4.2.5 Global Competitiveness

Question 1

what are the 2 main aims for global competitiveness

Answer 1

1 cost competitiveness
2 differentiation

Question 2

what is cost competitiveness and how does it help a business maintain a competitive advantage

Answer 2

• when a business can achieve low costs they can offer customers lower prices
• this cost leadership can push competitors with higher prices out of the market

Question 3

what is differentiation and how does it help a business gain a competitive advantage

Answer 3

• using a product or services USP’s to charge higher prices
  -high value can be placed on the product through branding or design

Question 4

when is it more suitable to use cost competitiveness

Answer 4

• this should be used when the business needs to increase sales and penetrate the market
• should be used at launch and growth

Question 5

when is it more suitable to use differentiation

Answer 5

• should be used in the long-term once a business has gained a larger market share and a strong brand image
• used on high quality products

Question 6

how can a business exploit exchange rates to gain a competitive advantage

Answer 6

• remember SPICED
  strong pound imports cheaper exports dearer
• if a business is relying on imports they want to locate somewhere that has a strong currency so that the imports are cheaper
• if a business is exporting lots of its products internationally then it should locate somewhere with a weak currency
• if a business relies heavily on imports and exports its likely to favour somewhere with a stable currency as it will help with their cash flow management