Homework SourseThe US market for computers is dominated by domestic firms s
The U.S. market for computers is dominated by domestic firms such as Dell, Hewlett-Packard, and Apple. The U.S. market for consumer electronics is dominated by Japanese firms and brands such as Sony, JVC, Panasonic, Mitsubishi, and Toshiba. However, the U.S. automobile market includes both strong domestic firms like Ford and General Motors and formidable Japanese competitors like Toyota and Honda.
Analyze each of the above mentioned industry from the standpoint of each country-based and firm-based theory of international trade discussed in this chapter. Which theory is the best predictor
Solution
The U.S. market for computers is dominated by domestic firms such as Dell, Hewlett-Packard, and Apple.
The U.S. market for consumer electronics is dominated by Japanese firms and brands such as Sony, JVC, Panasonic, Mitsubishi, and Toshiba.
Country based theory of international trade-Comparative advantage.[For US Computers market and Consumer Market]
The lesson of the principle of comparative advantage is: you’re better off specializing in what you do relatively best. Produce (and sell) those goods and services at which you’re relatively best, and buy other goods and services from people who are relatively better at producing them than you are.
The U.S. automobile market includes both strong domestic firms like Ford and General Motors and formidable Japanese competitors like Toyota and Honda.
Global Strategic Rivalry Theory
Thetheory focused on MNCs and their efforts to gain a competitive advantage against other global firms in their industry. Firms will encounter global competition in their industries and in order to prosper, they must develop competitive advantages. The critical ways that firms can obtain a sustainable competitive advantage are called the barriers to entry for that industry. The barriers to entry refer to the obstacles a new firm may face when trying to enter into an industry or new market. The barriers to entry that corporations may seek to optimize include:
