Assess the ways in which specialisation might give a business, such as Pfizer, a competitive advantage when trading internationally.
- Edexcel - A-Level Business - Question 2 - 2017 - Paper 1
Question 2
Assess the ways in which specialisation might give a business, such as Pfizer, a competitive advantage when trading internationally.
Worked Solution & Example Answer:Assess the ways in which specialisation might give a business, such as Pfizer, a competitive advantage when trading internationally.
- Edexcel - A-Level Business - Question 2 - 2017 - Paper 1
Step 1
Knowledge: Specialization and Competitive Advantage
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Answer
Specialization refers to a business's concentration on a specific range of products or services. In the healthcare sector, this specialization is highlighted by the dominance of a few multinationals, as indicated by global healthcare mergers in 2015.
Step 2
Application: Pfizer's Position in the Market
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Answer
Pfizer operates in a highly specialized environment for pharmaceutical goods, which require significant research and development investment. Such specialization mandates skilled labor, enabling Pfizer to innovate and provide distinctive products.
Step 3
Analysis: Competitive Pricing Through Specialization
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Answer
By specializing, Pfizer avoids direct competition with businesses like AstraZeneca in similar healthcare markets, allowing for unique pricing strategies and competitive advantages based on product differentiation.
Step 4
Evaluation: Vulnerabilities of Specialization
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Answer
However, specialization can render Pfizer vulnerable to market fluctuations. A sudden decline in demand for specific health products might adversely affect profits if the company is not diversified.
Step 5
Conclusion: Balancing Specialization and Diversification
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Answer
Thus, while specialization can provide Pfizer with competitive advantages due to differentiation and targeted market strategies, it is crucial to balance this with the ability to adapt to changing market demands and reduce associated risks.
