4.2.5 Global Competitiveness Flashcards

1
Q

What are two ways in which MNC’s can benefit in terms of being large companies?

A

economies of scale

finding the best quality resources at the right prices

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2
Q

How does depreciation affect an MNC?

A

will make exports cheaper and so exporters can benefit

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3
Q

How does appreciation affect an MNC?

A

will make exports more expensive and will impact competitiveness

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4
Q

What 3 things does the changes of exchange rates on a business impact?

A

price elasticity of demand
economic growth of other countries
significance of fluctuation rate

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5
Q

Why do firms have fixed contracts for fluctuating exchange rates?

A

means that temporary changes in exchange rates have less impact on firm

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6
Q

Define economic risk?

A

as a risk that future cash flows will change due to unexpected exchange rate fluctuations

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7
Q

What are the 2 types of competitive advantage that play a part in many international firms?

A

Cost competitiveness and differentiation

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8
Q

Define cost competitiveness?

A

able to achieve scale of economies which gives them advantage over rivals allowing them to deliver same product but at a lower cost

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9
Q

Define differentiation?

A

firm selects certain attributes of it’s products and tries to match with specific customers

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