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competing in global trade environment (comparative advantage (absolute…
competing in global trade environment
comparative advantage
absolute
adam smith
countries who cant produce goods at an equal price to others should instead purchase it from those coutnries
relative
david ricardo
specialising in production of product it can make cheaper than other countries. two countries work together to achieve the lowest net cost for production between them.
how does it happen?
diamond model (porter, 90)
countries competitiveness depends on
demand conditions for specific industry
strategies, structure andrivaly of firms in industry
availability and quality of factor conditions
quality of related industries and infrastructure
role of government affecting all above
competition among organisations
5 forces model
buyers
their bargaining power
potential entrants
sunk costs, costs to enter market.
other barriers to entry
suppliers
power relations between two
substitutes
rail travel rather than bus travel. shoes instead of trainers
industry competitiors
rivalry amongst firms, industry concentration
provides analysis of competitive position