International Economics and Competitiveness - Essay Example

INTERNATIONAL ECONOMCS Expound on competitiveness as an indicator of inexpensiveness and cost differences. What influences inexpensiveness? Competitiveness is the concept which motivates organization on achieving the largest market share using strategies and procedures effectively. Today’s competitive environment does not allow much variation on the basis of prices and quality. People are exposed to different choices and alternatives. They have a flexibility of making decisions among the available products and services.

Knowing the complex situation, it becomes difficult for the companies to take decisions without considering the prices and quality of their competitors. This competitive environment leads to tightly knit procedures of production and services. Competitiveness further more encourages firms to improve their products and services and calls for uniqueness in their products and services. This paper aims to analyze how competitiveness affects cost differences and how it influences inexpensiveness. Businesses in the modern economy do not have full flexibility to make their decisions on prices, quality and products.

They are bound to follow the market structures and need to analyze and compare the prices which are being offered by their competitors. Cost differences pose a major threat to the success of the business (Walker pp 69-75). For instance, a company using highly skilled labor will have to pay higher wages and hence the labor costs being charged to the products will be higher. However, the other company using low skilled labor for producing the same product will be paying less wages and hence, its product’s prices will be lower comparatively.

Considering that the companies are producing same quality products, it is more probable that people opt for the inexpensive product. Hence, competitiveness affects the prices of the products. A company needs to control its costs (including material labor and overhead costs) to survive and flourish in the competitive environment. Competitiveness leads to inexpensiveness, since companies try to minimize their costs to attract more consumers. Cost cutting leads to price reductions and the concept of competitiveness leads to inexpensiveness.

The global competition has opened new ways to inexpensiveness and has also made it difficult for the firms to sustain their growth keeping the cost differences to its minimal. Companies use latest technologies, a mix of high and low skilled labor, competitive strategies, different materials and make or buy decisions to minimize the cost differences that exist as compared to their competitors. Companies are now more motivated to provide less expensive products to their customers. However, there are certain consumers who value quality over prices.

Hence, it depends on the targeted population that how costs may be minimized without sacrificing the quality of the product or service. Inexpensiveness and costs of the product are also affected by uncontrollable factors on individual firm basis like inflation, global crises and unavailability or shortage of raw material, labor and other resources. Hence, prices and costs rise and fall as a result of global business conditions and resources availability (Daniels et. al. p 350- 354). Competition still remains one of the major indicators of inexpensiveness.

The more competitive is the market of a product or service the more price sensitive it becomes. Hence, we may conclude that competitiveness affects cost differences and demands strategic decision making to reduce costs and in turn prices that are being offered to the customers. Bibliography: Walker, O C. Marketing Strategy: A Decision-Focused Approach. Boston, Mass: McGraw-Hill Irvin, 2006. Print. Daniels, John D, Lee H. Radebaugh, and Daniel P. Sullivan. International Business: Environments and Operations.

Upper Saddle River, N.J: Pearson/Prentice Hall, 2007. Print.