4.2.5 Global competitiveness

Question 1

Exchange rate

Answer 1

The value of one currency in terms of another.

Question 1

Ways exchange rates impact businesses

Answer 1

1) Price of exports in international markets.
2) Costs of goods bought from overseas.
3) Revenue and profits earned overseas.
4) Converting profits from customers overseas.

Question 2

Impacts of exchange rate movements on competitive advantage

Answer 2

1) Can be used to lower costs.
2) Influences decisions on sourcing locations.
3) Import and exports.
4) Porter’s growth strategies - Find countries with exchange rates that favour strategy.

Question 3

How competitive advantage can be secured?

Answer 3

1) Cost Advantage = Where a business is able to produce at a lower cost than competition.
2) Differentiation Advantage = Where a business is able to differentiate its product from competition so that customers perceive superior value.

Question 4

Ways to achieve product differentiation?

Answer 4

1. Superior product quality.
2. Branding.
3. Sustained promotion.
4. Wide distribution across all major channels.

Question 5

Skills shortage

Answer 5

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

Question 6

What can be done by businesses to overcome skill shortages?

Answer 6

• Wage rise and remuneration.
• Offer better training and non-financial rewards.
• Outsource to specialist providers.

Question 7

What can be done by governments to overcome skill shortages?

Answer 7

• Invest in vocational education.
• Help firms offer more apprenticeships.
• Encourage inwards migration of overseas citizens with suitable skills.