Submitted by: Submitted by qqqqqqqq
Views: 158
Words: 939
Pages: 4
Category: Business and Industry
Date Submitted: 04/16/2014 11:17 AM
When prices are high, demand is low, and supply is high. On the other hand, when prices are low, consumers demand more of the product, and suppliers will not be willing to supply much given the low price. This happens because both sellers and buyers are rational. Buyers need to maximize utility given their limited incomes while sellers need to maximize their profits.
Additionally, comparative advantage assumes that producers get constant returns to scale (Cho & Moon,2000). This is to mean that whenever producers increase the inputs by a certain margin, then production increases with the same margin. This is to mean that at no point will the returns decrease with an increase in units of input.
This research is purposed to relate consumers’ perception on Hyundai cars to Michael Porter’s diamond model. This will help explain why Hyundai cars may tend to be more competitive in some areas based on the consumers’ perception on quality of the cars. According to the model, the following factors are for comparative advantage for countries or regions; location, natural resources, population size, labor and land.
Based on the factor conditions, Korea creates its own significant factors which include a wide technological base as well as, skilled resources (Porter, 1990). This helps Hyundai company to be more efficient in production as resources are well utilized. The improved productivity of the company helps to reduce the cost of production and hence lower the prices of its products. Since the prices are reasonable, and the quality is excellent, the company is able to survive in the industry despite the stiff competition as consumers are driven by quality and value.
Porter differentiated the factor conditions using the following categories; knowledge resources, physical resources, infrastructure, capital resources and human resources. He later subdivided the factor conditions into advanced and basic factors.
Basic factors are factors which are inherited and...