International Trade and Business Growth - The link between business specialisation and competitive advantage - 4.1.2
Competitive advantage - A sustainable advantage over the competitors in the long term, gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price.
Specialisation - When a business concentrates on a product or task and in many cases means producing only a small number of products.
Specialisation is particularly important when competing in international markets as it can create a competitive advantage for the business and act as a barrier to stop others from entering the market.
Specialisation increases output as economic units become more effective and efficient in what they produce due to:
The increased output can then be exchanged for other goods and services that the economic unit is not as good at producing. Specialisation allows for the exchange of goods and services between economic units.
By a business or country using its unique skills and talents in its workforce, the output can become more efficient and of far higher quality than elsewhere. Buying Pizza in Naples is proof of the value of specialisation
Specialisation is likely to lead to increased output per worker (productivity) as the workforce have a better understanding of their job role. This will help provide a competitive advantage as businesses improve the quality of their products.
Specialisation - When a business concentrates on a product or task and in many cases means producing only a small number of products.
Specialisation is particularly important when competing in international markets as it can create a competitive advantage for the business and act as a barrier to stop others from entering the market.
Specialisation increases output as economic units become more effective and efficient in what they produce due to:
- Greater understanding of the requirements of production
- Each economic unit can specialise in what they are best at
- Efficient use of time as there is no switching between tasks
- Technical economies of scale such as capital equipment is used to produce goods and services
The increased output can then be exchanged for other goods and services that the economic unit is not as good at producing. Specialisation allows for the exchange of goods and services between economic units.
By a business or country using its unique skills and talents in its workforce, the output can become more efficient and of far higher quality than elsewhere. Buying Pizza in Naples is proof of the value of specialisation
Specialisation is likely to lead to increased output per worker (productivity) as the workforce have a better understanding of their job role. This will help provide a competitive advantage as businesses improve the quality of their products.
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