Discussion Forum 6

Discussion Forum 6 - ideal facility location become a...

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Discussion Forum 6 In a world of zero transportation costs, no trade barriers, and non-trivial differences between nations with regard to factor endowments, firms must expand internationally if they are to survive. Discuss. Factor endowments are the available resources in any given country (land, labor, and capital). The theory of comparative advantage states that a country or company should produce their product in the country that offers them the greatest number of comparative advantages. This would be the country that has the most of the resources they need, at the cheapest prices. As we know, this doesn't always happen. Many times, factors like the ones listed in the original question, have a way making some business conditions less than optimal. Things like transportation costs, trade barriers, and other factors sometimes get in the way of a company being able to be located in the region that offers the comparative advantages. By removing these barriers, all companies could make the dream of having an
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Unformatted text preview: ideal facility location become a reality. This means companies that are currently located in an area that is not ideal for their business will have to expand internationally. But, there are examples of businesses already being located in the area that offers the most comparative advantage. These businesses can continue to do business as if nothing has changed. If they choose to expand, their comparative advantage should allow them to expand their business successfully. On the other hand, if they choose to continue to focus on the domestic market, I see no reason to believe that they wouldn't be able to survive. So, I guess my answer is no. I don't believe it is absolutely necessary for a firm to expand internationally to stay in business. I'm sure some of you disagree, so let's here what youve got to say....
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This note was uploaded on 08/15/2011 for the course MAN 372 taught by Professor Toops during the Spring '11 term at Edison State College.

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