4.4.1

Global Competitiveness

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Global Competitiveness

There are factors which can affect the global competitiveness of a business:

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Exchange rates

  • The impact of movements in exchange rates can affect the global competitiveness of a business as the cost of imports and exports change.
  • A global business which competes with a national business may be affected by an exchange rate change which reduces demand for its products whilst a national business may be unaffected.
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Competing on cost

  • Competitive advantage occurs when a business has an advantage over its competitors because of a factor which rivals cannot replicate and provides a cost or revenue advantage.
  • Competitive advantage can occur when a business is able to compete on cost by offering products or services as a cost lower than all other competitors.
    • For example, Aldi and Lidl compete on price and cost, which secures their market share as competitors are unable to compete at this level.
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Differentiation

  • Competitive advantage can occur when a business is able to compete on differentiation through offering products or services which consumers find superior to those offered by competitors.
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Skill shortages

  • Skill shortages can affect a business’ international competitiveness.
  • A shortage of skills within an industry, country or region can affect a business’ operations and lower efficiency, productivity and quality, which affects competitiveness.
  • For example, the United Kingdom has a shorted of skilled nurses which reduced the international competitiveness of private healthcare businesses.

Jump to other topics

1Exploring Business

2Marketing Campaigns

3Business Finance

4International Business

5Principles of Management

6Business Decision Making

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