4.2.5 - Global Competitiveness

Question 1

Def global competitiveness

Answer 1

Measures the ability of a business to succeed against both domestic rivals and foreign competitors in international markets

Question 2

Benefits of competing effectively on a global scale

Answer 2

• dominating their domestic markets with minimal penetration from imports
• easy of entry and strong competitiveness in foreign markets due to global brand recognition

Question 3

2 ways MNC can secure a competitive advantage

Answer 3

• minimising costs

- differentiation

Question 4

Main factors affecting competitiveness

Answer 4

Price and quality of domestic goods and services to be relative to foreign products

Question 5

Contexts of competitiveness of global firms (3)

Answer 5

• companies which report on export markets
• companies who domestic market is subject to competition from imports
• companies which need to import significant quantities of raw materials

Question 6

3 factors that influence the relative price of imports and exports

Answer 6

• relative costs of production
• relative productivity of labour
• exchange rates impact on the price of imports and exports

Question 7

Def exchange rates

Answer 7

Is the price of one currency expressed in terms of another currency

Question 8

What happens when the pound appreciates against other currencies

Answer 8

The UK exports to other countries will be more expensive

Question 9

What happens when the pound depreciates

Answer 9

Then UK exports will be less expensive

Question 10

When companies rely of export markets, what happens when the pound falls

Answer 10

Products will seem cheaper in foreign markets, boosting export sales

Question 11

When companies whose domestic market is subject to competition from imports pound falls what will happen

Answer 11

Imported products will become more expensive, increasing competitiveness of domestic producers in their home markets

Question 12

What will happen when companies which need to import significant quantities of raw materials pound falls

Answer 12

Imported materials will cost more, pushing production costs unless the same materials can be sourced at home

Question 13

Three key strategies to achieving cost leadership

Answer 13

Reasoning productivity, outsourcing and offshoring

Question 14

How do businesses gain productivity

Answer 14

Increasing efficient use of resources such as Human Resources and tangible non-current assets

Question 15

Def outsourcing

Answer 15

Means contracting another business to perform a business function on your behalf. Frequently production performed in a lower cost country

Question 16

Def offshoring

Answer 16

Means moving one of more business functions to a foreign country, usually to take advantage of lower labour costs

Question 17

Why does outsourcing give a competitive advantage

Answer 17

Reduces running costs, so can free up capital and space to invest further into processes that you can do cheaper than anyone else

Question 18

How does offshoring give competitive advantage

Answer 18

Transferring businesses successful methods abroad due to high unit costs

Question 19

Who suggests differentiation can give a competitive advantage

Answer 19

Porters three generic strategies

Question 20

How does porter say differentiation can be achieved

Answer 20

• distinctive design
• branding
• performance
  So that customer perceive greater advantage

Question 21

Def skill shortage

Answer 21

When there is a lack of skilled workers in the industry

Question 22

How do businesses find themselves a skill shortage

Answer 22

Companies rail to plan for future workforce needs to fail to train workforce

Question 23

How do businesses overcome shortage of staff usually

Answer 23

Poach them from other businesses with higher salary, lower profit margin, increasing prices, reducing competitiveness

Question 24

Why is skills shortage bad

Answer 24

Demand for highly skilled workers outstripping supply, imbalance in global economy, replaced by machinery, increases labour costs, reduced creative output

Question 25

What happens when there are national skill shortages

Answer 25

Businesses may need to consider outsourcing abroad and relocating to where skills are more readily available