The Baggies currently sit mid-table in the Premier League and the 28 year old is pleased with the progress being made.
"Competition makes you stronger and you put in those extra percentages that you might not do if you haven't got a guy breathing down your neck," he told the club's official website.
"Gareth (McAuley) has been very solid when he's come in and (Craig) Dawson has impressed everyone at the club with his attitude and the way he plays even though he's only 21 years old.
"There's plenty of competition, not only at centre-back but also in midfield, and with Shane (Long) coming in there's been plenty of competition in attack as well.
"I think we have a greater depth in the squad than we had last year."
Olsson reckons the squad has the ability to match last term's achievement of finishing 11th.
"I believe in setting goals along the way," he added. "Our goal has to be to get another season.
"Of course we want to progress and do better than last season - but we had a very good season and finished 11th.
"We saw Birmingham get relegated last year and we've got to be humble about our task.
"With that said, I think we have enough quality in the team to finish where we did last season - but our first goal has to be securing a new season and once there hopefully we will set another goal.
"Last season we scored a lot of goals and let too many in and it's about what your priorities are.
"We put a lot of focus this year on our shape and defensive work and that's been better because we have a few more players involved in the defence."