4.2.5 Global competitiveness

Question 1

What are the effects of having a strong pound?

Answer 1

1. £1 = €1.5
   2.Good for Brits travelling abroad
   3.Good for businesses as exports are cheaper EG: Jaguar
   4.Bad for business importing - dearer
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Question 2

What are the effects of having a weak pound?

Answer 2

£1 = €1
Good for foreign tourists coming to UK
Good for businesses as exports are cheaper EG: Jaguar
Bad for business importing - dearer

Question 3

4 ways of Cost Competitiveness

Answer 3

1. Cost leadership
2. Outsourcing
3. Offshoring
4. Economies of scale

Question 4

Advantages of Cost Competitiveness

Answer 4

1.Consumers are cost conscious

Question 5

Disadvantages of Cost Competitiveness

Answer 5

1. Low profit margin

2. Low loyalty–> no repeat purchases

Question 6

What is Cost Leadership?

Answer 6

Cost leadership is the objective of becoming the lowest cost producer in the industry

Question 7

How cost leadership can be achieved?

Answer 7

1. High productivity workforce
2. Lean and efficient distribution
3. High capacity utilisation
4. Lean production
5. Innovative technology

Question 8

What is outsourcing?

Answer 8

Giving specialist suppliers work so the business can gain lower unit costs and a competitive advantage

Question 9

Competitive Advantage through Differentiation

Answer 9

1. Establishing a strong brand image for a product
2. Making a USP
3. Better design or innovation

Question 10

Disadvantages of differentiation

Answer 10

1. Expensive research

2. Out competed

Question 11

Advantages of differentiation

Answer 11

1. It creates additional value
2. Develops brand loyalty
3. Can compete in the market with something other than low prices