4.2.5 Global Competitiveness

• When the pound appreciates, UK exports become more expensive and imports become cheaper. Prices may have to be reduced to keep demand high
• When the pound depreciates, UK exports become cheaper and imports become more expensive. Keeping prices the same keeps high profit
• Factors affecting global competitiveness are:

  • Impact of movements in exchange rates
  • Competitive advantage
  • Differentiation
  • Skill shortages
• A factor affecting global competitiveness is competitive advantage. This is through low-cost leadership, or matching the quality of competitors at lower prices. Competitive advantage is gained easiest by businesses selling standard / mass-produced items, and by larger businesses with good resource management, efficient production methods or waste minimisation.
• A factor affect global competitiveness is differentiation. A business can become more globally competitiveness due to factors like performance, design, reliability or consistency.
• A factor affecting global competitiveness is skill shortages. Differentiated businesses struggle the most, as they require more highly skilled / specialised staff. Careers are also developing due to changing technology, therefore there can be skill shortages in critical jobs.