4.2.5. Global Competitiveness

Question 1

Impact of movements in exchange rates on competition

Answer 1

Movements have major impacts on competition on
-Companies that rely on export markets
-Companies whose domestic market is subject to competition from imports
-Companies which need to import significant quantities of raw materials or components

Question 2

Competitive advantage through cost competitiveness

Answer 2

-Ability to produce good mist cheaply provides secure competitive position
Ways to achieve cost leadership:
1.Raise productivity- increasingly efficient use of resources, motivated staff, management and organisation

2. Outsourcing-Reduce costs by having another business perform business tasks more efficiently to free up capital and space
3. Offshoring- Reduce costs by transferring businesses methods and expertise abroad.

Question 3

Competitive advantage through product differentiation

Answer 3

These include:
-Design
-Different functions
-Engineering
-Performance

Question 4

Skill shortages and their impact on international competitiveness

Answer 4

-Lack of staff with appropriate skills due to failing to invest in staff training and sufficient planning. This can damage competitiveness by leaving roles unfollows
-Costs higher wages to poach staff from other businesses.
-Cost leadership and product differentiation less likely to occur where workers lack skill and expertise