Global competitiveness

Question 1

Define GLOBAL COMPETITIVENESS

Answer 1

Global competitiveness is a business’ ability to compete in international markets to become a leader in a given industry across the world.

Question 2

What factors impact global competitiveness?

Answer 2

• Movements in exchange rates
• Cost competitiveness
• Differentiation
• Skill shortages

Question 3

How does movement of exchange rates affect global competitiveness?

Answer 3

A decrease in the value of a currency will mean it is weaker and worth less.
An increase in the value of a currency will mean it is stronger and worth more.
Businesses that import items will be affected when a county’s currency depreciates, but businesses that export to international markets will benefit.
Vice versa when the currency appreciates.

Question 4

How does cost competitiveness affect global competitiveness?

Answer 4

Cost competitiveness (having the lowest costs in a market) can lead to competitive advantages as it will allow a business to lower their prices. This can be gained through purchasing, technical or marketing economies of scale. 
Cost competitiveness can also be gained through offshoring or outsourcing.

Question 5

How does differentiation affect global competitiveness?

Answer 5

Product differentiation offers a competitive advantage and is achieved when a consumers believe that a brand is unique or in some way superior to others.
Differentiation can be achieved through superior quality (e.g. Dyson), branding (e.g. Lindor) or advertising (e.g. Coco-Cola).

Question 6

How do skill shortages affect global competitiveness?

Answer 6

Demand for highly-skilled workers is outstripping their supply, and this mostly affects businesses who choose to use differentiation to gain competitive advantages.
Potential solutions: high pay, better training, outsourcing, offshoring, recruiting from abroad.

Question 7

Define a SKILL SHORTAGE

Answer 7

A skill shortage occurs when businesses are unable to recruit extra workers with the necessary skills, leading to a decline in competitiveness.

Question 8

Define COST COMPETITIVENESS

Answer 8

Cost competitiveness is the ability of a business to offer a good or service at the lowest cost possible, giving it a competitive advantage.