Threat from Substitute Products Rivalry among the existing players. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition.
More Essay Examples on Economics Rubric An absolute advantage for a specific country is the more efficient on production of a product than other countries. A comparable advantage for a specific country is to produce the most efficient goods and buy goods that it produces less efficient from other countries, even though they can produce more efficiently by themselves.
Different factors of production i. A more abundant of the above factors of production lead towards a lower cost. Through international trade, a manufacturing firm able to gain an economy of scale and for the ultimate goal of cost reduction. An economy of scale is a cost of reduction based on a large scale of output, the two reasons behind are a large production volume able to spread the fixed cost to a lower level, and through the utilization of specialized employee and equipment which able to obtain a high productive output.
International trade helps Logitech lower the cost of manufacturing their computer peripherals such as mice and keyboards.
Through international trade, Logitech will able to obtain their best available resources in different countries for its lowest cost and gain an advantage Porter theory in logitech their competitors. Under his theory of comparative advantage, there is a greater world production from nations with un-restricted free trade, and consumers from all nations able to benefit and consume more.
Under freedom of trade, all participated countries are able to have economic gains. Comparative advantage appears because of differences in factor endowments in each nation.
Each nation got varies and differences in factor endowments such as resources in land, labor, and capital and lead to their differences in their costs, and the more abundant of a factor, the lower on its costs.
Countries able to export their goods that make intensive use of factors that they are locally abundant, and import goods that make intensive use of factors that are locally scarce. Logitech expanded its manufacturing in Taiwan in order to produce at high volume, and to attract Apple Computer, Inc.
Taiwan got a low cost of direct labor, a well developed base of suppliers for parts, qualified people, and a rapidly expanding local computer industry. Logitech benefits from all of the above advantages. Logitech further expanded its production capacity in China to gain a lower cost and mature labor skills for manufacturing of their quality products.
Manufacturing industry offers huge job opportunities for China and benefits Logitech for a lower production cost. Fremont is located close to Silicon Valley, an area famous for development of emerging information technology globally.
The selected locations advance Logitech to gain access to human resources or technology experts such as software programmers and their targeted and major customers, e. Logitech designs their product in Ireland.
The employees are mainly highly skilled labor with knowledge and expertise in their specific functional area of specialty, and they are not easily to recruit or employ in other countries. As compare with the employees in Fremont and Switzerland, the production line employees got a relative lower level of skills, and can able to replace with other low cost labor from other Asian developing countries, e.
Based on the above mechanism, nations are able to enjoy a variety of products and with an average lower cost. Firm strategy, structure, and rivalry. The first attribute, factor endowments refer to the factors of production, such as basic factors e.
Advanced factors can be enriched through investments by individuals, companies, and governments. The third attribute, relating and supporting industries refer to the presence of suppliers and related industries which are internationally competitive. Through investments into the advanced factors, the relating or supporting industries able to gain an international competitive position within a nation, these group of successful and related industries able to share and flow their valuable knowledge between them, which able to benefit each other within their geographical location.
The fourth attribute is firm strategy, structure, and rivalry. The entire four attributes enable a nation to create a competitive advantage. On the other hand, Michael argues firms are likely to be successful in their industry or segments where the four attributes are most favorable.
These attributes are mutually reinforcing each other, and the effect of each attribute depends on the state of other attributes. Government refers to its choice of policies, which may enable a favorable condition in the four attributes, and improving its national advantage.
For the attributes of demand conditions, Taiwan got a rapidly expanding local computer industry and great local demand for information technology products and computer related peripherals. Local customers are looking for high quality and innovative local products from leading Taiwanese brands such as Acer, Inc.ANSWER 6: Porter might argue that Taiwan is an ideal manufacturing location for Logitech because of its well-qualified, relatively low cost workforce (factor endowments), and its rapidly expanding local computer industry (firm strategy, structure, and rivalry)%(30).
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.
May 28, · The Porter’s diamond theory can also be used to explain Logitech’s global value chain. The factors in the theory apply to locations where the company plants are located.
The availability of related and supporting industries in Silicon Valley and Taiwan is an advantage to the company.
Tutorial 2 - IB.
For Later. save. Related. Info. Embed. Using Michael Porter’s Theory of Global Strategy, the way Logitech has even if that means buying goods from other countries that it could produce more efficiently itself Logitech has successfully located the various parts of its value-added chain around the world to take adv of.
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.
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.