Competition is an economic phenomenon that affects equity, moves capital and is an external (exogenous) force that creates an accounting phenomenon in the social cell. It is a matter of economics, but it is of interest to accounting scholars when this, as an external agent, generates a patrimonial phenomenon.
When the company's administrator reduces the price of the goods to compete with the same equity means of another company, it generates an economic phenomenon and an accounting phenomenon. For example, supermarket A to compete with supermarket B lowers the price of coffee selling it below the price of supermarket B and the tendency, therefore, is for the customer to buy coffee at the supermarket A.
Usually the promotion is made to attract the customer to the company where he can also purchase other goods. ¨Modernly, as paradoxical as it may seem, the entrepreneur sells assets at a loss or beats the competitor, he creates the need for loss within a certain period of time to then it recovers with an increase in clientele and thus gives speed to other goods that make up for the previous loss.¨ (See Circulation of Wealth at www.conocimientosweb.net de meu authorship). Also Prof. Lopes de Sá taught about this matter: the loss will only prove effective if and only if it results in a future element that will represent an increase in value in the company and that can not only cancel the momentary reduction, but overcome it. In other words: the effective loss (PeEa) will occur only if and only if the referred loss (Pex) implies a profit (Rex) greater than it.¨ (See effective loss paradox at: www.lopesdesa.com.br ).
The organization's current trend is to create a competition mechanism, as there is currently an increase in competition between companies and will continue to be well structured to face the competitor.
Do not stop now... There's more after the advertising ;)
Werno Herckert
Member of the Brazilian Academy of Accounting Sciences
Member of the Neopatrimonialist International Scientific Association
Columnist Brazil School
https://brasilescola.uol.com.br/equipe/werno-herckert.htm
Would you like to reference this text in a school or academic work? Look:
DANTAS, Gabriela Cabral da Silva. "The competition and the patrimonial phenomenon"; Brazil School. Available in: https://brasilescola.uol.com.br/economia/a-concorrencia-fenomeno-patrimonial.htm. Accessed on June 27, 2021.