International Business (5pg) - Running Head INTERNATIONAL...

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Running Head: INTERNATIONAL BUSINESS 1 International Business Name Institutional Affiliation
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INTERNATIONAL BUSINESS 2 International Business Abstract With the removal of trade barriers and the formation of various trading blocs through regional economic integration, it has become significantly easier for companies to venture into the international market. There are many benefits that result from the expansion of a company into the international arena of which the most significant is the reduction of production costs. The following paper examines Logitech International Company and how it has incorporated elements of global trade to its advantage. Founded in 1981 in Switzerland, the company’s current main headquarters lie in Fremont, California. Most of its manufacturing and assembling takes place in China and Taiwan as part of its objectives to cut costs. Its products are designed in Ireland while most of its logistics operations take place in California. The organisation has significantly applied the theory of comparative advantage and Michael Porters Diamond model in the decentralisation of its activities. As a result, Logitech has become a leading producer of computer mice and other computer peripherals. In many ways, the company is the epitome of the modern global corporation.
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INTERNATIONAL BUSINESS 3 Regional economic integration describes efforts between countries in a particular geographical location to reduce or remove restrictions to the flow of commodities and the factors of production between each other (Sapir, 2011). Regional economic integration has been crucial in promoting international trade in the world. There are many advantages associated with the international trade especially regarding multinational companies or companies that want to follow the international route and intend to do so at significantly lower costs (Sapir, 2011). International trade does not only benefit the companies or countries setting up their plants in the foreign countries. The accommodating country gets an opportunity to develop their economy in the same measure. The following paper examines international trade in the context of Logitech Company. It aims to investigate the benefits of international trade in terms of costs of production and other factors using relevant concepts and theories(Sapir, 2011). These include the theory of comparative advantage and the Porters’ diamond model. 1. In a world without trade, what would happen to the costs that American consumers would have to pay for Logitech’s products? In the world with no trade, it is highly likely that Logitech products would be more expensive, and thus Americans would have to pay more. In the context of international trade, individuals would still accept money for the products they produce as well as for labour (Beaudreau, 2011). The only difference would be that the money would not be for products produced in other places other than their countries. The company has established its
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