Competitive Advantages

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  • 2.1.3
    • R&D
      • Gaining competitive advantages
        • Lowering prices
        • Quality: creating maximum value for consumers
        • Lowering average costs
        • Niche market
        • Strong brand reputation 7 loyalty
        • Good customer service
    • Incentive to increase market power
      • Enables firms to have USP
        • This increases brand recognition and loyalty
          • Which in the long-run increase firms revenue & profits
    • Product & process innovation
      • Technology
        • Increasing this could increase firms efficiency, productivity & potentially quality.
        • Lead to  development of new products & potentially new markets.
          • May destroy existing markets however.
      • SME''s
        • Helps create jobs, boost employment, stimulates investment & promotes competition.
        • (Small & Medium Enterprises)
    • Role of state funding
      • Increase in R&D can lead to economic growth
        • Potentially leading to higher GDP, income levels & employment
      • Govt. provides funding, mostly for merit good (+ive externalities) via subsidies e.g.
        • Encourages production and output for firms & lowers their AC.
          • Could create O.Cost 7 potential increase in taxes to fund Govt. spending. Could create Govt. failure in LR.
    • Product Life cycle

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