Competing on price is one form of race to the bottom. Winning that race involves leaving no money in the budget for growth, and may even have a company constantly teetering on the edge of destruction financially.
Other races to the bottom include ethics, life principles, and taxes. Each of these has its own drawbacks.
The question is why are they so often engaged in?
- Races to the bottom don’t require creativity.
- Races to the bottom are easy to be clear about what the goal is.
- Races to the bottom are self-fulfilling (with no money to left to get new equipment, or provide new services, more work only comes from under-cutting) and once on that wheel it’s tough to get off.