Global competitiveness (4.2.5)

Question 1

What is global competitiveness?

Answer 1

the ability of a business to perform better than its rivals across markets in different countries

Question 2

Exchange rate fluctuation

Answer 2

do not stay constant and can fluctuate over time
when a currency appreciates or depreciates it can affect businesses that import or export goods and services

Question 3

What is an exchange rate?

Answer 3

the price of one currency in terms of another

Question 4

What is currency appreciation?

Answer 4

when one currency increases in value against another currency

Question 5

Currency appreciation

Answer 5

exports become more expensive which may reduce international sales
imports become cheaper which lower costs for businesses
may reduce export competitiveness
e.g £1 = $1.60 may become £1 = $1.80

Question 6

What is currency depreciation?

Answer 6

when one currency decreases in value against another currency

Question 7

Currency depreciation

Answer 7

exports become cheaper which may increase international sales
imports become more expensive which leads to higher costs for businesses
may increase import competitiveness
e.g £1 = $1.60 may become £1 - $1.20

Question 8

What is competitive advantage?

Answer 8

a feature of a business and/pr its product that enables it to compete effectively with rival producers/products
e.g. strong brand, lower costs (e.g efficient production), innovation, product differentiation

Question 9

Ways of competitive advantage

Answer 9

cost competitiveness
product differentiation

Question 10

What is cost competitiveness?

Answer 10

when a business becomes a low cost producer in its industry

Question 11

Cost competitiveness

Answer 11

higher productivity
efficient use of machinery and technology
outsourcing and offshoring
allows firms to lower prices or increase profit margins

Question 12

What is differentiation?

Answer 12

when a business makes its products or services distinct from competitors

Question 13

Differentiation

Answer 13

strong branding
better design
higher quality
superior customer service

Question 14

What is a skills shortage?

Answer 14

occurs when a business cannot find workers with the skills required for certain roles

Question 15

Skills shortage cost competitiveness

Answer 15

less skilled workers may be less productive which can increase unit costs due to inefficiency or waste
never achieving economies of scale

Question 16

Skills shortage differentiation

Answer 16

businesses may struggle to produce high quality or innovative products if employees lack the necessary expertise