ipl-logo

What Is Company Xy's Comparative Advantage?

533 Words3 Pages

Nancy Slesar
BUSE (71828)
9/02/2014

Chapter 2
BUSN 100

A) A comparative advantage is when a company/country can manufacture a certain product for a lower cost then another source. To put comparative advantage into perspective, two companies both manufacture cotton for towels. Assuming that company ABC is located in Arkansas, where most of US cotton is grown and company BCD is located in New York City. Company XY has a greater comparative advantage because the cotton is grown locally, unlike company YZ where the cotton must be imported from a different state. All in all, the secret for higher profiting on a certain product means the lower the manufacturing cost, the better. Most of US goods are “Made in China” instead of the US (although India is now leading as the lowest cost manufacturer) …show more content…

Aside from the comparative advantage, companies also have to take into consideration the balance of trade, balance of payments, exchange rates, and also countertrade. The balance of trade is made of two components- trade surplus and trade deficit. When a company is sending out (export) more then importing, it is considered a trade surplus. Counteracting that term, trade deficit deals with the import being higher then the export. This trade is highly unfavorable. The exchange rate is when a country’s currency is made relevant to another county’s currency. For example, if Joe from San Diego wanted to go to Mexico to get some tacos (pretending that Mexico only accepts pesos), he would have to go a currency exchange location to trade in his US dollars for Pesos. Countertrade is when goods are exchanged for goods, labor or services. Countertrade does not involve any money. For example, if Joe wanted a sombrero instead of tacos, he could initially

Show More
Related
714 Words | 3 Pages

By specializing we are able to produce more than someone who doesn’t. If every country specialized in what they had comparative advantage in, prices of goods would be a lot lower. An example of this is how Florida has an excellent environment to produce oranges cheaply and then transport them to Canada to be sold at a reasonable price. If Canada decided to stop the flow of oranges from Florida and grow them here, production costs would be very expensive. This would result in a price increase of oranges so consumers would end up purchasing less (59).

Read More
725 Words | 3 Pages

Chapter 8. Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises 1. Trade need not be the result of comparative advantage. Instead, it can result from increasing returns or economies of scale, that is, from a tendency of unit costs to be lower with larger output. Economies of scale give countries an incentive to specialize and trade even in the absence of differences between countries in their resources or technology.

Read More
691 Words | 3 Pages

V. SUMMARY OF THE ARTICLE. Dr. Francesca Filbey’s article highlights the brain and how it is biologically wired in adults and juveniles with addictions, whether it is alcohol or drugs. Filbey (2013) discusses how a person is vulnerable (family history) or biologically (brain impulses) prone to addiction, as well as what kind of treatments can be done to help those that suffer from addiction. She analyzes different studies relating to each area and how effective they were.

Read More
216 Words | 1 Pages

Mr. Wynn is the Chief Executive Officer (CEO) of the Wynn hotels in Las Vegas and Macau China. Steven Wynn importance to the casino is absolute, he is the vision and the heart and soul of the organization. His philosophy is “Bigger ain’t better, Better is better”. Mr. Wynn is using a differentiation strategy to gain the competitive advantage over his rivals. Wynn has also has the ability to understand the competition since, he was the previous CEO of various casinos in which under his leadership made in four star hotels.

Read More
1669 Words | 7 Pages

According to Barney (1991), a firm can be said to possess competitive advantage when it achieves superior performance over its competitors by implementing a value-creating strategy that is not simultaneously being implemented by a competitor. TJ is Barney differentiates simple competitive advantage from sustainable competitive advantage, which is more durable because existing or future competitors cannot duplicate the benefits of the company’s strategy. Recommendations and

Read More
616 Words | 3 Pages

has a lower opportunity cost than China for producing airplanes and therefore has the comparative advantage in that industry. China has a lower opportunity cost than the U.S. for producing ships and therefore has the comparative advantage in that industry. It is mutually beneficial for China to produce ships and the U.S. to produce airplanes. Comparative advantage is more important than absolute advantage because it allows both parties to receive a good at a price that is lower than its opportunity cost. It also allows for specialization which makes production more efficient.

Read More
975 Words | 4 Pages

Competitive advantage is when two or more firms compete within the same markets, one firm possess a competitive advantage over its rival when it earns (or has potential to earn) a persistently higher rate of profit. There are three types of competitive advantage. a) Cost leadership strategy occurs when a firm a delivers the same services as its rivals but at a lower price. b) The differentiation strategy occurs when a firm delivers greater services for the same price of its rivals. c) Focus strategy is a focused approach requires the firm to concentrate along one specific segment either a cost leadership or a specialization strategy.

Read More
1000 Words | 4 Pages

The value of a currency is the worth of it as compared to or with other currencies. The value of a currency against other currencies is the exchanged rate of that currency. Exchange rate management or control in countries differs. While some practice fixed exchange rate regime, others also allow the forces of demand and supply to determine the value (price) of the currencies. Currency fluctuations normally happen in countries where they practice the free exchange rate system.

Read More
1116 Words | 5 Pages

Competitors – The industry that Nissan currently operates in provides lots of potential competitors for them as many automobile companies are developing electric cars which are something Nissan are very keen on focusing on. Nissan currently only run a small market share of the industry so many competitors are dominating the market such as Ford, Vauxhall etc. Nissans competitors have many strengths and weaknesses against Nissan. Some companies such as Ford focus heavily on fuel powered cars which means they will have an advantage against Nissans fuel powered range but Nissan will have an advantage over them with Nissans electric cars and the amount of research that has been put into it. Other companies such as Tesla whose main focus is electric cars are a fairly big competitor towards Nissan and the Nissan leaf range.

Read More
3035 Words | 13 Pages

When a company is competing through its differentiation advantage; it would try to carry out its activities in a much better manner than the

Read More
1312 Words | 6 Pages

ACHIEVING GLOBAL COMPETITIVE ADVANTAGE OF APPLE INC. Apple Inc. is an American conglomerate company located in one immeasurable loop, Cupertino, California in the middle of the Silicon Valley. (OPPapers, 2012). Apple is motivated on their designing, developing, innovating new products like the personal computers, other related software products, and the electronic products such as MP3 players and iPods. Apple Inc.’s main products are iMac, iPod, iPhone, iPads and its latest advanced product is iWatch, which is on the edge of creating another revolution after iPhone. Apple Inc. has transformed its image from an inventive computer manufacturer to a fully-fledged consumer 's electronic company.

Read More
1180 Words | 5 Pages

DEFINITION of 'Comparative Advantage' The reason of a countries engage in the international trade even one country more efficient to produce every single particular goods than other country. The theory of Absolute Advantage founded by Adam Smith on 1776 to describe an entity is the best at doing something than other competitors, in other words, the productivity of each unit of labor is the highest by using the same resources level. Ricardian Model Comparative advantage is an essential concept in International trade which created by David Ricardo on 1817 as the ‘Ricardian Model’ < Ref.

Read More
1763 Words | 8 Pages

5.3 Country position and attractiveness According to Porter (1990), the level of competitiveness on a country depends on the capacity of the industry and the skills to upgrade and innovate. The competitive advantage is produced and sustained on the differences in values, economics structures, culture, institutions, history, and other factors that contribute to competitive success. Therefore, companies as well as nations have to fight for a position on the market as centers of production or industrialization of products.

Read More
835 Words | 4 Pages

Mr Price has a wide range of competitors such as H&M, Woolworths and Pick ‘n Pay. A competitive advantage describes how the business has benefits or strengths over its competitors in the market. By having this, the competitors don’t seem as a threat to the company. It’s used

Read More
1014 Words | 5 Pages

The four building blocks of competitive advantage can be used to help a company become more profitable and stay ahead of their competition. The four factors are superior efficiency, quality, innovation, customer responsiveness. All four building blocks are important to any company. However, I believe that customer responsiveness is the most important because having loyal and happy customers can make or break any company. The four building blocks can help companies grow and become the leader in their industry over their rivals.

Read More

More about What Is Company Xy's Comparative Advantage?

Related Topics

Open Document