International Business Globalization
Q-1Explain how trade lowers the costs of making computer peripherals such as mice and keyboards.
ANSW.It is amazing to think that trade helps to lower the costs of a product. As we saw in the previous question, if the United States were to build a product entirely domestically, the retail price would not be feasible to most consumers. With trading in place it allows for economies of scale. The technology can be developed in one country, the ergonomics in another country, the production in another country, and the assembly in yet another country. The shipping costs are much less than it would be to perform these tasks in one country. This is called absolute advantage, where someone is great at one thing. With this in mind you will get a product that has the best resources available at the lowest cost, which is comparative advantage. Finally, specialization is where everyone is doing what they do best and pulling their resources together to make one incredible product.
Q-2.Use the theory of comparative advantage to explain the way in which Logitech has configured its global operations. Why does the company manufacture in China and Taiwan, undertake basic R&D in California and Switzerland, design products in Ireland, and coordinate marketing and operations from California?
ANSW.Logitech is very brilliant when it comes to comparative advantage. It does basic R&D work in Switzerland with 200 employees, its headquarters are in Fremont, California with 450 employees as well as some R&D, the ergonomic designs are developed in Ireland, and the products are manufactured in Taiwan and China. The comparative advantage is that it is the most cost effective to break up the business in many different countries that specialize in a certain job.
Q-3.Who creates more value for Logitech, the 650 people it employs in Fremont and Switzerland, or the 4,000 employees at its Chinese factory? What are the implications of this observation for the argument that free trade
ANSW.It is amazing to think that trade helps to lower the costs of a product. As we saw in the previous question, if the United States were to build a product entirely domestically, the retail price would not be feasible to most consumers. With trading in place it allows for economies of scale. The technology can be developed in one country, the ergonomics in another country, the production in another country, and the assembly in yet another country. The shipping costs are much less than it would be to perform these tasks in one country. This is called absolute advantage, where someone is great at one thing. With this in mind you will get a product that has the best resources available at the lowest cost, which is comparative advantage. Finally, specialization is where everyone is doing what they do best and pulling their resources together to make one incredible product.
Q-2.Use the theory of comparative advantage to explain the way in which Logitech has configured its global operations. Why does the company manufacture in China and Taiwan, undertake basic R&D in California and Switzerland, design products in Ireland, and coordinate marketing and operations from California?
ANSW.Logitech is very brilliant when it comes to comparative advantage. It does basic R&D work in Switzerland with 200 employees, its headquarters are in Fremont, California with 450 employees as well as some R&D, the ergonomic designs are developed in Ireland, and the products are manufactured in Taiwan and China. The comparative advantage is that it is the most cost effective to break up the business in many different countries that specialize in a certain job.
Q-3.Who creates more value for Logitech, the 650 people it employs in Fremont and Switzerland, or the 4,000 employees at its Chinese factory? What are the implications of this observation for the argument that free trade