4.2.5 global competitiveness

• global competitiveness

  the ability of a business to perform better than its rivals across markets in different countries
• two ways to be globally competitive

  1. cost competitiveness = when a business becomes one of the lowest-cost producers in its industry
  2. differentiation = when a business makes the characteristics on its product/services different from those of its competitors
• spreading risk

  operating in different markets/countries/regions
• entering new markets or trading blocs

  • access to new resources/free trade
  • new regulations
• acquiring international brand names

  • instant access to locally recognised brands
  • faster than building a brand from scratch
• securing resources

  access new materials/info

  • expertise and skills
  • local market
• maintaining or increasing global competitiveness

  benefit from economies of scale

  • reduces costs = reduces prices
• drawbacks of global mergers and joint ventures

  • diseconomies of scale = costs rising due to exceeding optimal production point
  • cost implication - expensive to merge businesses
  • culture clash
  • shared decision making - clash of objectives
  • redundancies
• impact of skills shortage

  • a workforce without the required skills will impact a firm's competitive advantage
  • product differentiation may suffer a workers lack of skills/expertise to produce highly differentiated goods
  • cost competitiveness may suffer as productivity is reduced as unskilled workers are more likely to make mistakes/work slowly