Dentista en la Mesa Arizona

Rick Politician 873454/2/2007 I BUS 300 Chapter 4 Homework a. Many American production firms face increasingly strong competition from firms in foreign countries with low labor costs. This competition seems "unfair" to the owners and managers of the American firms. Even if they drop their wages to the minimum allowed by their state, the American production firms still cannot beat the prices of the foreign goods. Often American firms close down or adapt and begin to make products where they have a comparative or absolute advantage. As the American firms close down or adapt many workers lose their jobs and begin anew. These workers frequently look for a job in a similar industry, decide to live off of unemployment or go back to school to learn another trade or skill. During this time families may have to move or downsize their lifestyle and consumption. The competition from foreign firms probably sounds "unfair" to these laid off workers and their families. Unions attempt to keep their members at work by lobbying government officials to impose tariffs and quotas on foreign products. By raising the prices on foreign products and/or limiting the amount that foreign firms can sell, the U.S. government makes the locally manufactured products more competitive. Although, keeping these American workers producing goods aids the workers and their families, the tariffs and quotas hurt the rest of the U.S. and the world economically. David Ricardo's theory of comparative advantage shows that it is in the best interests of America as a whole to focus on the products Americans excel at producing. By only producing what Americans are most efficient at making, the GNP will rise and Americans can trade off their surplus to purchase more goods. In fact, the people of the U.S. will end up with more goods than they could have purchased had they continued their less efficient production of other goods. b. Michael Porter' diamond does not makes clear why the Indian software companies become more and more internationally competitive. According to Porter, usually a "combined presence" in each of the four categories leads to an industry achieving competitiveness on an international level. From the article, one sees that the Indian software industry only has a strong presence in the factor endowments and firm strategy, structure, and rivalry categories. Applying Porter's theory to this case study, one would not expect the Indian software industry to grow at the rate it has. Using the category to separate information did help identifying some of the reasons for the Indian success in the software industry. An example of a factor endowment is that the Indian middle class attains high education degrees from prestigious Indian colleges. They emphasize receiving degrees in engineering. Also, the middle class speaks English in the business world making it easier for Indian firms to do business internationally. Lastly, since Indians work while American and Europeans relax or sleep, they are able do have jobs finished for American and European firms overnight. Indian firms strategy, structure, and rivalry also push them into an internationally competitive role. Nine hundred software companies in India compete with each other and make each other better companies. These companies pay there software engineers an average wage of $4,000(US$) per year. This means Indian firms can undercut international competition on price. Also, Indian firms reinvest in the training and skills of their employees which will sustain their growth into the future. The use of ISO 9000 supports continuous improvements in products and quality across the Indian software industry. Satellite communication links the Indians with the rest of the world allowing them to business in real time. This, coupled with soaring local demand for personal computers and mobile telephones improves Indian software companies' industry position. Factor Endowments -Poor information technology infrastructure -1999, 3 million comp out of a billion people - 22 phone lines per 1000 people - 1998, less than 100,000 internet connections + Highly educated middle class + World class educational institutions + Emphasis on Engineering + English is the middle class working language + Indians can do overnight remote maintenance because they work while US and Europeans sleep Firm Strategy, Structure, and Rivalry + Late 90's, 900 software companies + $4,000 entry wage for software engineer vs. $70,000 in the U.S.; hourly wages $25-35/hr vs. $75-100 in U.S. + Indian software firms are investing heavily in training and programming skills - ISO 9000 quality standards. Demand Conditions + Minimal demand in the 90's for personal computers in India + Personal computers and especially mobile phones are taking off Related and Supporting Industries + Satellite Communications has allowed instant communication with U.S. and Europe