For Florida to have a comparative advantage with California in regards to the trade of oranges, Florida would have to be able to produce oranges cheaper than California. Florida would need some distinct productivity advantage, like cheaper fuel prices, cheaper labor, a more efficient production system. This comparative advantage would then exist only in relation to the trading of oranges between Florida and California.
If one were to then compare Florida and New Mexico, then the particular circumstances between Florida and New Mexico would have to be evaluated to see if Florida had the comparative advantage. If New Mexico had some production advantage over Florida in the production of oranges, then while Florida may have a comparative advantage over California, it would not have a comparative advantage over New Mexico. And the circumstances between orange trade between New Mexico and California can be analyzed as well and it may be…...
mlaReferences
Maneschi, Andrea. (1999). Comparative Advantage and International Trade.
Northampton, MA: Elgar Publishing. Print.
Woo, Koo, and P. Lynn Kennedy. (2005). International Trade and Agriculture. Malden,
MA: Blackwell Publishing. Print.
"This is because any actor's comparative advantage depends only upon the relationship between that single actor's own levels of productivity for two goods under consideration, while (www.auburn.edu).
An example of the distinction between comparative and absolute advantage might be that Microsoft may have so much capital and available resources that it could produce, say, pizza at an absolute advantage, compared with the local Italian restaurant. But to do so, Microsoft would have to give up some of its resources better spent in the production of a new indows operating system, from which it could make much more money. Giuseppe, however, down the street, has a comparative advantage making his living producing pizzas at the business he inherited from his father, as he has few start-up costs, and because he can employ all of his family at the business at no cost. Economically, this single proprietor has the least to lose…...
mlaWorks Cited
Johnson, Paul. (2001). "Absolute Advantage." Glossary of Economic Terms. Retrieved 18 May 2007 at http://www.auburn.edu/~johnspm/gloss/absolute_advantage
Johnson, Paul. (2001). "Comparative Advantage." Glossary of Economic Terms. Retrieved 18 May 2007 at http://www.auburn.edu/~johnspm/gloss/comparative_advantage
Absolute Advantage
A worker has an absolute advantage in the production of a good relative to another if it can produce the good at lower cost or with higher productivity (Armington, 1969). In this model we would say that worker 1 has an absolute advantage in both plumbing and masonry when compared to the worker 2. It is because worker 1 takes less number of hours in both of the activities: plumbing and masonry. In other words:
4< 5, therefore in each of the case worker 1 has an absolute advantage.
Comparative Advantage
A worker has a comparative advantage over the other worker when he/she can produce that good at a lower opportunity cost relative to another worker (Arrow, 1974). Opportunity cost is defined generally as the value of the next best opportunity. In the context of the workers, workers have the opportunities either to work in masonry or plumbing (Chiang. And Masson, 1988).…...
mlaReferences
Armington, P. "A Theory of Demand for Products Distinguished by Place of Production." IMF Staff Papers, 16, 1969, 159-78.
Arrow, K.J. "The Theory of Discrimination," in Discrimination in Labor Markets, edited by 0. Ashenfelter and A. Rees. Princeton, NJ: Princeton University Press, 1974.
Chiang. S., and R. Masson. "Domestic Industrial Structure and Export Quality." International Economic Review, 29, 1988, 261-70.
international trade the theories of absolute and comparative advantage are important. The concept of absolute advantage is seen in the trade theories of Adam Smith, originally published in 1776, where it was argued that countries should produce the goods that they can create with the lowest total costs (Smith, 1994). A country has an absolute advantage if they are able to produce a good at the lowest overall cost compared to other nations. In this model nations should export goods they produce at the lowest cost and import those goods that have the highest overall cost to produce (the absolute disadvantage) (Smith, 1994). In this way nations use their resources to optimize production. The concept of absolute advantage is a good starting point to assess who trade takes place in the international environment, but it is also too simplistic. Trade is more complex, with many countries producing goods which…...
e-anking as a Competitive Advantage in razil
The Federative Republic of razil is the largest and most populous country in Latin America, and fifth largest in the world. Spanning a vast area between central South America and the Atlantic Ocean, it is the easternmost country of the Americas and it borders Uruguay, Argentina, Paraguay, olivia, Peru, Colombia, Venezuela, Guyana, Suriname and French Guiana - every South American nation except for Ecuador and Chile. Named after brazilwood, a local tree, razil is home to both extensive agricultural lands and rain forests. The official language of razil is Portuguese.
Possessing large and well-developed agricultural, mining, manufacturing, and service sectors, as well as a large labor pool, razil's economy outweighs that of all other South American countries and is expanding its presence in world markets. Major export products include coffee, soybeans, iron ore, orange juice, steel and airplanes.
After crafting a fiscal adjustment program and pledging…...
mlaBibliography
Bank of America. 9 April 2005. Retrieved June 9, 2005 from http://www.bankofamerica.com/deposits/checksave/ .
Benson, Todd. Brazil's Banks Adjust View of Their Market. April 9, 2005. The New York Times. Retrieved June 9, 2005 from http://www.changemakers.net/library/temp/nytimes04905.htm .
Chandler, Lester V. And Goldfeld, Stephen M. The Economics of Money and Banking. New York. Harper & Row. 1977.
Colitt, Raymond. A modest start for flashy virtual malls. October 30, 2000. Retrieved June 7, 2005 from ePayNews.com. 9 April 2005. Retrieved June 9, 2005 from http://www.epaynews.com/statistics/bankstats.html .
regional international institutions, International Monetary Fund, World Bank, United Nations, World Trade Organization, a financial institution. Select countries apply traditional international trade theories, absolute advantage, comparative advantage, factor endowment, enhance participation international trade.
International Trade Participation
The interaction between countries is a complex process that is strongly influenced by economic, political, and cultural factors. The need for this interaction is based on the resources that can be provided with smaller efforts by some countries to countries that need them. The need for resources has determined countries to involve in military, economic, and biological wars, or to involve in influence relationships where several countries support a larger community that can polarize greater power in the attempt to counteract the influence of other powerful countries. This is the case of the European Union that was developed in order to join the efforts of European countries so that they could balance the power between…...
mlaReference list:
1. Comparative Advantage (2014). Investopedia. Retrieved March 6, 2014 from http://www.investopedia.com/terms/c/comparativeadvantage.asp .
2. Regional Trade Agreements (2011). OECD. Retrieved March 6, 2014 from http://www.oecd.org/document/62/0,3746,en_2649_36442957_31839102_1_1_1_1,00.html .
3. Role of the World Trade Organization (2012). ICT. Retrieved March 6, 2014 from http://www.ictregulationtoolkit.org/en/section.1651.html.
O'Sullivan and Sheffin pointed out (2003), an absolute advantage, in commercial terms, describes the advantage that a country has over another country when it comes to manufacturing a product or service, at the same level of resources. Since the level of resources is the same, the element that usual differentiates between the output is the labor productivity, which varies from country to country because of different reasons, including better organization, level of education, specialization etc.
Comparative advantage, on the other hand, places the issue in the realm of competitive costs and accepts the idea that, although a particular country may have no absolute advantage, it would still have a comparative advantage over another country when it came to a particular good or service: it would be able to produce a particular good or service more efficiently than another.
Absolute and comparative advantages are useful when discussing trade theories, particularly because the…...
mlaBibliography
1. Blaug, Mark, (1992). The methodology of economics. Cambridge University Press
2. O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. The Wall Street Journal: Classroom Edition (2nd ed.). Upper Saddle River, New Jersey
In 2004, FASB (Financial Accounting Standards Board) issued a draft meant to provide guidelines of how entities should estimate fair value prices for reporting purposes.
Escape clause - is a part in any contract that specifies the conditions in which one or more parties involved in the contract may avoid performing its duties as specified in the contract.
14. The import substitution is a policy through which countries decide to substitute some of the imported products with others manufactured locally. The advantage of this policy is the import limitation, which in some instances may turn out to be positive for the trade balance and national value-added creation. The disadvantage is that national products lose export competitiveness because they are protected by the state. The export promotion is a policy through which countries decide to develop measures meant to increase the exports of national products. The advantage of this policy is that…...
3. The country that I have chosen is South Africa. Absolute advantage is a situation when a country has an advantage in producing an item; comparative advantage reflects a situation when a country does not have absolute advantage but on the balance of trade should produce that good anyway. Compared with the United States, South Africa has absolute advantages in some mineral production, but mainly in the cost of labor. A combination of high levels of unemployment and a weak rand (9.05 to the USD) make South Africa's labor costs substantially lower -- even educated, middle class South Africans earn less than their American counterparts. South Africa has a comparative advantage in some manufacturing and service industries, however. It might not be cheaper than some Asian nations, but it has good technological and managerial capabilities that could give it comparative advantage in a number of light manufacturing and resources industries.
The…...
mlaWorks Cited:
Blinder, A. (2010). Quantitative easing: Entrance and exit strategies. Federal Reserve Bank of St. Louis Review. Retrieved March 6, 2013 from http://research.stlouisfed.org/publications/review/10/11/Blinder.pdf
Yellen, J. (2013). Challenges confronting monetary policy. Board of Governors of the Federal Reserve System. Retrieved March 6, 2013 from http://www.federalreserve.gov/newsevents/speech/yellen20130302a.htm
Aversa, J. (2010). Fed to review $600 billion bond buyback program at Tuesday's meeting. CNS News. Retrieved March 6, 2013 from http://cnsnews.com/news/article/fed-review-600-billion-bond-buyback-program-tuesday-s-meeting
tarbucks in India
Identifying Global Opportunities
Global Business Opportunities
tarbucks is a global retailer of coffee, and is seeking new growth markets, since its largest markets (U.., Canada, UK) are all mature. The company has nearly 20,000 stores (2011 Annual Report). The company has premium positioning in the market with its brand, logo and patents providing key intellectual property to expand globally.
Potential Markets
When looking for potential markets, tarbucks seeks the opportunity to license or to form joint ventures with established food service companies. This allows tarbucks to leverage its brand in new markets, while gaining local market expertise. The company has demonstrated in the past that it is skilled at adapting to changing times and new technology, but at its core is a great coffee business.
Business Opportunity Analysis
Looking at new market opportunities, tarbucks has already identified China as a major area for growth (Loeb, 2013). However, there remains several key opportunities in the…...
mlaSources
The company will compile its information on a daily, weekly, monthly and quarterly basis and then communicate this back to Seattle head office, while Tata head office in Mumbai will also receive the information. Most of the decision-making for the business is between the Starbucks manager there and the Tata partner manager. They make joint decisions, and typically rely on information from the joint venture. Only performance measures are communicated back to head office, so there is not much need for a global MIS. However, by linking the Indian operation in with the pre-existing global Starbucks MIS the company will achieve its objectives of being fully connected.
Technology for Managing Information
One of the important considerations here is that Starbucks relies on global MIS. It does not need to create it so much as integrate it with the existing systems. This means expending on infrastructure in India in order to support the company's rapid growth in that country. For Starbucks, being prepared from an information systems perspective for rapid growth is an essential component of the market entry strategy. The company will utilize the Internet, cloud-based computing, and will also use traditional Internet networks and storage, communicating with email and instant message.
Module 9: Identifying human resources for global business activities
Macroeconomics
Comparative advantage is when someone is better at something than someone else. In the context of economics, it is typically applied to trade. For example, if two countries are trading, they should each produce the good at which they have comparative advantage. The overall production of two countries producing to their respective comparative advantage will be higher than if they both produced to their domestic demand. Key to understanding comparative advantage is the idea of opportunity cost. Where resources are scarce, any use of resources for one purpose means that another purpose must be forgone. But if parties produce that in which they have comparative advantage, not only does overall production increase, but opportunity cost decreases (Landsburg, 2007).
The product life cycle theory is an entirely different theory, reflecting an entirely different subject. The product life cycle theory is focused on the idea that products start with an introductory phase, move…...
mlaReferences
Business Mate (2014). What is transaction cost theory? Business Mate.org. Retrieved December 10, 2014 from http://www.businessmate.org/Article.php?ArtikelId=182
CIA World Factbook. (2011). Australia. Central Intelligence Agency. Retrieved December 10, 2014 from https://www.cia.gov/library/publications/the-world-factbook/geos/as.html
FFS (2014). Fragile States Index 2014. Retrieved December 10, 2014 from http://ffp.statesindex.org/
Geert-Hofstede.com (2014). Retrieved December 10, 2014 from http://geert-hofstede.com/
In the real world, most markets are far from fully competitive, labor-productivity within a country varies over time and full employment is just a dream in most capitalist economies. (Suranovic 1997)
Given the list of such 'unrealistic' assumptions made in the model, it is easy for us to dismiss the results of comparative advantage altogether or to accept it with a large dose of skepticism. But would such dismissal be justified? It is prudent to remember that almost all economic theories operate under a large number of 'unrealistic' assumptions that do not apply to the much more complex real world. In fact, we deliberately simplify the variables in economics in order to be able to construct models and to carry out analysis. Such simplification does not make all economic analysis redundant. It should also be remembered that comparative advantage and international trade would work to the benefit of all individuals…...
mlaReferences
David Ricardo and Comparative Advantage." (2004). Net MBA.com. Internet Center for Management and Business Administration. Retrieved on November 17, 2004 at http://www.netmba.com/econ/micro/comparative-advantage/
Suranovic, Steven. (1997) "The Theory of Comparative Advantage - Overview." International Trade Theory and Policy. Retrieved on November 17, 2004 at http://internationalecon.com/v1.0/ch40/40c000.html
Colonel Robert Torrens (1780-1864) was a British army officer and owner of the Globe newspaper
David Ricardo (1772-1823): British economist and businessman who was a great proponent of 'free trade.' which both are able to produce the Polish-American mathematician who helped to develop the theory of hydrogen bomb
Comparative advantage states that mutually beneficial exchange is possible whenever relative production costs differ prior to trade. Nations gain by producing goods at relatively low costs and exchanging their outputs for different goods produced by others at relatively low cost. Thus, all potential trading partners can gain enormously through appropriate specialization and exchange. A country has an absolute advantage in producing a good if production of the good absorbs fewer resources than are required in other countries or by other individuals or firms.
Globalization drivers over the last decade include market drivers (common customer needs, global customers, global market channels), cost drivers (global scale economies, sourcing efficiencies, factor of production differences), government drivers (unrestrictive trade and investment policies, compatible technical standards, common marketing regulations) and competitive drivers (high degree of cross-border trade, global competitors, and interdependence among countries in policy, trade/investment and management) (Industry globalization).
The global marketplace is here today,…...
mlaBibliography
Comparative advantage and absolute advantage. EconomicsInteractive.com. Retrieved from http://www.unc.edu/depts/econ/byrns_web/Economicae/Essays/ABS_Comp_Adv.htm
Hobbss, R.T. (n.d.). Stock split essentials -- what every stock trader needs to know. http://www.streetdirectory.com/travel_guide/144170/trading/stock_split_essentials____what_every_stock_trader_needs_to_know.html
Industry globalization. University of Kentucky. Globalizationhttp://www.uky.edu/~wallyf/globaliz.ppt#268,1,Industry
Understanding stock splits. Investopdiea. http://www.investopedia.com/articles/01/072501.asp
Thomas Money
The operating decisions that must be made by Thomas Money include the level of output that the company needs to have in response to the prevailing economic conditions. The company is facing a difficult economic environment at present. Thomas Money's performance is strongly correlated with economic measures that focus on construction, such as new housing starts and new business or institutional construction. In the current environment, housing starts are entering into a long period of decline following the bursting of an unsustainable housing bubble (Byun, 2010). The one bright spot in Thomas Money's business is that there is strength in institutional construction in the health care industry, as the elderly population increases, driving increased demand for health care services (no author, 2007). However, this improvement is not enough to keep Thomas Money's customer in business and as a result the company is facing a high level of repossessions. This…...
mlaWorks Cited:
No author. (2007). Health care demand rising, population aging: The imperative to increase physician supply. Health Care News. Retrieved February 3, 2012 from http://www.gnyha.org/5834/File.aspx
Byun, K. (2010). The U.S. housing bubble and bust: Impacts on employment. Bureau of Labor Statistics. Retrieved February 3, 2012 from http://www.bls.gov/opub/mlr/2010/12/art1full.pdf
Landsburg, L. (2007). Comparative advantage. Library of Economics and Liberty. Retrieved February 4, 2012 from http://www.econlib.org/library/Topics/Details/comparativeadvantage.html
Investopedia. (2011). Interest rate parity. Investopedia. Retrieved February 4, 2012 from http://www.investopedia.com/terms/i/interestrateparity.asp#axzz1lFGk3bQ3
nature of U.S.-Mexican trade relations, it is difficult indeed not to think of the statement of Mexican President Porfirio Diaz at the turn of the last century, "Poor Mexico, so far from God, and so close to the United States." For Mexico does continue to seem to occupy a benighted position vis-a-vis its richer and more powerful neighbor to the north, a position that is in no small measure defined and continually recreated by the nature and mechanisms of international trade between the two nations. This paper examines the nature of the trade relations between the United States and Mexico in the light of several classical economics theories and models as well as in respect to recent developments in the wake of the 1992 signing of the NAFTA accord and the last decade's worth of increasing globalization.
Economic Theories and Models
We begin by discussing and summarizing some of the useful…...
mlaReferences
Danaher, K. & Burbach, R. (eds.) (2000). Globalize this!: The battle against The World Trade Organization. Los Angeles: Community Archives Publications.
Esty, D. (1994). Greening the GATT: Trade, environment, and the future. Washington DC: Institute for International Economics.
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