International Trade Theory Of Comparative Advantage, Global Operations, Free Trade And Porter 's Diamond

1673 Words May 7th, 2015 7 Pages
1 Introduction

The case study will address the issues contained in the case using theories of international business such as the theory of comparative advantage, global operations, free trade and Porter’s diamond that will be based on the cross-border trade and investment in the world, These theories can be incorporated in the company Logitech, which has made them into one of the world’s leading provider of personal peripherals. This analysis allows the team to develop the knowledge and identify the important implications in which international trade theory can be linked to real-life business situations.
2 Theory of Comparative Advantage and Global Operations
The theory of comparative advantage implies the importance of trading for other goods with countries that specialize in the producing those goods in areas that are more efficient so that countries can utilize the majority of its resources to gain an absolute advantage. Logitech has benefitted by diversifying its global operations to different countries based on operational and strategic decisions to remain competitive and innovative in the computer industry.

In order to expand and increase its profit margins, they had to remain cost-effective in the manufacturing of its products so they decided to venture into Taiwan and capitalize on the “low-cost labour and production costs to manufacture products that are more affordable to consumers, which resulted an increase of market share” and first mover’s advantages to…
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