Question

How does competition, whether domestic or foreign, harm businesses?

Short answer

Competition can harm businesses by driving them out of market.

Step-by-step solution

Step 1. Introduction 

Competition can be defined as the situation when different independent producers are striving against each other to attract consumers and gain more profits, or market share.

Step 2. Explanation

A foreign seller might be able to produce goods at a lower cost, they would thus be able to also sell them at a lower price. Consumers in the domestic market would prefer cheaper alternatives rather than domestically produced goods. This might drive domestic producers out of the market.

If a business loses its market share it might have to reduce production or even stop its operation. This would cause job loss for their workers.