4.2.5 Global competitiveness

Question 1

What are exchange rates?

Answer 1

The value of one currency in terms of another.

Question 2

How would appreciation and exports effect UK businesses?

Answer 2

If the pound appreciates, exports become more expensive which may lead to less sales and therefore the business will reduce their prices to keep demand up.

Question 2

How would appreciation and imports effect UK businesses?

Answer 2

Appreciation will make imports cheaper so businesses that sell imports will have lower costs and therefore make more profits.

Question 3

How would depreciation and exports effect UK businesses?

Answer 3

Depreciation will make exports cheaper meaning a business can either make higher profits or gain more market share.

Question 4

How would depreciation and imports effect UK businesses?

Answer 4

Depreciation will make imports more expensive, which may mean some businesses will lose demand, profits + sales.

Question 5

What is a competitive advantage?

Answer 5

A competitive advantage is an advantage over competitors gained by offering consumers greater value either by means of lower prices or by providing greater benefits and service that justifies higher prices.

Question 6

What are the 2 ways to achieve competitive advantage?

Answer 6

1.) Low cost leadership
2.) Differentiation

Question 7

What is low cost leadership?

Answer 7

-With this strategy a business will seek to produce the same quality products as its competitors at a lower price.
-It is more effective with large businesses.
-They gain good cost leadership through good resources management, waste minimisation, efficient production methods.

Question 8

What is differentiation?

Answer 8

-A business will produce a unique product or give a unique service.
-Kotler suggested these attributes can set a product/service away from competition:
-Performance
-Style
-Design
-Consistency
-Durability
-Reliability
-Repairabilty

Question 9

How would skill shortages impact on international competitiveness?

Answer 9

-The lack of ability to find skilled workers can cause a decline in competitive advantage.
-Businesses that aim for differentiation will suffer the most from skill shortages.

Question 10

How could skill shortages affect UK businesses?

Answer 10

Not enough talent coming through to take UK businesses into the digital era to make them competitive on a global scale.

Question 11

Outline SPICED

Answer 11

-Strong
-Pound
-Imports
-Cheaper
-Exports
-Dearer