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January Business Mock > 4.2.5 Global competitiveness > Flashcards

4.2.5 Global competitiveness Flashcards

1
Q

exchange rate

A

price of 1 currency expressed in terms of another currency

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2
Q

appreciation

A

if pound appreciates (gets stronger) against other currencies
UK exports to other countries = expensive/dearer

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3
Q

depreciation

A

depreciates = exports cheaper
= sell increased exports, revenue from overseas,
imports more expensive = buy less
exports > imports

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4
Q

government objectives

A 
1high growth 
2low stable inflation 
3low unemployment 
4strong and stable exchange rates 
5balance of payments surplus exports greater than imports
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5
Q

SPICED

A 
strong 
pound 
imports 
cheap 
exports 
dear
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6
Q

WPIDEC

A 
Weak 
pound 
imports 
dear 
exports 
cheap
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7
Q

how does exchange rate affect business

A
  1. price exports in international mkt
  2. cost of goods bought from overseas
  3. revenue/profits from overseas (repatriating)
  4. converting cash receipts from customers overseas

(cost of imports and barriers to entry)

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8
Q

winners of a weaker exchange rate

A

businesses exporting into international market (recession currencies depreciate)
businesses earning substantial profits in overseas currencies

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9
Q

losers of weaker exchange rates

A

businesses importing goods and services (increase costs/affect competitiveness)
overseas business trying to compete in domestic market) = price less competitive

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10
Q

extent to which a business is impacted by exchange rate changes depends on:

A
  1. amount of imports bus relies on (weaker/depreciate ER)
  2. volume of exports bus relies on (depreciation)
  3. how many other countries you are generating income from (repatriating)
  4. no of available substitutes
  5. value of product (western status) = branding positive = little effect
  6. product price elastic
  7. YED = product necessity = less/no impact as still needed – proportion of income that something is in budget large quantity = price increase affect demand)
  8. whether domestic business face strong comp from overseas firms in mkt
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11
Q

2 main ways a MNC can secure a competitive adv:

A
  1. minimise costs (cost min EOS) (cost leadership)
    -vcpu = sppu = competitive
    (cost adv)
  2. differentiation
    -unique from comp
    -USP/added value
    -inflate consumer opinions of you = premium price = profitability
    (differentiation adv)
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12
Q

types of markets

A 
1. monopoly 
2 duopoly 
few. digopoly 
monopolistic = many firms = degree of loyalty 
many. perfect competition
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13
Q

Porter’s Generic Strategies/ Porter’s Strategic Matrix (source of competitive advantage)

A

costs:
broad: cost leadership
narrow: cost focus

differentiation:
broad: differentiation leadership
narrow: differentiation focus

curve:
above = focus diff or cost leadership (above line = optimum)
below = stuck in middle

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14
Q

leadership

A

broad (mass)

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15
Q

focus

A

narrow (niche)

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16
Q

cost leadership

A

common and viable

large target market = allow to compete and decrease costs and price

17
Q

differentiation leadership

A

common

stand out

18
Q

cost focus

A

not viable
not high enough sales volume for low costs
no EOS

19
Q

differentiation focus

A

niche marketing

20
Q

issues surrounding being “stuck in the middle” of Porter’s strategies

A

combination of more than 1
trade off between costs and differentiation
guaranteed low profit (losing proposition)
recipe for strategic mediocrity and low performance = pursuing all means bus is unable to achieve any due to inherent contradictions

21
Q

how can differentiation be achieved?

A
  1. superior product quality (features/ benefits)
  2. branding (customer recognition)
  3. wide distribution(across major channels)
  4. sustained promotion (advertise/sponsor)
  5. customer service
  6. ethical stance (CSR, mission statement, social enterprise)
  7. USP
  8. R&D
  9. product development
22
Q

skills shortage

A

not enough specific “talent” in a particular field of employment
volume of workers “ability” is limited
“shortage” supply of labour
forces wages to increase
costs increase = decrease profits
prices increase = decrease sales = competition

common reason business off shores (labour cheaper overseas)

more likely to affect businesses who follow differentiation strategy staff skills = key for differentiation

23
Q

skills shortage definition & examples

A

when there is a lack of workers with the right qualifications in the industry

-HGV drivers, NHS workers, Bricklayers

24
Q

how can businesses overcome skills shortages?

A
  1. raise wages
  2. offer training (on and off the job)
  3. offshore to find supply of labour
  4. joint ventures, global merger (horizontal integration = collaborate with other firms)
  5. use capital intensive where possible
  6. headhunt
  7. fringe benefits
  8. outsource to specialist providers
25
Q

governments overcome skills shortages by ??

A
  1. invest in training (provide tax and incentives invest training/education)
    = new courses = fund programmes = subsidise training
  2. migration policy (suitable skills)
  3. raise wages in the public sector (inward migration)
  4. pension schemes
  5. make professions inclusive (promotion)
  6. national curriculum changes
  7. invest in vocational education
  8. make sure offer more/better apprenticeships
26
Q

how does skill shortages impact global competitiveness

A 
increased costs(associated)  = increased prices = decrease competitors/competitive 
dependent on PED, stance, diff leadership
27
Q

how does exchange rate affect business

A

prices can change due to ER - elasticity or substitutes
profits returned to domestic country (repatriating)
cost of raw materials (imports)
profit margins change
barriers to entry fluctuate
converting cash receipts from customers overseas

28
Q

repatriating

A

sending money back to own country

January Business Mock (15 decks)

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