Business Specialisation & Competitive Advantage
Imports and Exports
- Businesses that trade internationally import and export goods/services
- Imports are goods and services bought by people and businesses in one country from another country
- In 2022, the UK’s biggest import was cars valued at approximately £3.25 billion
- In 2022, the UK’s biggest import was cars valued at approximately £3.25 billion
- Exports are goods and services sold by domestic businesses to people or businesses in other countries
- In 2022, China’s biggest export was smartphone manufacturing valued at approximately $21.4 billion
- In 2022, China’s biggest export was smartphone manufacturing valued at approximately $21.4 billion
- Imports are goods and services bought by people and businesses in one country from another country
- Exports generate extra revenue for businesses selling their goods abroad
- Imports result in money leaving the country which generates extra revenue for foreign businesses
Specialisation and Competitive Advantage
- Specialisation occurs when a country/business decides to focus on producing a particular good/service
- Businesses specialise when they focus on a specific goods/services e.g. Apple focus on the production of technological products and services
- Countries can also specialise on a narrow range of goods and services e.g. Ghana specialises in cocoa and gold
- Specialisation can increase the quantity and quality of goods and services. This has many benefits including;
- Lower unit costs due to Economies of scale as costs are spread over a large output
- Lower unit costs allow the business to lower prices for consumers leading to more sales
- If businesses do not lower their selling price, then due to the lower costs they are able to to increase their profit margins
- Any excess output can be sold abroad as exports
- When businesses specialise, it can also help them to gain a competitive advantage
- If they can increase the value added on their goods/services, this can help to gain an edge over their competitors
- An example of a competitive advantage includes having access to local markets, resources and materials that competitors do not have access to