Logitech Case Essay

1.In a world without care, what would happen to the costs that American consumers would stick to pay for Logitechs Products?World trade refers to buying and selling across national borders. It would be difficult to predict or estimate the prices of the product of one company wish Logitech in one market like America.2.Explain how trade lowers the costs of making computer peripherals such as mice and keyboards.1. Components atomic number 18 procured from any part of the world where they can be begetd and manufactured at the best cost. (Motorola plant in Malaysia submits the mouses chip Agilent Technologies supplies visual sensors). 2. The intellectual capital going into any product is created at the trust where the right talent is avail adapted. (Ergonomics design is done in Ireland, softw ar programing is done in Switzerland and Fremont). 3. The actual assembling/manufacturing is done at the stupefy where is can be done most cost effectively. (Assembling is done in Taiwan and China). 4. The products reach the customers the most efficient way by pickings the service s of the most efficient logistics company. (Marketing and operations from Fremont).3.Use the theory of comparative advantage to explain the way in which Logitech has configured its spheric operation. why does the company manufacture in China and Taiwan, undertake basic R&D in California and Switzerland, design products in Ireland, and coordinate trade and operations from California?Comparative advantage, as proposed by Ricardo, says that it is honorable for nations to withdraw in trade even when there is absolute advantage for them to produce all the goods. So nations allow invest a major(ip)(ip) good deal of their resources to produce what they can produce with advantage. This theory is being utilise to the fibre in the following way 4.Who creates more value for Logitech the 650 people it employs in California and Switzerland, or the4,000 employees at its Chinese mo rattling? W hat are the implications of this ceremonial for the argument that free trade is beneficial?Logitech make $8 for e truly mouse being sold. Let us assume that $3 of this is exhausted on R&D and software programming. Free trade is beneficial because, it is the free trade which is allowing Logitech to take advantage of the low cost work force available in China. If free trade w ere not available, Logitech would be forced to manufacture its mice in U.S. at a oftentimes higher cost.5.Why do you think the company decided to shift its integrated headquarters from Switzerland to Fremont?It suspensors Logitech to stay close to its customers. It can respond to the demands of the customers more promptly. Fremont is also the place where a lot of technological innovations are happening. Logitech being in the high-tech industry, continuous innovation is a key success factor for its business. Fremont is also an important in terms of managerial talent. All these reasons make it convenient for Logitech to move to Fremont.6. To what extent can Porters giveball field help explain the choice of Taiwan as a major manufacturing site for Logitech?Porters diamond considers four important attributes which will create an environment that helps the domestic industries. The four attributes can be applied to Taiwan becoming a manufacturing hub for electronics goods as shown belowTaiwan has substantially qualified people for manufacturing electronic goods. It has good infrastructure and transport facility. on that point is demand throughout the world for electronic products produced in Taiwan. All major global companies source their electronic components from Taiwan. Taiwan has a well-developed supply base for parts and rapidly expanding local computer industry. There is tough contest and rivalry among local companies which help in better efficiency. The giving medication has created Science-based industrial parks through which they encourage companies to invest in Taiwan. Land is precondition at very subsidized rates in these parks.7. Why do you think China is now a prefer location for so much high-technology manufacturing activity? How will Chinas increasing mesh in global trade help that country? How will it help the worlds developed economies? What potential problem are associated with piteous to China?All the factors in Porters diamond are at play in China very efficiently. It has huge merciful resources, land, water and other natural resources. It has good infrastructure for transportation, ports and communication. It has created special zones for promoting exports, frankincense ensuring a good demand for the goods they manufacture. The rivalry among the domestic firms is also very strong. Government supports export oriented firms through funds. The cost of labor is very low. Technical human skills are available. These factors make China a favored location for high-technology manufacturing. Chinas increase in global trade will ensure that invest ment flows into China for manufacturing. Its balance of payment eyeshot will become very strong. It can use the trade as a lever for governmental mileage. As more investment happens it w ill help China to reap the advantages of economics of scale.It can extend better living conditions for its citizens. It will also generate funds for plotted investments. The worlds developed economics will be able to take advantage of the low cost manufacturing available in China. The global companies can improve the efficiency of their supply chain by manufacturing in China. The following are the potential problems associated with moving work to China The political changes, when they happen, can lead to disruption of work. Decision making at the government level is opaque, which can cause problems if unfavorable decisions are taken. When there is care in the political relationship between the home country and China. The companies whitethorn lose an opportunity to develop an alternate to China a s a manufacturing hub.