Global Competitiveness

• global competitiveness: the ability of a business to perform better than its rivals across markets in different countries
• currency appreciation

  benefit: cheaper imports --> reduced costs --> higher profit margins

  drawback: export are more expensive for international customers --> drop in demand
• currency depreciation

  benefit: exports are cheaper --> boosts competitiveness

  drawback: imports are more expensive --> higher costs --> forced to increase prices
• what acronym can be used to remember how exchange rate fluctuations affect global competitiveness?

  SPICED
• what does the acronym SPICED stand for, in terms of exchange rate fluctuations?

  Strong

  Pound

  Imports

  Cheaper

  Exports

  Dearer
• what two strategies can be used to create a competitive advantage?

  cost leadership

  differentiation
• explain cost leadership

  • business becomes the lowest cost producer in their industry
  • can be achieved through outsourcing / offshoring / increased productivity
• explain differentiation

  • business makes product characteristics different to competitors
  • can be achieved through developing a strong brand / better design / better quality / customer service
• how can skill shortage in the labour force affect global competitiveness?

  skills shortages --> lower productivity --> higher wastage --> higher costs --> inability to gain a competitive advantage