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Competing in the Global Environment (Understand the Global Trade…
Competing in the Global Environment
Understand the Global Trade Environment
Rapid development of ICT and social media provides better interconnections
International Trade
An economy with capacity to work as a unit...(Castells, 1996, p.92)
Competition among business Organisations
Five forces model of competition Porter 1980
:
Direct Industry competitors
Suppliers
Buyers
Potential Entrants
Substitute goods and services
World Trade Organisations
Foster openness of greater worldwide trade
Deals with Global rules
Trade agreements negotiated terms from nations
1986-94 Uruguay Round - provide legal status
Help Producers of goods& services, exporters and importers conduct business
CRIICISED - for doing trade with some nations who do not up hold the human civil rights
Competition and trade amongst Countries
Comparative Advantage
Absolute comparative advantage
If a country can supply the goods cheaper than others then its better to get it cheaper - (Adam Smith, 1776.pp 424-5).
Relative comparative advantage
Determinant factor is the price that exists in producing the goods.
(For example if it costs £60 for cloth UK and £50 in Spain whilst wine is £55 UK and £40 Spain. Differences are £10 and £15. Bigger comparative advantage was bigger for Spain to produce wine. RCA would show it is better for UK to produce cloth not wine - David Ricardo 1819.
Diamond Model
Michael Porter 1990
Differences in national values, culture, economic structures, institutions and histories (Porter 1990, p 74.)
Demand for the country who has the specialism
Strategies, structure and rivalry of firms in the industry
Quality of related industries and infrastructures
GOVERMENT INFLUENCE
