global markets and business expansion

Question 1

global competitiveness

Answer 1

measures the ability of a business to succeed against both domestic rivals and foreign competitors in international markets

Question 2

benefits of competing competitively

Answer 2

• dominating their domestic markets with minimal penetration from imports
• ease of entry and strong competitiveness in foreign markets due to global brand recognisition

Question 3

how is competitiveness achieved (porters 2 strategies)

Answer 3

• cost leadership, low costs and undercutting rivals with lower prices
• product differentiation, feasible in wealthier markets where price is less important (consumers value design branding and functionality over price)

Question 4

what can have major impact on the global competitiveness of firms and for what kind of companies

Answer 4

movements in the relative values of currencies. Companies like:

• those that rely on export markets
• companies whose domestic market is subject to competition from imports
• companies that need to import sufficient quantities of raw materials / componenets

Question 5

what is the impact of a high exchange rate

Answer 5

• companies relying on export markets will see higher prices and lower profit margins
• companies whose in competition with imports will be affected as the imports will seem cheaper in home currency terms, therefore gaining an advantage over domestic firms
• companies who rely on imported materials will see a positive impact, the cheaper imports means cheaper materials and therefore lower production costs

Question 6

what is the impact of a low exchange rate

Answer 6

the opposite of the high exchange rate

• companies relying on export markets will seem cheaper in foreign markets, boosting sales
• companies whose in competition with imports, imports will seem expensive in home currency terms, therefore increasing competitiveness of domestic producers in home turf
• companies who rely on imported materials will see a negative impact, the expensive imports means high cost materials and therefore higher production costs

Question 7

how can firms lower costs to become more competitive?

Answer 7

• raising productivity
• outsourcing
• offshoring

Question 8

how is productivity raised?

Answer 8

increasingly efficient use of resources - like HR and tangible non-current assets.
increased productivity comes from motivated staff and organised processes.
assets business uses to generate revenue like property machinery and equipment should be used to the maximum capacity to ensure a lower unit cost

Question 9

outsourcing

Answer 9

means contracting another business to perform a business function on your behalf. Frequently that function will be production, often performed by a business located in a lower cost country. This can reduce running costs and increase efficiency

Question 10

offshoring

Answer 10

means moving one or more business functions to a foreign country, usually to take advantage of lower labour costs.

Question 11

as it is difficult to compete in developed economy, what are effective and long-lasting ways in which a product can differentiate

Answer 11

• design
• different functions
• engineering
• performance

Question 12

how can a business fill newly created positions with skilled staff

Answer 12

a business may poach staff from other businesses, offering a higher wage. But if this fails, a business may need to look on a more international scale and invest in skilled staff who are more readily available