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INTERNATIONAL TRADE THEORIES, ., BIBLIOGRAPHY, ANALYSIS: Not only does the…
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Porter's
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Firm strategy, structure, & rivalry
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Factors beyond the company's control and outside their scenario, that can make industries rise, or bring them down.
ex.: wars, costs, foreign government decisions
Demand Conditions
Domestic demand must be sophisticated to develop competitiveness and quality. It should give a picture of emerging needs
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Local governments have long-term objectives that they reach through subventions, subsidies, investment, and regulations
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ANALYSIS: Not only does the Factor Endowment theory acknowledge three production factors and its abundance in a country, it also considers further how much is needed for production of a commodity. This adjusts better to describe a country's capabilities for production, and hence offers a more suitable trading scenario than the previous theories could provide. The only thing I would add would be a greater emphasis on countries bieng able to develop their factors to increase abundance.
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ANALYSIS: Economies of Scale are a tool for what every firm should do: analyze its internal and external environments to figure out ways of improving or gaining benefit. While the competitive advantage theory does this analysis for improving quality driven by competitive environments and gaining an edge, the Economies of Scale tend to use the advantage for reducing costs and being overall more efficient.
I consider that this is good for established companies with a long trajectory, that enables them to have a clear mapping of their scenarios. It does not, however, help determine specialization of the company, simply specialization and elaboration of the inputs for the production processes. I would use this theory/strategy as an add-on for Porter's theory; I would first focus on quality to gain a competitive advantage, that would then grant me enough power within the industry to leverage better costs.
ANALYSIS: The Absolute Advantage Theory fails greatly to truly map the conditions of trading agents, mainly because of its conception of a single production factor. This leads it to ignore many conditions that can change how a party produces a given product. Furthermore, the consideration of just two countries doesn't consider the possibility of true international commerce. However, it can still be useful for nations to understand their situation and consider what to produce and what to trade.
ANALYSIS: The Comparative Advantage Theory is really helpful to understand why a country can benefit from trade, even when they have absolute advantage for production of both commodities. It is one of, if not the best model for representing the benefits of international trade. However, it can make a country lack a commodity, if they specialize in another one and fail to trade with other nations. Also, developed countries might take advantage of developing ones.
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ANALYSIS: I think that Porter's Competitive Advantage does a very good job at showing how companies and countries relate when it comes to international trade, and how they can help each other develop and succeed. I consider it is valuable for countries to determine a trade pattern, from the perspective of what national companies are specializing in. By the same token, companies can identify local strengths and exploit them to gain competitive advantage.
I also think that this theory can be useful for multinational companies: once they know their needs as a firm, they can identify the host countries that have the required factors developed enough for them to best serve the company.