The term ‘incumbent’ is not a new one, particularly in business or government politics. However, as with some other terms, people use it without even knowing what it means. As important as it is to understand what incumbent means, it is equally important to understand the importance of incumbency in any business setting. Here, we’ll explain what it means to be incumbent with examples, as well as the advantages involved.
What Does Incumbent Mean?
An incumbent is a person or entity who currently wields power or authority. The word is typically when another party (a new challenger or political candidate) is attempting to replace the incumbent. The term derives from the Latin incumbere, which means “to lie down on,” and formerly applied to those who held salaried ecclesiastical positions known as benefices.
Understanding What Incumbency Means
The term “incumbent” can have various different connotations depending on the context. It most frequently refers to a person who holds a position in a specific office, whether they are employed or elected. This person is responsible for particular duties that come with their employment. Chief executive officers (CEOs) are examples of company incumbents, whereas senators are examples of political incumbents.
The term “incumbent” can also be used to denote the duties or obligations that a specific individual must fulfill. It can also refer to a powerful corporation that controls a big amount of its industry’s market share. Furthermore, the term incumbent can refer to a variety of corporate positions and partnerships.
Companies, as previously stated, list their leaders on an incumbency certificate. These leaders include current directors and officers, as well as major stockholders. This certificate, like an annual report, is an official corporation act. As a result, external parties, including shareholders, can rely on its accuracy.
What Does Incumbent Mean In Government Politics?
In politics, the incumbent is the person who currently holds a post. For example, the incumbents are the state’s two senators. Anyone who seeks to defeat them in an election is attempting to undermine their authority. Incumbents frequently defeat rivals in reelection. The incumbent has won eight of the previous twelve presidential elections featuring incumbent candidates. Gerald Ford, Jimmy Carter, George H. W. Bush, and Donald Trump are the only incumbents who did not win reelection.
The incumbent gains a huge advantage over their challengers.
One of the key advantages of tenure is name recognition. Politicians in the office are frequently seen in the news, on television, or on the radio. Anyone who consumes media will become at least vaguely acquainted with their name and identity. Another advantage incumbents have is that their name recognition means they can generally raise more money than rivals.
In addition, incumbent candidates have campaigning expertise in government. They’ve gone through the debating, canvassing, and chatting to potential voters processes. They also have the infrastructure and an experienced volunteer force to support a reelection campaign. Many rivals are gaining experience for the first time and developing entirely new campaign infrastructures.
Finally, many voters are risk-averse. It is far easier to vote for someone who has done the job previously and whose actions you can foresee than for an unknown entity.
What Is An Incumbent In Business?
In the business sector, an incumbent is a company that has strong market power. Aside from the fact that holding a significant market share gives potentially enormous earnings, incumbency offers various benefits over competitors.
Businesses gain an incumbent’s advantage through a variety of sources.
For one thing, the incumbent company has more market experience and awareness of consumer wants than competitors. The competitor must identify client wants as well as construct infrastructure to suit those needs.
Discovering consumer demands necessitates market research, which can be costly. Existing organizations can get such knowledge at a reduced cost and already have most of the infrastructure in place to meet those needs.
Another element of the incumbent’s advantage is that current businesses understand how to effectively convert customers into profit. Even if a new company discovers a consumer demand and strives to meet that need, it may discover that those clients do not generate long-term profits. Existing organizations have a better understanding of the profit margins that different goods and customer types provide, allowing them to focus on the highest-margin prospects.
Finally, an incumbent business benefits from brand awareness and loyalty, which forces competitors to work harder to gain market share.
What Is An Incumbent Firm?
An incumbent firm is one that is already well-established in a sector, particularly one with a substantial market share. It already manufactures and sells things to consumers. If another company wishes to enter that market, it must compete with the incumbent and take a percentage of its market share.
In industries where goods are not homogeneous, incumbent firms typically have a competitive edge over challengers. If the quality of a product, such as apparel, varies between firms, incumbents have a competitive advantage in terms of consumer loyalty and brand recognition. Challengers must work hard to overcome those advantages in order to enter the market and become incumbents.
What Is An Incumbent Vendor?
An incumbent vendor is a supplier with whom a company currently works to obtain raw materials. If a hospital purchases medicine from firm XYZ, XYZ is the hospital’s incumbent vendor.
Existing vendors frequently have contracts with the firms they supply, establishing them as the company’s only supplier.
Existing vendors typically have an advantage over other suppliers looking to supply a business. One source of that advantage is exclusive contracts. Inertia is another source. Purchasing managers cultivate relationships with suppliers and are more inclined to extend a contract than to seek a new one.
Incumbent suppliers also understand their current clients’ demands better than competitors, making it easier for them to successfully propose contract conditions.
What Is The Difference Between A Candidate And An Incumbent In Government Politics?
The incumbent in politics is the person who currently holds a post. Candidates are those who are running for a position. Incumbents are typically, but not always, candidates for the seat they currently hold.
For example, Barack Obama was the incumbent president in the 2016 presidential election. However, because he had exceeded the two-term limit for president, he was unable to compete for reelection. Instead, Donald Trump and Hillary Clinton were the two contenders competing for the position. There were no incumbent candidates seeking reelection.
There may be no incumbent in a position in various cases. A seat must be filled if it becomes empty due to resignation or death. In this scenario, there will be no incumbent and only candidates in the election.
What Is the Advantage of Being An Incumbent?
In statistical terms, incumbents are considerably more likely to keep their power than they are to lose it to a new challenger; this is known as “incumbency advantage” or “incumbent advantage.” This advantage exists because incumbents have:
Name recognition: When people recognize the name of a person or organization, whether as consumers or voters, they are considerably more likely to trust them.
Expertise: Because incumbents have considerable experience in their area, challengers attempting to unseat them will have to contend with the incumbents’ business or electoral edge, which includes established channels, contacts, and supporters.
Familiarity: People are more likely to support someone they know rather than someone they have never met. Because the public is already aware of the incumbent’s skills and faults, incumbents have a significant edge over newcomers.
Examples of Business Incumbents
In most cases, an incumbent in business refers to an industry leader. While it is usually used to refer to a person, this is not always the case. It can also be used to describe a business or a product. For example, a corporation may have the highest market share or additional clout within the industry.
Market-leading companies should have the “incumbent’s advantage,” which is a better understanding of customer needs than competitors, a better understanding of profitability in terms of meeting those needs, and that knowledge of their needs and profitability is less susceptible to imitation than the uniqueness of their product or service.
As a result, incumbents in an industry may shift in reaction to market developments. For example, BlackBerry maker Research in Motion was formerly regarded as an incumbent in the smartphone market until Apple’s iPhone surpassed it in global sales.
An incumbent can also refer to business partnerships, such as those between a supplier and another business. Because of the associations of the provider holding the position, the supplier currently in use is deemed the incumbent. If a new supplier wishes to take over the present provider’s obligations, the new supply is a challenger to the current supplier’s incumbency.
Examples Of Incumbents In Government
When referring to a political office or post, the incumbent is the person who currently holds the office or position. While the word refers to the person in the job at all times, it is more typically used during elections to distinguish between two candidates when the existing position holder is seeking a second term. The challenger is the candidate who is running against the incumbent.
Depending on the current sentiment of the linked constituents, holding the incumbent status may be considered as advantageous. If constituents believe the existing situation is acceptable, they may be more inclined to vote for the incumbent. If constituents are dissatisfied with the circumstances created by the incumbent’s policies or conduct, they may be less likely to vote for them.
Incumbents are not compelled to try to keep the post they currently occupy, but they do keep the title until the day they leave office. If a new office is formed and no one has filled it prior to the first election, the job has no incumbent.
Points To Consider
Certain positions in the United States government have term limits that must be met before an incumbent can be re-elected. Some of them have term restrictions for life, which means that after the entire term limit is reached, an individual cannot run for that office again.
In the United States, the president has a four-year term limit and can be re-elected for another four years. A president can only serve for a total of eight years in their lifetime.
Senators and members of the House of Representatives are the two branches of Congress. Senators serve six-year terms and are then re-elected, whereas House members serve two-year terms and are then re-elected. There are no term limitations in either the Senate or the House, therefore members can serve indefinitely.
The goal of term limits is to prevent one person from wielding too much power over a nation for a protracted period of time, as well as to provide citizens the right to change their leadership if they are dissatisfied with who is elected. This is a critical stage in the American democratic framework.
Many critics have claimed that government representatives spend a considerable percentage of their time on re-election campaigns and striving to be re-elected rather than on the real responsibilities of the position—or, more accurately, that re-election takes time away from the responsibilities. Many arguments have been advanced to change term limits, the election process, and how candidates receive campaign contributions.
Which Incumbent Presidents Did Not Serve a Second Term?
William Taft, Herbert Hoover, Gerald Ford, Jimmy Carter, George Bush Sr., Benjamin Harrison, Martin Van Buren, John Quincy Adams, John Adams, and Donald Trump are the incumbent presidents who lost their second terms.
Do Incumbents Frequently Win Re-Election?
Yes, incumbents are more likely to be re-elected. In general elections in 2020, 93% of incumbents across the country were re-elected. In fact, all states except California, New Hampshire, Ohio, and West Virginia had an incumbent win rate of 90% or above.
What Does Incumbent Hire Mean?
An incumbent hire is one who is currently employed by a qualifying employer.
Does A Job Incumbent Contribute to The Position Description?
Based on previous activities and responsibilities held, the job incumbent can contribute to the position’s job description.
What Does It Mean To Be Incumbent Upon All Employees?
To be incumbent on all employees means that it is necessary as a duty.
What Is An Incumbent Salary?
Incumbent salary refers to an employee’s present salary range when it has a greater maximum rate than the newly created salary range for the job.
In Conclusion
An incumbent is a person who has a certain post with well-defined responsibilities. Most generally, an incumbent refers to a person who currently holds a political office; nevertheless, it also refers to certain positions in a corporation, business connections, and a company that is the market leader in an industry.
Related Articles
- STRATEGY CANVAS: How to Make Strategy Canvas with Examples
- CANDIDATE RELATIONSHIP MANAGEMENT SYSTEMS: Guide To The Processes
- How to Hire Employees for Small Businesses & Startups: A Detailed Guide
- Certificate of Incumbency: Definition, sample, Forms, and Templates
- INTERVIEW QUESTIONS TO ASK CANDIDATES.
References
