 
 

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Plutus Capital (SEBI Registered Investment Advisor) | SEBI RIA Registration no. – INA100001406 | Type of registration – Individual | Validity of registration – (31st Mar, 2014)--- Perpetual | Registered office address - 9B Shivalik Apartment 32 Sec 6 Dwarka Delhi 110075 | BASL membership Id- 1337 | GST No. - 07AMXPK8605Q1ZZ | Principal Officer - Ankur Kapur (Ankur@plutuscapital.co) | SEBI local office address - Securities and Exchange Board of India, 5th Floor, Bank of Baroda Building, 16 Sansad Marg, New Delhi – 110001.

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Clients can seek clarification to their query and are further entitled to make a complaint in writing, orally or telephonically. An email may be sent to the Ankur@plutuscapital.co.

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​Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

 

Registration granted by SEBI, membership of BASL and the certification from National Institute of Securities Markets (NISM) in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

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