Internal competition is healthy, necessary and good. Internal competition is detrimental. Replace competition with collaboration. People are commodities. Each has an essentially fixed set of strengths and weaknesses and must therefore be assigned to a fixed role in the organization.
People are never commodities.
Each is a unique individual with much to contribute if only the system will allow it. People can and do grow and change and so must have choice in their work. Efficiencies are highest and costs are lowest when people are assigned to the same tasks for months or years at a time. Corporate performance is maximized when people can choose the work that interests them and can do the work to their standards of quality. Rewarding the best performers and punishing the worst will lead to greater productivity, creativity and efficiency.