The Logistic

Topics: Economics, Comparative advantage, International trade Pages: 3 (721 words) Published: July 13, 2011
Name| Dilip Raj Bhatta| Global Business Environment|
Roll No| 10108| |
Assignment No. 1| Case :LOGITECH|

a) 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. Porter speaks of these four attributes as constituting the diamond. He argues that firms are most likely to succeed in industries or industry segments where the diamond is most favorable. These four attributes can be applied in the case of Taiwan, which becomes a manufacture site for Logitech’s electronic goods. (a) Factor endowments - Taiwan offered a well-developed supply base for parts, suitable infrastructure and qualified people for the manufacture of electronic goods. (b) Domestic demand conditions – Taiwan local computer industry market is rapidly expanding, so there is huge demand of mice in this country. Also, there is huge demand of electronic products from all other counties. (c) Relating and supporting industries - Taiwan offered a well developed supply base for parts, i.e. it has a well-developed supply base for parts. Also, it has rapidly expanding local computer industry. These factors represent the presence of suppliers or related industries. (d) Firm strategy, structure, and rivalry – Logitech strategy is to produce at high volume and low cost with offering a better designed product. 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...
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