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Dr Subhash Gupta
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Why do countries compete to try to get international businesses to locate in their countries? What kinds of economic & social factors would attract international business to a country? How can an unprofitable international business improve its chances of becoming profitable?
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Definition of Competitiveness
With the globalization phenomenon, the increased mobility of corporate assets, and the requirement to recruit productive human resources, this question is becoming very difficult to answer. When economic and financial data of a particular country is used to compare with another countrys, the analyst must be very careful with its consistency.
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Definition of Competitiveness
Various countries employ different terminology to compare its competitiveness with the rest of the world. There is no one finite set of data, which provides for the full meaning of competitiveness. Competitiveness would involve a series of factors to be considered: (a)Size -effect (b)Population at a particular point in time (c)Factors of Productions (e.g. land, labour, capital, & time) (d)Use of New Technology (e)Macro-economic policies (e.g. financial performance) (f)External Factors
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The OECD defines competitiveness as "The degree to which a country can, under free and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the real incomes of its people over the long-term".
The World Competitiveness Report suggests eight major factors which influence the competitiveness of companies and nations
1. Internationalization 2. Domestic Economy 3. The State (Government) 4. Finance 5. Infrastructure 6. Management 7. Science & Technology 8. Quality of Labour Force
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Structure of Competitiveness
Resources
Economic Innovation
Degree of Competition Economic Stability Business Perceptions Workers Attitude
Business Environment
Economic Results
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International Competitiveness
Competitiveness is underpinned by 4 key factors, namely: 1. People/skills (Human capital) these include technical skills, entrepreneurship and managerial skills which call for education and training to work hand in glove with business. 2. Technology/Knowledge Turning R&D (scientific advances) into profitable business through research and innovation, i.e. advances in microchips and biotechnology
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International Competitiveness
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Infrastructure and superstructures infrastructure modernisation and integration of physical infrastructure such as roads, railways, ICT, and energy/water; governance, legal and regulatory framework and working culture. Institutions of trade facilitation Institutions such as standards and quality agencies, trade promotion etc.
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Trade
Productivity (Quality should exist)
Investment in productive facilities (Factories, R&D, Technology
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Improved or superior products Better pricing Higher quality Better service Uniqueness Access to markets & distribution channels Profit
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Is the total value of all g/s produced in a country during a specific period. Is the total GDP divided by the number of people in the country. Allows countries to compare productivity rates The higher the GDP per capita, the higher the countrys productivity rate
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When a country produces a good at a lower cost or higher productivity relative to another country Enables a country to set prices & policies without fear of competition Uses fewer resource to produce a product than another country
Countries should specialize in the production of goods that they have an absolute advantage & then trade for goods produced by other countries
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Increased reliance of business, labour & government on knowledge, information & ideas The sum of knowledge, information, intellectual property, talent & experience within a country Knowledge prime source of competitive advantage in the global economy Transparency (sharing) of information equals productivity Tech & scientific breakthroughs & new processes
Intellectual Capital
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Money collected by governments Process used by a company to change organizational structure, a product line or production process to become more efficient, productive & competitive High standard of living & produce sophisticated range of products Developing nations (newly industrialized economies i.e. NIE) moving toward more sophisticated manufacturing Less-developed nations largely agricultural-based with political instability
Rationalization
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Economies of Scale:
where the cost of item goes down when items are bought or produce din large quantities The demand for the industrys product in Canada The trade balance between Canada & other countries Organizational change Canadian business activities
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Speed of Adaptation
The facility or ease with which countries, governments, businesses & workers must respond to change
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Believe that to gain competitive advantage, there must be a commitment to quality. promotes everyone working together to make improvements Helps eliminate waste in all systems & processes of an organization
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Quality Control
Always continuously improve the product or service to stay competitive & create jobs Encourage education of the workforce both on & off the job Allow workers to take responsibility for & provide in their work Remove communication barriers between management & the factory floor Encourage teamwork between departments to improve product quality and to create common goals. Japan adopted principles & transformed
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A method of managing organizations with a commitment to continuously improve the products, processes & work habits of employees Market-driven organizations respond to market needs by providing customers with high=quality g/s that are low In cost and available when required.
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