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Competing in a global trade environment - Coggle Diagram
Competing in a global trade environment
The Theory of Comparative advantage
A revised version by David Ricardo
Specialisation in the production of goods not necessarily built from absolute advantage but still benefits both trading countries
When comparing with another commodity there is an advantage to produce one over the other
To understand how and why a country can specialise other another on particular goods
The theory of Absolute advantage
Developed by Adam Smith
A country that can produce and supply a good cheaper than another will be of benefit to both countries.
The diamond model
Developed by Porter (1990) in the book The Competitive Advantage
Factor conditions
Structure of firms and rivalry
Relating and supporting Industries
Demand Conditions
The five forces of competition
Industry Competitors
Threat
Potential Entrants
new organisations entering the market
Substitutes
Something different that can reach the same needs of the customer
Bargaining Power
Buyers
Customers of the business
Suppliers
Where the firm makes purchases
Rivalry among existing firms