Global Competitiveness
Business: BTEC Level 3 National Extended Diploma, topic 4.4.1
Global Competitiveness
There are factors which can affect the global competitiveness of a business:
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.
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.
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.
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.