Specialisation Cheat Sheet

by Natalie Moore (NatalieMoore) via cheatography.com/19119/cs/2202/

Theory of absolute advantage With whom trade theories (PESTEL) Specia​lis​ation assump​tions (valid?)

Countries can produce some goods more s/t Countr​y-S​‐ Developed trade mostly with Full Everyone who wants a job
effect​ively and efficently than others. imi​larity eachother because they - employment has one
theory produce and consume more, Economic Minimi​sation of real and
Theory of compar​ative advantage create new products to efficiency opport​unitiy costs of
compete, produce differ​ent​‐ production by exploiting
Free trade can increase global output even
iated products and services compar​ative advantages
if one country has an absolute advantage in
the production of all products e/t Specia​lis​‐ Provide other countires an rather than nesses​sarily
ation and advantage over domestic absolute advantages
Trade pattern theories aquired producers. Specialise to Division of Ops for gains: resource
advantage grain advantage, eg gains owners benefit by sale of
Theory Large depend on Russia,
Germany = machinery & one output for other, more
of export less than USA,
equip highly valued goods.
country small. Large = varied Brazil,
size climates and more India, Product differ​nti​ation Two Simplified version of reality
measure=area
resources, so more China s Cultural Importers and expoerters countries,
self sufficent. are similarity find it easier to trade with two
large countries they are similar to commod​‐
Size of Developed countries more likely in language and or culture ities
economy to trade. Top 10 export​/im​‐ p Political May discourage or Transport Reduce the benefits of
neasure-GDP porters developed countries. relati​‐ encourage trade costs specia​liz​ation
size Developed economies produce onships / Statics and Relative conditions in a
more so have more to trade, economic dynamics country change
incomes are high so people buy agreements
Production bits of products made in
more. e/t Overcoming Transport costs networks different countries
distance
Mobility Assume resources can
move domest​ically to where
Intern​ational PLC Theory
they are needed. Not always
valid.

Free trade results in

Specia​lis​‐ Soil, natural resources, fish

ation - in seas, minerals, wildlife,
natural rainfo​rests
advantage
Specia​lis​‐ Product or process
ation - technology
aquired
advantage

By Natalie Moore Published 8th June, 2014. Sponsored by ApolloPad.com

(NatalieMoore) Last updated 11th May, 2016. Everyone has a novel in them. Finish
Page 1 of 2. Yours!
https://apollopad.com
cheatography.com/nataliemoore/
www.jchmedia.com/
 Specialisation Cheat Sheet
by Natalie Moore (NatalieMoore) via cheatography.com/19119/cs/2202/

Free trade results in (cont) Production possib​ilities curve Importing and exporting probs (cont)

Increased efficency Graphical repres​ent​ation of alt combin​ations Top Intern​ational outlook and
Increased global output of goods and services an economy can management risk orient​ation. Most focus
produce. commitment on domestic rather than
(which factor- land, labour, capital )- or their
foreign. Exporting and
ratios What type of products are traded An economy’s factors of production are
scarce; they cannot produce an unlimited importing places tough
People Countries with high people to
demands on mgmt. Firms
and land land ratio trade labor with labour/ quantity of goods and services.
earlier slave trade? land with agarness and surplus
wheat and wool for example
Importing and exporting probs resources to trade intern​ati​‐
Manufa​‐ Places which need lots of room onally are rare.
cturing manufa​cture inplaces where Financial Most SMEs site 'shortage of
capital/land risks Trade Ineffi​cencies due to delays,
locations there is a lot of room. working capital to finance
regulation documents and admin fees.
export' as big barrier.
Capital, Production factors are not Regula​tions differ from one
Offers low profit​ability in
labor homoge​nous, vary within and country to the next.H​‐
light of unexpected costs
rates and among countries coz of traini​‐ omeland security also can
labour/labour and unknown financial
specia​lis​‐ ng/edu differ​ences be a problem.
constr​aints
ation
Trade Lots of it. Including: duty
Customer With high speed connec​‐
Process Companies may substitute docume​‐ rates, customs clearance
management tions customers want
tech (FP capital for labour, depending ntation and entry processes.
immediate answers.
theory on the cpst of each. Values declar​ations, dute
results capital/labour Scant IB Diffic​ulties of unders​tanding
manage​ment,. Mistakes
varied) expertise foreign business practices.
spawn costs and it can get
Limited knowledge of
Product New products req $$$ in R & D $$$ to manage
compet​itors, unfami​liarity
referrintech
tech as so most come from developed
with lcoal customs etc
capital countries capital/capital Why import?
Marketing High shipping costs /
According to the factor propor​tions (FP) Specia​lis​ation of labour (cheap-economic)
barriers logistic demands, difficulty
theory - factors in abundance are cheaper Global rivalry
price matching &
than factors in scarcity. Assumes
promoting. Discou​raging for Local unavai​lablity (geography-resources)
homogenity in countries.
exporters. Divers​ifi​cation (Economic-risk)
Top manage​ments outlook

By Natalie Moore Published 8th June, 2014. Sponsored by ApolloPad.com

(NatalieMoore) Last updated 11th May, 2016. Everyone has a novel in them. Finish
Page 2 of 2. Yours!
https://apollopad.com
cheatography.com/nataliemoore/
www.jchmedia.com/