The desire to surpass a competitor is a common human tendency whether in sports

The desire to surpass a competitor is a common human tendency whether in sports or business. A measurement of performance relative to competitors encourages this desire and can be highly motivating for management and employees alike. Furthermore market share performance is a key indicator in ascertaining how well a firm is doing and in spotting emerging problems as well as sometimes allaying blame. As an example of the latter declining sales over the preceding year along with a constant and improving market share can suggest that the firm is doing a good job even though certain factors adversely affected the whole industry. Market share is usually measured by (1) Share of overall sales and/or (2) Share relative to certain competitors usually the top one or several in the industry. Of particular importance is trend data: Are things getting better or worse? If worse why is this and what needs to be done to improve the situation? Since Boeing and Airbus were the only real competitors in this major industry relative market shares became critical. The perceived importance of gaining or not losing market share led to severe price competition that cut into the profits of both firms as will be discussed later.