Bbb4M Chapter 3

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3.1 Establishing a Global Presence

|Why is achieving a competitive advantage a|Leads to increase sales and profits. | |goal? |Major goal of corporations is to maximize profits. | | |If you do not enjoy any competitive advantages you will lose market share (customers) = sales = profits. | | |You will eventually go bankrupt. | |Why is GDP per capita a good measure of an|GDP is measure of total value of all goods and services produced in a country during a specific period. | |economy’s strength? |Includes items produced by foreign owned companies. | | |Economic strength is measure by output and productivity | | |The more you produce and the more efficient you produce the stronger your economy. | | |GDP measures output but not necessarily productivity. | |Why is GDP not completely accurate in |Since GDP only measures output and not productivity other measures have been developed to look at economy’s | |measuring a country’s economic strength? |overall strength. | | |The measure of GDP / capita is a better measure of economic strength it measures GDP per person vs. total | | |A large country which produces more goods could have a lower GDP / capita which means it is less productive | |Explain R&D and how it can affect the |Increases in productivity are usually the result of improvements made through technology. | |strength of an economy |Generally speaking improvements in technology are linked to R&D spending (effective) therefore countries | | |with high levels of R&D enjoy improvements in technology which lead to more efficient production and higher | | |output per capital. | |Why do companies invest in R&D? |Invest in technology to improve products/services and productivity. | | |R&D is tied to improvements in technology. | | |Improvements in technology are linked to many competitive advantages – lower costs, better quality, improved| | |products | |Why do countries invest in R&D? |Countries invest in R&D to grow their economies and make themselves more attractive to businesses. | | |Many countries subsidize business R&D through educational institutions. | | |For example business schools provide information to business on how to improve management effectiveness… |

3.2 Achieving Competitive Advantage

|What is the difference between achieving a|Absolute advantage – Achieved if you can produce a good at a lower costs or higher rate of productivity | |comparative advantage and an absolute...
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