International_Busniess

Chapter 5 Case Questions World trade refers to buying and selling across national borders. It enables countries to produce and export what it manufactures most economically. In a world without trade Americans would have to pay quite a bit more for Logitech products than they currently do. Logitech would not have the access to low-cost foreign production facilities to assemble their items and would have to rely on parts manufactured and assembled in the US. Trade lowers the cost of making computer peripherals such as mice and keyboards because countries have different levels of labor, technology, education or more capital, and most importantly probably more of the natural resources of that product. It basically makes it so that those countries can make the product cheaper than another country might be able to. This gives the country an extreme advantage over the other countries because making things cheaper results in bigger profits. China and Taiwan are the best for setting manufacturing plants, because the population is very big in these countries, so labour is cheap. Therefore, China and Taiwan have a comparative advantage in manufacturing when compared to Switzerland or California, which in turn have cheaper and more abundant R and D facilities. The design would be taken care of in Ireland because they are known for there design engineers. I would also say that the marketing and operations are done in California because of the exposure that is received from that state. I would say that the 650 people in Fremont and Switzerland create more value simply due to the fact that even though it’s a lower number of employees they are creating more value in the company because they are doing all of the brain work, while in China they are doing the labor or assembling what the 650 people in Fremont and Switzerland have created. Fremont and its location is the reason for this, they have better access to bigger technololgy. The choice of Taiwan as the major manufacturing site for Logitech was they needed high volume and low cost. The cost was high but the direct labor accounted for only 7% of the cost of Logitech’s mouse. They also had a wide supply base for parts, qualified people and an expanding local computer industry.