Please enable JavaScript.
Coggle requires JavaScript to display documents.
Reading 2: Competing in a global trade environment - Coggle Diagram
Reading 2: Competing in a global trade environment
UNDERSTANDING THE GLOBAL TRADE ENVIRONMENT
a global economy is 'an economy with the capacity to work as a unit in real time on a planetary scale'
the global economy originated from an increase in worldwide flows of labour, goods, money, services, and information
the WTO has attracted some criticism for doing agreements with countries that do not respect human civil rights.
glocalisation
regional levels
national levels
local levels
supranational levels
'the global village'
COMPETITION AND TRADE AMONG COUNTRIES
absolute advantage
developed by Adam Smith
relative comparative advantage
developed by David Ricardo
a country will tend to specialise in the production of the good in which it has a comparative advantage
helps to understand how countries can gain from global trade by specialisation
the 'diamond model' developed by Michael Porter
all countries are characterised by 'differences in national values, culture, economic structures, institutions, and histories that all contribute to competitive success'.
a countries competitiveness depends on:
the strategies, structure, and rivalry of firms within the industry
the quality of related and supporting industries and infrastructures
the demand conditions in the country for that specific industry
factor conditions, demand conditions, strategies, structure and rivalry of firms and the quality of related and supporting industries
governments can influence all four factors through a variety of actions
COMPETITION AMONG BUSINESS ORGANISATIONS
business organisations also need to carefully identify their competitors and the nature of the competition existing in the global trade environment
'five forces model' of competition
to assess their competitive position and market attractiveness
buyers
direct industry competitors
potential entrants
suppliers
substitute goods/services
analysis of these five forces allows business organisations to get a picture of their competitive position in the market