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Global Trade Environments (Comparative Advantage (Absolute comparitive…
Global Trade Environments
Global Village (McLuhan)
integrating planet
effecs in one part of the world felt elsewhere in realtime
Impact non-globalised businesses
such as change in oil prices
Increase in worldwide flow
Labour, Goods, Money, Services and Information
Development of ICT and social networks
Greater interconnectedness
Comparative Advantage
Absolute comparitive advantage (Smith, 1776)
If countries can supply a good for less than you make it, you should buy it from them
Relative comparitive advantage (Ricardo, 1819)
Each country will specialise in certain products as they are relatively more efficient
Why do countries have comparative advantage in some goods and services over others?
Diamond Model (Porter, 1990)
Factor Conditions
natural resources
ie - Diamonds in Namibia
Demand conditions
in the country for the specific industry
it Tourism in Italy - Rome, Vence
Strategies, structure and rivalry within the industry
France - champagne region
Quality of related and supporting industries
US and UK - good supporting industries in education
Government influence
Subsidies
Infratstructure
Tax conditions
educational policies
Competition among organisations
Porters 5 forces (1980)
Direct Industry Competitors
Suppliers
Buyers
Potential Entrants
Substitute goods / services