4.2 Global Markets And Business Expansion

Question 1

What is global competitiveness?

Answer 1

Global competitiveness is the ability of a business to perform better than its rivals across markets in different countries

Question 2

What are the advantages of currency appreciation?

Answer 2

• If businesses import raw materials they will become cheaper
• This will help reduce costs and possibly increase their profit margin

Question 3

What are the disadvantages for a business of appreciation?

Answer 3

• If businesses export goods/services their goods will be once more expensive
• This may lead to a fall in sales as consumers now shift demand to domestic businesses

Question 4

What are the advantages for a business of depreciation?

Answer 4

• If businesses export goods/services a broad they become more competitive because their products are cheaper
• In the domestic market there may be less competition from foreign firms as imports are now more expensive for domestic consumers

Question 5

What are the disadvantages for businesses for a depreciation?

Answer 5

• If a business imports raw materials they are now more expensive
• This leads to an increase in the costs fort a business which could then be passed onto consumers in the form of higher prices

Question 6

What is the impact of skills shortages ?

Answer 6

• If a business is unable to find the labour with the required skills it will affect their ability to gain a competitive advantage
• Cost leadership could be difficult to achieve if the workers lack skills as they may not be as productive
  - This could increase unit costs due to factors such as waste
• Product differentiation is less likely to occur where workers lack the skills and expertise to price highly differentiated products
• In order to overcome these issues, a business can use outsourcing and offshoring to access the skills needed