What do you think it means to become 'globally competitive'?
A business selling products which are attractive to customers in different countries.
What factors might lead to a business becoming globally competitive?
Price advantages.
Other competitive advantages such as a strong brand image.
What are the benefits of achieving global competitiveness?
Economies of scale through increased sales.
Cost advantages through moving production to low cost countries.
What could could change a global businesses competitiveness?
Changes in exchange rates.
So you have to think through various possibilities if the pound appreciates or depreciates in value.
If the pound appreciates in value it makes exports more expensive.
What may stop sales in overseas markets from falling sharply?
- The price elasticity of demand of the product.
- The willingness of the firm to reduce the profit margin to keep the product affordable.
- The business may be importing raw materials or components from overseas and will financially benefit from the appreciation.
So, don't make simple statements like:
If the pound appreciates in value it makes exports more expensive so sales will always fall.
Competitive advantage:
The two types of competitive advantage that are key in building a global business are:
Cost competitiveness.
This is key to the success of Ali & Lidl.
Differentiation.
Firms trying to command a higher price by creating a differentiated product.
Which condoms would you buy?
Clever marketing can also lead to product differentiation.
Skill shortages and their impact on international competitiveness.
What skills are we short of in the UK?l
BBC link here.
