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Evaluate strategies which may be used by businesses and governments to improve the competitiveness of a countrys goods and services.

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Introduction

Evaluate strategies which may be used by businesses and governments to improve the competitiveness of a country?s goods and services. Competitiveness refers to the ability of a firm to offer goods and services that meet the quality standards of the local and world markets at competitive prices which provide adequate returns on the resources employed or consumed in producing them. Competitiveness can be measured by price and non-price aspects, such as quality, advertising and innovation, and it can be promoted by both businesses and governments. Given that a firm is large enough and it has the ability to improve the competitiveness of the goods it produces it can follow the strategy of outsourcing. This is when a firm divides its production process in different parts of the world where it is able to find cheap methods of production. For example, many firms from the developed world locate their industries in less developed countries where there is cheaper labour, cheaper land, or lower corporation taxes. ...read more.

Middle

This new business will therefore be a free-rider as it will benefit from a trained worker, and thus higher skills and productivity, without having to pay for its training. This therefore creates a disincentive to firms in spending more on training and investing on human capital making it more difficult for them to find ways and improve competitiveness of their products. Governments can also find several ways in order to improve the competitiveness of goods produced in their country, as this would expand the country?s export industry leading to export-led growth, as well as reducing the deficit. Governments can increase incentive of firms to spend on R&D and innovation by providing grants and offering tax breaks if R&D is used. By doing this, a firm will have a greater incentive to spend more on R&D improving the quality of goods produced; more advanced products will be released in the market increasing consumer?s demand and thus non-price competitiveness will be improved. ...read more.

Conclusion

Spending on the New Deal was £1.3 billion in 2001. This helped to increase productivity levels in the UK and the price competitiveness of UK goods. However, schemes like the New Deal require a long period of time in order to have significant effects in the economy and increasing the competitiveness of the UK. Time is needed for educating people properly in order to join the labor force and apply their skills. Time is also needed in order to apply the new working methods people have learned and find an appropriate employment that suits to the skills they have gained. In conclusion, a lot of strategies can be applied in order to improve the competitiveness of the country; however, it is not so easy to be effective on the economy. Most of these strategies would have a positive effect in the long run as time is needed in order to apply these policies. This is the case with UK where a lot of strategies took place to improve competition of the country but it is still behind its competitors and it is ranked 20th out of the 59 economies covered by the WCY. ...read more.

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