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B2 R2 competing in a global environment (global economy: (...WTO creation,…
B2 R2 competing in a global environment
global economy:
an economy with the capacity to work as a unit in real time on a planetary scale (Castells, 1996, p. 92)
increase in worldwide flow of goods, services, money, capital, labour, information
...WTO creation
.. to encourage/support smooth, predictable, and free flow of trade
trade agreements negotiated & signed by trading nations (e.g. Uruguay Round)
earlier GATT
main aims
help producers conduct business
allow govt to meet social & environmental objectives
glocalisation (Robertson, 1995)
comparative advantage (Sacino, 2017)
if country A can supply product B at cheaper price than country C,
then
it makes sense for country C to buy product B from country A
relative comparative advantage
product C produced at cost
50p in country A
60p in country B
product D produced at cost
40p in country A
55p in country B
comparative advantage for country A is 10p in product C; 15p in product D
so
country A sells product D to country B
county B sells product C to country A
absolute comparative advantage
the diamond model (Porter, 1990)
country analysis
demand conditions in the country for that specific industry
the strategies, structure, and rivalry of firms within the industry
the quality of related and supporting industries and infrastructures
factor conditions (e.g. natural resources)
govt able to influence the 4 factors: subsidies, infrastructure provision, tax conditions, educational policies (labour force skills)
Porter's Five Forces (Porter, 1980)
industry competitors
