What is one likely effect on a UK clothing business when a rival begins importing lower-cost jackets produced in Bangladesh? The UK business has higher wage...
Question 1 Report
What is one likely effect on a UK clothing business when a rival begins importing lower-cost jackets produced in Bangladesh? The UK business has higher wage costs and has been selling similar jackets through local department stores for five years.
(a) Identify one source of competitive pressure created by globalisation in this case. [1]
(b) Explain one possible response the UK business could make to protect its sales. [2]
Answer Details
(a) The competitive pressure is competition from imported lower-priced jackets, made by overseas producers with lower costs. [1]
(b) The UK business could differentiate its jackets through better design or higher quality. [1] Customers may then choose its jackets despite their higher price. [1]
Alternatively, it could reduce production costs so that it can lower its selling price and compete more directly. [2]
Exam focus: A response must address why sales are threatened: the rival can charge less because its production costs are lower.
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