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Kamis, 14 Mei 2009

global business - competitiveness

International competitiveness

This refers to the ability of a country (or firm) to provide goods and services which provide better value than their overseas rivals.

This is competitive advantage but on a international scale.

As there is constant threat from foreign competition it is essential for business to strive to improve competitiveness.

Although there is a tendency to look to government to play a role in maintaining the competitiveness of UK business, in the final analysis it is a matter for individual firms.

Some determinants of International competitiveness

  • Price relative to competitors
  • Productivity - output per worker
  • Unit costs
  • State of technology
  • Investment in capital equipment
  • Technology
  • Quality
  • Reliability
  • Lead time
  • Entrepreneurship
  • Exchange rate
  • Relative inflation
  • Tax rates
  • Interest rates

Increasing competitiveness
Firms can increase their international competitiveness by:

  • Rationalisation output to get rid of high cost plants
  • Relocating to places where labour costs are lower
  • Process innovation
  • Product innovation
  • Incorporating the latest technology into investment
  • Sourcing from abroad where appropriate
  • Seeking out new market opportunities
  • Improving relationships with suppliers and customer

Government’s role to improve international competitiveness
Governments seek policies which aim to:

  • Encourage R&D spending (e.g. through tax breaks)
  • Improve the skills base
  • Improve the economic infrastructure
  • Promote competition between firms
  • Operate macro-economic policies favourable to business expansion
  • Reduce interest rates to stimulate investment
  • Reduce tax rates to stimulate enterprise, effort and investment
  • Deregulation to promote competition
  • Reduce bureaucracy
  • Encourage sharing of ideas and best practice
  • Reduce protectionist barriers to stimulate competition
  • Encourage investment in human capital
http://tutor2u.net/business/strategy/global-business-competitiveness.html

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