4.1.2 International Trade - Specialisation & competitive advantage

Question 1

Competitive advantage

Answer 1

something that allows a business to generate more sales/be more profitable than it’s rivals

e.g higher quality products , lower costs ,

Question 2

Gaining a competitive advantage is important for firms operating where

why?

Answer 2

gaining a competitive advantage is important for firms operating in an international market

Because they face more competition than firms only operating in a domestic market

Question 3

How can a business gain a competitive advantage

Answer 3

Through specialisation

Question 4

Specialisation

Answer 4

when a business focuses on producing a limted scope of services e.g just cakes

Question 5

how will Specialisation improve a business - linked to efficiency

efficiency meaning

Answer 5

it will improve their efficiency

efficiency - when something is produced at an overall minimum cost

Question 6

2 ways in which specialisation improves efficiency

1 advantage of efficiency

Answer 6

1- you find fastest ways of working due to repetitive nature of tasks

2- less wastage as staff become familiar with production process

OVERALL reduces production costs

Question 7

Disadvantages of specialisation - 2

Answer 7

• maybe too reliant on one industry. if there’s a decrease in demand for the product that you specialise in you may lose sales.
• specialisation can increase the costs of training staff - staff may need extensive training to gain the skills they need to become specialised in making that specific product

Question 8

2 advantages of specialisation

Answer 8

1) Improved efficiency

2) Highest quality - therefory may be popular. Also charge higher price due quality but also because other businesses may not be producing your product (differentiation)