Exit barriers are low Logitech When exit barriers are low, weak firms are more likely to leave the market, which will increase the Fast industry growth rate Logitech When industries are growing revenue quickly, they are less likely to compete, because the total Large industry size Logitech Large industries allow multiple firms and produces to prosper without having to steal market share
Porter speaks of these four attributes as constituting Porter theory in logitech diamond. Also, there is huge demand of electronic products from all other counties.
Also, it has rapidly expanding local computer industry. These factors represent the presence of suppliers or related industries.
Choosing Taiwan has advantages of low cost, well-developed suppliers, qualified people, etc. Also, the tough competitions among the local manufactures help the firm to gain efficiency. Here, the government role in providing suitable space at subsidized rate in its science-based industrial park to encourage foreign companies to invest is also important.
In this way, these four attributes are favorable to Logitech in choosing Taiwan as a major manufacturing site. The theory of comparative advantages suggest that it makes sense for a country to specialize in producing those goods that it can produce most efficiently, while buying goods that it can produce relatively less efficiently from other countries- even when there is absolute advantage for them to produce all the goods.
It also suggests that unrestricted free trade brings about increased world production and stimulates economic growth, which creates dynamic gains from trade. Logitech has configured its global value chain to produce its goods at high volume with lower production costs while maintaining the value of those assets that lead to differentiation, which is aligned with this theory.
Specifically, this theory is applied in the flowing ways to configure its global operations. China and Taiwan for manufacturing Taiwan is offering well-developed supply base for parts, qualified people, and a rapidly expanding local computer industry. Government of Taiwan is providing suitable place for manufacturing at a subsidized rate.
All these facilities provided by Taiwan help Logitech to manufactured large volumes of products at low cost. China is providing cheap and hard working labors. This helps Logitech to increase its production capacity and go for mass production by utilizing the human resources more efficiently.
The corporate headquarter office in California provides top management to know more about the new innovation and trends in the market. Experts needed for designing new products, formulating policies, etc. Also, in Switzerland, the talented human resources for developing softwares, analyzing business trends and formulating policies are available.
Design products in Ireland Ireland has high number of young and skilled people. These young skilled minds are very much important in innovative design. So Logitech select Ireland for products design.The Challenges Faced In International Trade Theory Commerce Essay.
Print Reference this. Disclaimer: Logitech as a case study of international trade and competitive advantage fully discussed in form of answering study questions. Porter’s Diamond and Competitive Advantage. Case Analysis for Logitech Logitech is known as a global provider of peripheral devices for computers, tablets and phones.
Logitech manufactures mice, keyboards, microphones, game controllers, and web cams. The company also makes speakers for the home and the computer, headphones, wireless audio devices, and audio devices for mobile phones.
Trade is the exchange or the transfer of ownership of goods and services from a seller to a buyer and gets back something for an exchange - Logitech Essay introduction. Trade exists because of specialization and division of labor, which is to concentrate on a specific part of production of goods, and trade the finished goods for other finished goods with others.
To what extend can Porter’s diamond help explain the choice of Taiwan as a major manufacturing site for Logitech? Answer: Porter’s theory of national competitive advantage suggests that the pattern of trade is influenced by four attributes of a nation: (a) factor endowments, (b) domestic demand conditions, (c) relating and supporting industries, and (d) firm strategy, structure, and rivalry.
Michael Porter developed Porter’s Diamond, also known as The Diamond Model, in in his book ‘The Competitive Advantage of Nations’. The four determinants of Porter’s diamond must operate as a system rather than individually. Porter's Five Forces Framework is a tool for analyzing competition of a business.
It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack of it) of an industry in terms of its profitability.