absolute cost advantage


absolute cost advantage
The cost advantage enjoyed by a country in producing certain goods, compared to costs in other countries. The costs of producing similar products vary between different countries because certain resources, such as labour, raw materials, and energy, will be cheaper in some countries than in others. Multinational enterprises are able to take advantage of these cost differences by buying components or products from countries that have these advantages. For example, a motor-vehicle manufacturer in an economy with high labour costs may purchase certain components from another country with significantly lower labour costs. Compare competitive advantage

Big dictionary of business and management. 2014.

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  • advantage — ad‧van‧tage [ədˈvɑːntɪdʒ ǁ ədˈvæn ] noun [countable, uncountable] something that helps you to be better or more successful than others: • America s lead in aerospace is one of its most important competitive advantages. • Government subsidies give …   Financial and business terms

  • Absolute advantage — The principle of comparative advantage , generally attributed to David Ricardo in his 1817 Principles of Political Economy and Taxation extends the range of possible mutually beneficial exchanges. It is not necessary to have an absolute advantage …   Wikipedia

  • Absolute Advantage — The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service. Entities with absolute advantages can produce something using a… …   Investment dictionary

  • Comparative advantage — Economics …   Wikipedia

  • barriers to entry — Factors that prevent competitors from entering a particular market. These factors may be innocent, e. g. an absolute cost advantage on the part of the firm that dominates the market, or deliberate, such as high spending on advertising to make it… …   Big dictionary of business and management

  • strategic asset — A source of competitive advantage derived from factors outside a firm rather than from its own competence. Such sources could include proximity to raw materials and government policy on the exchange rates. See also absolute cost advantage …   Big dictionary of business and management

  • David Ricardo — Classical economics Born 19 April 1772(1772 04 19) Died …   Wikipedia

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  • Purchasing power parity — GDP per capita adjusted for Purchasing Power Parity (PPP) in the world, 2009 …   Wikipedia

  • Porter 5 forces analysis — Porter s 5 forces analysis is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979 . It uses concepts developed in Industrial Organization (IO) economics to… …   Wikipedia