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Logitech Case Study by Esther Rogo & Marjorie Seide
International Business
GM598
Professor Joan Roberts

1. In a world without trade, what would happen to the costs that American consumers would have to pay for Logitech’s products?

The costs that Americans would have to pay for Logitech’s products would be astronomical. This would be due to the fact that the production assembly, resources and the sale of the products would have to be done in the United States. The U.S. labor wage is significantly higher than that of Taiwan or China. Additionally, the company would not be able to manufacture in Taiwan, where manufacturing is cheap and efficient, where the company needs the capacity to produce at high volume and low cost and offer a better designed product-not to mention the Taiwanese factory soon out-producing Logitech’s U.S. facility. Moreover, Taiwan offered a well developed supply base for parts, qualified people, and a locally expanding local computer industry. Without trade, Logitech would be able to rely on China for cheap labor and the assembly of the products with 4,000 employees. In sum, all of these increased expenses and costs would require a rise in the retail price for the consumer. There is also less overall competition in a world without trade, thus allowing Logitech to raise retail price to its consumers.
2. Explain how trade lowers the costs of making computer peripherals such as mice and keyboards?

Trade lowers the costs of making computer peripherals in many ways. For one, trade allows companies like Logitech to set up production and labor sectors in other countries, which enables the company to manufacture the products at a much cheaper rate.
Second, trade allows for increased economies of scale. Whereby enabling Logitech to produce a high quality product at a low price because the company can purchase parts from