Answered: The growing unimportance of labor cost…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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The growing unimportance of labor cost arbitrage suggest that R&D and innovation are ___________ (increasingly important OR increasingly unimportant)to determining competitiveness for both companies and countries.

This trend will favor __________(advanced OR emerging) economies with highly skilled labor forces, strong innovation ecosystems, and robust intellectual property protection.

Transcribed Image Text:$3.2T $0.8T Free cross-border digital services Intangibles provided to foreign affiliates Higher-end estimate. Intangible assets Multinational companies send intangible assets value that goes into traded to their affiliates around the world–including Free cross-border digital services Trade stats do not track soaring cross-border flows of free digital services, software, branding, design, including email, real-time mapping, video conferencing, and social media – and Gross services trade Services embedded in goods trade A conventional measure of the value of services. Roughly one-third of the manufactured goods comes from services like R&D, engineering, sales and operational processes, marketing, finance, and HR. and other IP developed in headquarters-and these represent tremendous but undercounted value. these services undoubtably create value for users but are not counted in trade statistics. The services trade is underappreciated, and services will continue to play a more important role in how countries and companies participate in global value chains in the future. 31 Labor-cost arbitrage has become less important. It's a common perception that trade flows are driven by companies searching for low-cost labor. However, only 18% of goods trade today is from low-wage to high-wage countries. of goods trade Share Labor-cost arbitrage Other factors 18% 82% of goods traded of goods traded Exports from countries These include: whose GDP per capita is Access to one-fifth or less than skilled labor the importing country. Access to natural resources O Proximity to customers O Quality of infrastructure This trend may be amplified in the future by technological developments, as automation and AlI reduce labor inputs in manufacturing. R&D and innovation are becoming increasingly important. Companies are spending more on R&D and intangible assets such as brand, software, operational processes, and other tual property.

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