BU491 Chapter Notes - Chapter 2: Starbucks, Comparative Advantage
Document Summary
Forces for change: scale, scope, factor costs, and free trade. The industrial revolution created pressures for much larger plants that could capture the benefits of the economies of scale offered by the new technologies that it spawned. As those pressures continued into the twentieth century, the level of scale intensity often increased further. In less capital-intensive industries, companies that were largely unaffected by scale economies often were transformed by the opportunities for economies of scope that were opened by more efficient, worldwide communication and transportation networks. In many industries, mnes discovered that there were opportunities to exploit both scale and scope economies. With change in technology and markets came the requirement for access to new resources at the best possible prices, making differences in factor costs a powerful driver of globalization. Labour-intensive industries turned to international markets as a source of cheap labour.
