Logitech Case Study

According to Colander, "The reason two countries trade is that trade can make both countries better off" (2004, p. 416). In economics, the theory of comparative advantage clarifies why it can be advantageous for two countries to trade, even though one of them may be able to produce every kind of item more cheaply than the other. What matters is not the absolute cost of production, but instead, the ratio between how easily the two countries can produce different kinds of goods. The basic idea of the principle of comparative advantage is that as long as the relative opportunity costs of producing goods differ among countries, then there are potential gains from trade.

Dave gives “The Theory of Comparative Advantage” a different name and calls it “The Roundabout Way to Wealth”.(p.10) He says that this theory deals with the idea that even a nation which is relatively poor at doing everything, still do some things relatively well. “And a nation that is really good at many things should still specialize in producing some items and import the rest”.(p.10) Time is the ultimate scarce resource. Investing time in doing something means having less time in doing

Comparative advantage is the concept that production can be conducted with lower opportunity cost than a competitor. The lower cost of

While most in today’s hyper-competitive global economy look towards countries including; China, India, Taiwan, Vietnam, and others in search of lower production costs seeking the ever illusive comparative advantage, others have different ideas. Switzerland, a tiny land locked nation in central Europe surrounded by Alps with a relatively small population of 7,630,605 is one such country. It operates with its own comparative advantage in the industries of

The United States has an absolute advantage over the technological products and services which are critical. Within the global markets, the U.S has been able to provide tech products and services appropriately. However, it has comparative advantage of offering tech services while the absolute advantage exists in technology design and providing industrial capacity. The U.S is a major exporter in the international markets of products such as civilian aircraft, semiconductors, cars, car accessories, fuel oil, and organic chemicals among others. Such exports improve the U.S's comparative and absolute advantage.

The comparative advantage for computers, then, would go to Japan because they are more efficient at making them. They produce more computers and give up less than Canada does.

Reduced costs and better utilization will help BMG operate at their max efficiency resulting in a higher ROI and attract investors thus establishing a competitive advantage. Because BMG will be able to self manage their infrastructure with fewer resource and less capital, the savings can

These advantages are usually temporary because a competitor, which in turn creates a perpetual cycle of improvement strategies (Baltzan & Phillips, 2007), often duplicates them. Techniques to consider, would be environmental scanning, first-movers advantage, and Michael Porter’s Five Forces Model (Baltzan & Phillips, 2007).

Comparative advantage states that the division of labor should operate freely, without outside interference, because some countries, people, states, etc., have special advantages over the others, that allows them to produce certain goods more

Michael Porter investigated why nations have a competitive advantage in specific industries his findings saw two basic types of competitive advantage that firms could pose low cost or differentiation. If you combine the two types of competitive advantage and allow room for a way in which firm wish to achieve them this will lead to three generic strategies which will achieve higher average performances in industries: cost leadership, differentiation and focus.

The country can maximize their wealth by putting the resources in the most competitive industries. Government created comparative advantage rather than free trade because now easier moves the production processes and the machines into countries that can produce more goods (Yeager & Tuereck, 1984). However, many countries now move to new trade theory suggests the ability firms to limit the number of competitors associated with economic scale (reduction of costs with a large scale of output) (Krugman, 1992). The comparative advantage occurs when two-way trade in identical products, it will useful where economic scale is important, but it will create problem with this model. As a result, government must intervene in international trade for protection to domestic firms (Krugman, 1990)

A country is said to be more productive than another country, if it can produce more output (goods) for a given quantity of input, such as labour or energy inputs. An example is that there are only two countries, Australia and Japan. They both produce computers and wine, and only one factor of production, labour. Japan produces 6 computers for every 1 bottle of wine, where as Australia produces only 4 computers for every 3 bottles of wine. This suggests that Australia should export some of its wine to Japan, and Japan should export some of its computers to Australia. Australia has an absolute advantage over Japan, when producing wine, and Japan has an absolute advantage over Australia, when producing computers (Gandolfo, 1998).

Acer's dominance as a global manufacturer of IT hardware products can be attributed to the company's extensive electronics component expertise, depth of experience managing global electronics component supply chains, and well-planned acquisitions. Through a series of successful acquisitions, the company has four successful brands including Acer, eMachines, Gateway and Packard-Bell (DiDominico, Kartika, Sibeck, 1996). Of these three strategic areas that Acer excels in, their logistics and supply chain expertise across each of the geographies they compete in continue to deliver the greatest time-to-market and cost gains (Honi, Taring, Po-Young, 2000). Acer is organized into two segments, the device business group and consolidated products and services or other business group. This second group continues to be instrumental in the success of the "divide and conquer" strategies that Acer is successfully using relative to Lenovo. It is also a critical success factors in their success with global markets and local market competitive strategy. The combination of their depth of expertise with electronic components and supply chain prowess in the high technology industry also give the company a formidable competitive advantage against Dell and the troubled PC marker Hewlett-Packard (Honi, Taring, Po-Young, 2000). Despite all these strengths however, Acer continues to struggle with the areas of consumer branding and consumer awareness

Logitech has several internal strengths that has attributed to the company’s success. Logitech has created for itself a strong reputation through its innovative products and excellent customer service. Innovation is Logitech’s top strengths. Because an innovation is cover throughout the paper, I will not be providing detail examples of in this section, but rather be focusing other key factors. Logitech has stood the test of time, the company can quickly respond and adapt to changes in technology or market conditions. Because Logitech’s product and brand is recognized worldwide, the company has a strong channel coverage and efficient worldwide distribution. In 2009, Logitech’s business retail

The principle of comparative advantage provides a simplified theory explaining why free trade is possible, even when one country has an economic disadvantage. Both the Ricardian and Heckscher-Ohlin theories rely on fixed economic assumptions of constant return and perfect competition. However, intuitively the basic principle of business is to increase returns through innovation, improving processes and technology or increasing economies of scale. Organizations understand they control pricing and are price setters, rather than price takers as suggested by perfect competition (Krugman & Obstfeld, 2003). The idea of increasing returns and imperfect competition challenge the foundations of comparative advantage.