User talk:Shelly Rana

International Trade Theory

1 Theories of international trade and investment 2 Why nations trade 3 How nations enhance their competitive advantage: contemporary theories 4 Why and how firms internationalize 5 How firms gain and sustain international competitive advantage

Foundation Concepts

Comparative advantage Superior features of a country that provide it with unique benefits in global competition – derived from either national endowments or deliberate national policies

Competitive advantage Distinctive assets or competencies of a firm – derived from cost, size, or innovation strengths that are difficult for competitors to replicate or imitate

'''Perspectives of the Nation and the Firm ''' Comparative advantage Is the concept that helps answer the question of all nations can gain and sustain national economic superiority

Competitive advantage Is the concept that helps explain how individual firms can gain and sustain distinctive competence vis-à-vis competitors

Examples of National Comparative Advantage China is a low labor cost production base India’s Bangalore region offers a critical mass of IT workers Ireland’s repositioning enabled a sophisticated service economy Dubai, a previously obscure Emirate, has been transformed into a knowledge-based economy

Examples of Firm Competitive Advantage Dell’s prowess in global supply chain management Apple’s design and technology leadership in mobile devices Samsung’s leadership in flat-panel TV Herman Miller’s design leadership in office furniture (e.g., Aeron chairs)

International Trade Theory What is international trade? Exchange of raw materials and manufactured goods (and services) across national borders Classical trade theories: explain national economy conditions--country advantages--that enable such exchange to happen New trade theories: explain links among natural country advantages, government action, and industry characteristics that enable such exchange to happen Implications for International Business

Why Is Free Trade Beneficial? Free trade - a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country Trade theory shows why it is beneficial for a country to engage in international trade even for products it is able to produce for itself International trade allows a country to specialize in the manufacture and export of products that it can produce efficiently import products that can be produced more efficiently in other countries

Why Do Certain �Patterns Of Trade Exist? Some patterns of trade are fairly easy to explain it is obvious why Saudi Arabia exports oil, Ghana exports cocoa, and Brazil exports coffee But, why does Switzerland export chemicals, pharmaceuticals, watches, and jewelry? Why does Japan export automobiles, consumer electronics, and machine tools?

What Role Does �Government Have In Trade? The mercantilist philosophy makes a crude case for government involvement in promoting exports and limiting imports Smith, Ricardo, and Heckscher-Ohlin promote unrestricted free trade New trade theory and Porter’s theory of national competitive advantage justify limited and selective government intervention to support the development of certain export-oriented industries