4.2.5 Global competitiveness

Question 1

Main benefits of global competitiveness?

2

Answer 1

• Dominate dom markets w min penetration from imports

- Ease of entry (strong brand recognition)

Question 2

When is product differentiation especially feasible (Porter)?
1

Answer 2

• Wealthier markets where design, branding, function ^important than price

Question 3

Impact of a high exchange rate? (£1:$1.50 - £1:$2)?

3

Answer 3

• Exporters = ^prices
• Dom firms (dom market) = foreign rivals’ imported products cheaper to UK consumers
• Companies (import sig raw mats) buys ^foreign currency, >imported mats cost in £
• Depreciation = opposite^

Question 4

What strategies can be used to achieve cost leadership?

3

Answer 4

• ^Productivity
• Outsourcing
• Offshoring

Question 5

How can outsourcing achieve cost leadership?

2

Answer 5

• > Running costs

- Free up capital/space to invest further in those cheap processes

Question 6

How can offshoring achieve cost leadership?

1

Answer 6

• > Unit costs as lower rates of min wages/land

Question 7

How can skills shortages negatively impact international competitiveness?
2

Answer 7

• Can’t cope w changes in market

- Poach staff from other firm = ^wages to coax staff