4.2.5 Global Competitiveness Flashcards Preview

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Flashcards in 4.2.5 Global Competitiveness Deck (6)
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1
Q

what are the 2 main aims for global competitiveness

A

1 cost competitiveness
2 differentiation

2
Q

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

A
  • 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
3
Q

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

A
  • using a product or services USP’s to charge higher prices
    -high value can be placed on the product through branding or design
4
Q

when is it more suitable to use cost competitiveness

A
  • this should be used when the business needs to increase sales and penetrate the market
  • should be used at launch and growth
5
Q

when is it more suitable to use differentiation

A
  • 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
6
Q

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

A
  • 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