International Trade Theory - 8325 Words

International Trade Theory Chapter Outline OPENING CASE: The Ecuadorian Rose Industry INTRODUCTION AN OVERVIEW OF TRADE THEORY The Benefits of Trade The Pattern of International Trade Trade Theory and Government Policy MERCANTILISM Country Focus: Is China a Neo-Mercantilist Nation? ABSOLUTE ADVANTAGE COMPARATIVE ADVANTAGE The Gains from Trade Qualifications and Assumptions Extensions of the Ricardian Model Country Focus: Moving U.S. White Collar Jobs Offshore HECKSCHER-OHLIN THEORY The Leontief Paradox THE PRODUCT LIFE CYCLE THEORY Evaluating the Product Life Cycle Theory NEW TRADE THEORY Increasing Product Variety and Reducing Costs Economies of†¦show more content†¦In addition, environmentalists worry that the industry is now following proprer safetyt precautions with the chemicals it uses. QUESTION 2: Consumer groups in Europe have pushed for reforms to Ecuador’s environmental regulations for its rose industry. Other groups have encouraged trade sanctions to force Ecuadorian rose growers to be more environmentally responsible. Consider the impact these groups could have on Ecuador and workers in the rose industry if they are successful in their efforts. ANSWER 2: In response to the suggestions of consumer groups in Europe, some Ecuadorian rose growers have voluntarily joined a program certifying they are responsible growers. As part of the program , the growers must supply workers with appropriate protective gear, train them in the proper use of chemicals, and hire doctors to visit workers on a weekly basis. Most students will recognize that the cost of this type of program will affect the profits of growers, and could lead to layoffs within the industry, higher prices for consumers, or both. Teaching Tip: For more information on the rose industry in Ecuador, visit {http://www.american.edu/TED/rose.htm}. Chapter Outline with Lecture Notes and Teaching Tips INTRODUCTION A) This chapter has two goals. The first goal is to review a number of theories that explain why it isShow MoreRelatedGlobalization And International Trade Theory1203 Words   |  5 PagesInternational trade plays a big role in every person’s life. The credit should go to every economist who has contributed to the development of international trade theory. Trade is the consequence of the human â€Å"propensity to truck, barter, and exchange one thing for another† (Smith, 1776). Different people have different propensities for trading, so do different economic periods have different economic conditions, which require different international trade theories. This could be the material causeRead MoreQuestions On International Trade Theory1332 Words   |  6 Pages201109990 Module name: International business Module code: MKIB 225 Essay question: Why do businesses internationalize? Compare and contrast the various â€Å"standard† theories . Word count: 1051 Why does business internationalize? With the development of international business, countries with the purpose of increasing the variety of local products had been trying best for decades to trade with other nations. Furthermore, international trade theories were developed to explainRead More International Trade Theories Essay2547 Words   |  11 PagesInternational Trade Theories Mercantilism Mercantilism was a sixteenth-century economic philosophy that maintained that a countrys wealth was measured by its holdings of gold and silver (Mahoney, Trigg, Griffin, Pustay, 1998). This recquired the countries to maximise the difference between its exports and imports by promoting exports and discouraging imports. The logic was transparent to sixteenth-century policy makers-if foreigners buy more goods from you than you buy from them, thenRead MoreInternational Trade Theories, Trade, Cultural Diffusion, And Economic Trade Theory1374 Words   |  6 Pagesbase concept of international trade theories. The author will examine and critically assess the concept of international trade. This paper agrees with the economist that international trade is the interdependence of nations in terms of trade, cultural diffusion, and economic interdependency. International business trade theories are basically different theories with their concept of trade how they explain international trad e. The concept of majority of economist believe that, trade is about exchangingRead MoreNew Trade Theory : International Patterns Of Trade2016 Words   |  9 Pages The term â€Å"NEW TRADE THEORY† describes relations among natural country returns, government actions and industry features that enable such exchanges to occur. As a result output increases with knowledge, an industry’s capacity to understand the economies of scale rises and unit cost decreases. Because of such economies of scale world demand chains only a few firms in some industries. New Trade Theory recommends that a serious issue in defining international patterns of trade. The economies ofRead MoreDifferent Theories Concepts Of International Trade Theories1697 Words   |  7 Pagesdifferences between different theory concepts of international trade theories. The author will analysis and seriously assess their believe concepts and believe. The author of this assignment agrees with the economist that international trade is the interdependence of nations in terms of trade. International trade theories are basically different theories, with their concept of tra de how they explain international trade. The concept of majority of economist believes that, trade is about exchanging goodsRead MoreInternational Trade Theories That Can Be Analyzed944 Words   |  4 PagesInternational Trade Theories There are a number of different trade theories that can be analyzed in regards to the above referenced research project, and I will attempt to address the theories I feel that are most relatable to the question in hand. The first international trade theory I will address is that of Mercantilism. Historically, mercantilism is defined as â€Å"the economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances, which a government shouldRead MoreHistory Of International Trade, And The Theory Behind It Essay928 Words   |  4 PagesTrade it’s everywhere! A large quantity of our nation’s goods and services are acquired through trade. America plays a key role in international trade, exporting a large quantity of goods, as well as importing a large quantity of our goods from other countries. In this paper it will be discussed how well America is doing, challenges international trade is facing in what countries, and who America does the most trading with as well as a brief history. The first point I will be covering is the historyRead MoreNotes On Economics And International Trade Theory1222 Words   |  5 Pagesadvantage in international trade theory. 8. Import: A good or service brought into one country from another. Along with exports, imports form the backbone of international trade. The higher the value of imports entering a country, compared to the value of exports, the more negative that country s balance of trade becomes. 9. Export: A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. 10. Free trade: Also calledRead MoreEconomic Theories Of International Free Trade Essay2137 Words   |  9 PagesThroughout the centuries of economic theories, there have always been major disagreements amongst economists. Each believing their theory provides a better explanation or solution to the economic situations the globe finds itself in. The anomaly to these disagreements is the theory, first introduced by Adam Smith, which states that international free trade is in the best interest of the trading countries and the ever globalizing world as a whole. This essay shall compare the views of the great economists;

Essay on The Role of Special Interest Groups in American...

THE ROLE OF SPECIAL INTEREST GROUPS IN AMERICAN POLITICS nbsp;nbsp;nbsp;nbsp;nbsp;Like political parties, pressure groups can be considered another system that connects the citizen more directly to government. However, at the same instant there are marked differences in both composition and function that define interest groups as different entities from larger political parties. According to V.O. Key Jr. in a composition appropriately entitled Pressure Groups; pressure groups â€Å"Ordinarily†¦ concern themselves with only a narrow range of policies;† and unlike the goals of political parties, their intentions are to â€Å"influence the content of public policy rather than the results of elections.† Nevertheless, it is a realized fact that†¦show more content†¦As for the struggle for opinions to be heard during these periods, it is as â€Å"if there were no elections or no concern about the nature of public opinion;† whether views of the groups are valued or not is dependent on the balance of party contro l within each arena. nbsp;nbsp;nbsp;nbsp;nbsp;In addition, there are also public corybantics by pressure organizations that run parallel to the efforts in the congressional arenas of decision. â€Å"The belief often seems to be that Congressmen will be impressed by a demonstration that public opinion demands the proposed line of action or inaction.† Therefore, special interest groups â€Å"organize publicity campaigns and turn up sheaves of editorials in support of their position.† OftenShow MoreRelatedThe Role of Special Interest Groups in American Politics Essay1388 Words   |  6 PagesTHE ROLE OF SPECIAL INTEREST GROUPS IN AMERICAN POLITICS Like political parties, pressure groups can be considered another system that connects the citizen more directly to government. However, at the same instant there are marked differences in both composition and function that define interest groups as different entities from larger political parties. According to V.O. Key Jr. in a composition appropriately entitled Pressure Groups; pressure groups OrdinarilyÂ… concern themselves with onlyRead MoreAmerica Is Known For Its Freedom Of Speech1682 Words   |  7 Pagesknown for its freedom of speech. The dynamics of the American political system gives the American people a voice in what goes on in the government. The right to vote gives all citizens the opportunity to vote on various positions in the government and local areas. Political parties perform a number of functions for the American political system. The functions and components of political parties, interest group activity, electoral politics, public opinion, politi cal participation, and politicalRead MoreThe Policy Process1582 Words   |  7 Pages(Metagora, 1995). In the policy process there are many different models that explain the process. â€Å"One of the oldest and most common approaches to the study of policy- making derives from the early work of H. Lasswell (1951)†. H. Lasswell was an American political scientist who was known as the first to have taken into account and analyzed policy as a process. The most common model and the one H. Lasswell helped build is known as the stages model of policy. There are six stages within this modelRead MoreTackling Environmental Problems Today Is More Difficult997 Words   |  4 Pagesproblems of politics†. (Turin) This posturing has become a major issue for society and could lead to dire consequences in the future. It is time for us to come together and address the issues of political influence, in order for us to have a meaningful conversation we must discussion the influence of special interest groups, understand how politicians manipulate and use false authority to push agendas an d also discover the importance of citizen involvement. Lobbyists for special interest are hiredRead MoreAmeric The People, For The Corporations1738 Words   |  7 PagesIntroduction Corporate money in politics has become an increasingly prominent issue in the political spectrum of the United States after the 2010 Citizens United Supreme Court decision which lifted the cap on political contributions from corporations, thus increasing the influence companies have on the US electoral process (Shekar 71). This controversial court case brought the issue of non-voter influence on elected officials to the political stage and gave worry to many Americans who sought equal representationRead MorePresidential Election : Clinton Vs. Trump1285 Words   |  6 PagesClinton vs. Trump: Two Different People, Two Different Americas During the 2016 Presidential campaign between Hillary Clinton and Donald Trump, there were many campaign advertisements from both sides that strongly resonated with voters. Clinton’s role model ad, for example, sent a powerful message by illustrating Trump’s substandard behavior as a presidential candidate. On the other hand, Trump’s â€Å"Hillary Clinton won t Change Washington† ad demonstrated Clinton’s ineffectiveness as a leader as wellRead MoreFactionalism in America Essay1749 Words   |  7 PagesIn discussing the problems surrounding the issue of factionalism in American society, James Madison concluded in Federalist #10, The inference to which we are brought is that the causes of cannot be removed and that relief is only to be sought in the means of controlling its effects. (Federalist Papers 1999, 75) In many ways, the nature of American politics has revolved around this question since our countrys birth. What is the relationship between p arties and government? Should the party serveRead MoreThe On The Workings Of The Constitution Convention Essay1319 Words   |  6 PagesUnited States, but also as an event that continues to affect contemporary politics† (Pope and Shawn 1). 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An interest group is an organization whose members share commonRead MoreThe American Public Policy Process966 Words   |  4 PagesThe American public policy process is a system that consists of laws, regulatory measures, action items, and funding priorities controlled by the elected representatives. The public policy process system that is in place within the federal government was developed within the framework of the United States Constitution and those with special interests. Within the current system of policy process utilized by the federal government America’s affluent community holds the greatest interests. Over the

Roskill and Howard Davies Airport Commissions and the Third London Airport Free Essays

Introduction London’s airports are operating close to capacity and there are challenges associated with the location particularly of Heathrow airport, such as noise pollution and safety of London’s populace (DOT, 2003; Helsey and Codd, 2012). Capacity expansion pursuits have been long drawn over half a century involving two airport commissions and political intrigues (FT, 2014). The Third London Airport commission popularly known as the ‘Roskill Commission’ anticipated growth in air transport and speculated that by the end of the century London might have to accommodate 100 million passengers (Abelson and Flowerdew, 1972). We will write a custom essay sample on Roskill and Howard Davies Airport Commissions and the Third London Airport or any similar topic only for you Order Now It was an appropriate estimate as the actual number was 115 million (CAPA, 2013). This ceiling has been surpassed and London airports are operating under strenuous volumes. The pursuit of an alternative airport, additional runways to expand capacity, among other options continue to feature in public discourse almost half a century later with myriad arguments and counterarguments (FT, 2014; The Independent, 2014). This report explores the works of the airports commissions (Roskill and Howard Davies commissions), as well as the consideration of the controversial Boris Island alternative. It focuses on the demand and supply of airports among other considerations significant for such ventures as the development of new airports or aviation facilities. History of commissions and development of arguments A 1964 interdepartmental committee on the Third London Airport forecast that the capacity of Heathrow and Gatwick airports combined, even with the addition of a second runway at Gatwick, would be insufficient for London’s air traffic by 1972 (Mishan, 1970). After the consideration of options, the commission on the Third London Airport (Roskill Commission) was set up in 1968. With their evaluation of the timing of need, expansion capacity requirement, and after a careful study of a total of 80 proposed project sites, the commission finally chose four sites, among them a new airport at Cublington (Abelson and Flowerdew, 1972). It was the first time that a full range of environmental and economic arguments were brought to bear on a major investment decision, providing substantial and significant systemic evidence on which to base decisions (HC, 1971). Its excellence in approach and output was however to not much good as government, with a variant perception and opinion immediately rejected its findings choosing instead a scheme to build an airport at Foulness, in the Thames Estuary (Mishan, 1970). Interestingly, this option had been considered and had been decisively rejected by the Roskill Commission on the basis of cost, distance and convenience to prospective passengers (FT, 2014). Neither of the two propositions (Cublington and Foulness) was built and a subsequent change in government and complexion led to the devise of a different scheme – a limited expansion of an existing airport at Stansted which was accomplished a decade after proposition. This option had also been considered by the Roskill Commission and never made its shortlist of key options (Helsey and Codd, 2012). It was a predictable failure and is still challenged by the lack of success in supporting long-haul operations by airlines, only benefitting from low-cost carriers (principally Ryan air) drawn by attractive landing charges which offset consequent inconvenience to their passengers (AOA, 2013). A proposal which has re-emerged and gained prominence is the new airport at the Thames Estuary. The ‘Boris Island’ alternative Dubbed ‘Boris Island’ as a consequence of its support by London Mayor Boris Johnson, the London Britannia Airport (a name adopted for the latest iteration of the idea in 2013) is a proposed airport to be built on an artificial island in the River Thames estuary to serve London. Plans for this airport go several years back but the idea was revived by the Mayor in 2008 (CAPA, 2013; Mayor of London, 2013). Proponents of the project cite the significant advantage it portends in the avoidance of flights over densely populated areas with consideration of noise pollution and attendant safety challenges. However, its critics who include some local councils, nature conservation charity – RSPB, as well as current London airports, oppose the scheme, suggesting that it is impractical and expensive (AC, 2013b). It is still under consideration of the Howard Davies Airports Commission, which estimates the entire undertaking including feeder roads and rail to cost ?112 billion, about five times the presently shortlisted short-term options (AC, 2013c). The overall balance of economic impacts of the project would be uncertain given the requirement for the closure of Heathrow and by extension London city for airspace reasons (CAPA, 2013). Renewed pursuit – Howard Davies Airports Commission In spite of the myriad arguments and criticisms of the various alternatives, not much has changed and the Howard Davies Airports Commission set up in 2012 still wades in the long running controversy (CAPA, 2013; AOA, 2013). There has evidently been little learnt in the several decades of bad policy making given the hedging, stonewalling, and political posturing that still characterizes the endeavour, a readiness to oppose policies espoused by those of different complexions or the persistent complication of issues when there is requirement for bold action. This characterizes policy today as it did half a century earlier with elaborate models being grossly misused and deliberately disregarded. Minor challenges and disadvantages are greatly amplified overshadowing potentially more substantial benefits (FT, 2014). The Airports Commission was set up to examine the need for additional UK airport capacity and to recommend to government how this can be met in the short, medium and long term. The commission is tasked with creating economic, sustainable and socially responsible growth through competitive airlines and airports. (AC, 2013a). The findings of the Howard Davies Airports Commission contained in their interim report released in December 2013 (preceding a final report expected in 2015) are mainly focused on the continued growth of air travel, mainly in the South East of England. The Commission considers that the region needs an extra runway by 2030, and another possibly by 2050. On the shortlist for the expansion of airport capacity are three options comprising a third runway at Heathrow 3,500m long; lengthening of the existing northern runway to at least 6,000m enabling it to be used for both landing and take-off; as well as a new 3,000m runway at Gatwick (CAPA, 2013; AOA, 2013). Not included is the brand new hub airport in the Thames Estuary, which is side-lined citing uncertainties and challenges surrounding the proposal at this stage (AC, 2013d). However, the Commission promises an evaluation of its feasibility and a decision on its viability later in 2004 (The Independent, 2014). The Stansted and Birmingham options, however, failed to make the shortlist, although the decision remains open for their qualification in the long term (CAPA, 2013). In the Commission’s view, the capacity challenge is yet to become critical although there is potential if no action is taken soon. However, capacity challenges and the jostling and vying for a slice of anticipated extra capacity by airports signals need (AC, 2013d). Arguments on the expansion of airport capacity The Howard Davies Commission acknowledge the ‘over-optimism’ in recent forecasts of growth in demand for the aviation sector, but consider the level of growing demand as prominent requiring focus on the earliest practicable relief (AC, 2013c). This is in response to contentions by opponents that the current capacity is adequate basing their primary argument on earlier inaccurate demand forecasts. These opponents posit operational changes including quieter and bigger planes could serve to accommodate more passengers negating the need for ambitious and expensive ventures. Some also argue that constraining growth in the aviation industry would be the best option for emissions reduction and that government should utilise available capacity, pushing traffic from London’s crowded airports to others around the country, (AC, 2013b; c; d; AOA, 2013 DOT, 2013). The Commission accepts the changes in aviation practice and aircraft design could deliver modest improvements in capacity but argue that none of these submissions suggested significant transformational gains (AC, 2013c). It also stresses that deliberations were alive to the issue of climate change and were focused on the delivery of the best solution for the UK, which entails the achievement of carbon targets and delivery of required connections for the economy and society(AC, 2013c; d). The Commission notes that doing nothing to address capacity constraints could have unintended economic and environmental consequences with the possibility of some flights and emissions being displaced to other countries (AC, 2013d; CAPA, 2013; Mayor of London, 2013). Reliance on runways currently in operation would likely produce a clearly less ideal solution for passengers, global and regional connectivity, and would be sub-optimal in the endeavour to minimize the overall carbon impact of aviation (AC, 2013a; AOA, 2013). To achieve statutory mechanisms aimed at operational efficiency and emission reduction are critical. Conservationists, such as the Friends of Earth, decry growth arguing that the building of more airports and runways will have a major impact on local communities and the environment (Mayor of London, 2013; AC, 2013b). The argument for sustainable growth is welcomed by industry players in light of calls for constraint (AOA, 2013; The Independent, 2014). Through time, the argument has significantly centred on the timing of need for expansion of capacity with the uncertainty over growth and demand estimates. The drive for more intensive use of existing capacity is most appropriate in the short-term given that operational and aircraft design improvements have enabled the handling of more volumes than anticipated. Though limited, there is still capacity for improvement benefitting environmental conformity and overall efficiency. Several tactical improvements are proposed by the Davies commission to enable full and efficient use of available resource and capacity (DOT, 2013; AC, 2013d). The Davies Commission proposes the encouragement of greater adherence to schedules by airlines through stricter enforcement of aircraft arrival time. This would enhance efficient sequencing of arrivals ending the practice of ‘stacking’ especially at Heathrow (Europe’s busiest airport), which is expensive in fuel costs and time and has adverse environmental impact. They also propose ‘smoothing’ of timetables and the tackling of surges in traffic and bottlenecks, such as restrictions of arrivals before 6am and the designation procedures of runways which impede efficiency (AC, 2013d). Also considered are ‘mixed-mode’ operations which entail simultaneous use of runways for take-offs and landings. Through this mode, Heathrow expects to gain 15% in airport capacity without extra building (AOA, 2013). The Airports Commission rules out proposed mixed-mode operations suggesting its use when arrival delays arise and eventually to allow envisaged gradual traffic build up and increase in operations towards the opening of additional runways rather than a flood-gate of activity. In their consideration of noise pollution and impact on residents, the Commission recommends ending of simultaneous landings at both runways with an exception of times of disruption (AC, 2013d). Presently, Heathrow designates different runways for landings and departure which are switched daily at 3 pm to allow for respite for communities near the airport (AOA, 2013; FT, 2014). The Howard Davies Commission suggests that there might not be need for one huge hub airport as growth in recent years has come from low-cost carriers (AC, 2013a). This view makes the case for expansion of Gatwick Airport. In anticipation of confirmation of expansion priorities and solutions, airport bosses are at loggerheads with Gatwick bosses suggesting that it would not make business sense for their second runway if Heathrow is also given a green light for simultaneous expansion (AOA, 2013). This is in consideration of an extension of time to achieve return on investment from the expected 15-20 years to 30-40 years. Gatwick’s case is compelling given that it is cheaper, quicker, has significantly lower environmental impact and is the most deliverable solution in the short term (CAPA, 2013). Heathrow rejects this argument insisting there is a clear business case for a third runway regardless of development at Gatwick. With the airport operating at 98% of its capacity, they highlight potential for parallel growth delivering choice for passengers (AOA, 2013). Mayor Johnson is, however, opposed to Heathrow’s expansion citing the misery inflicted on a million people or more living in west London. He notes that there has been significantly more concern for the needs of passengers superseding the concerns of those on the ground. Johnson proposes focus on the new hub airport (Boris Island) to relieve impact on residents as well as to enhance UK’s competitiveness (Mayor of London, 2013). Supporters of Heathrow’s expansion say it will be quicker and will help to maintain the UK as an international aviation hub increasing global connections. Paris, Amsterdam and Frankfurt are closely competing for this business (DOT, 2013). Conclusion The examination of need for additional airport capacity and recommendation of solutions for the short, medium and long term, has taken the UK half a century and two commissions and still there is no confirmed venture despite the raft of proposals. The earlier Roskill Commission reached conclusions on four promising sites-including a new ‘Boris Island’ airport, which are still under consideration in the later commission the Howard Davies Airports Commission. Considering several arguments with regard to their mandate, the latter commission has proposed additional runways one at Gatwick and possibly two at Heathrow despite potential adverse effects to London residents. They are still to deliver a verdict on the new Thames Estuary project, promising a decision later in 2014 after evaluation. References Abelson, P. and A., Flowerdew, 1972. Roskill’s successful recommendation.† In: Journal of the Royal Statistical Society. Vol. 135. No. 4, pp.467 Airports Committee, 2013a. Emerging thinking: Aviation Capacity in the UK. 7th October. Viewed from: https://www.gov.uk/government/news/aviation-capacity-in-the-uk-emerging-thinking Airports Commission, 2013b. Stakeholder responses to Airports Commission discussion papers. 25th October. Viewed from: https://www.gov.uk/government/publications/stakeholder-responses-to-airports-commission-discussion-papers Airports Commission, 2013c. Airports Commission discussion papers. 29th July. Viewed from: https://www.gov.uk/government/collections/airports-commission-discussion-papers–2 Airports Commission, 2013d. Short and medium term options: proposals for making the best use of existing airport capacity. 7th August. Viewed from: https://www.gov.uk/government/publications/short-and-medium-term-options-proposals-for-making-the-best-use-of-existing-airport-capacity CAPA, 2013. The Davies Commission’s Interim Report on UK airports: the big loser remains UK competitiveness. Centre for Aviation. Department of Transport, 2003. The Future of Air Transport – White Paper and the Civil Aviation Bill. [online] viewed on 14/1/2014 from: http://webarchive.nationalarchives.gov.uk/+/http:/www.dft.gov.uk/about/strategy/whitepapers Financial Times, 2014. London’s new airport held to ransom by folly. December, 2013 Helsey, M., and F., Codd, 2012. Aviation: proposals for an airport in the Thames estuary, 1945-2012. House of Commons Library. Viewed from: http://cambridgemba.files.wordpress.com/2012/02/sn4920-1946-2012-review.pdf House of Commons Hansard, 1971. Thhird London Airport (Roskill Commission Report). 4th March. Vol. 812. cc1912-2078. HC Mayor of London, 2013. Why London needs a new hub airport. Transport for London. Viewed from: http://www.tfl.gov.uk/corporate/projectsandschemes/26576.aspx Mishan, E., 1970. What is wrong with RoskillLondon: London School of Economics Airports Operators Association, 2013. The Airport Operator, Autumn 2013. The Independent, 2014. Sir Howard Davies’ Airports Commission: Air travel could be transformed within a few years – with no more ‘stacking’. 17th December, 2013 How to cite Roskill and Howard Davies Airport Commissions and the Third London Airport, Essay examples

Journal of the International goods Academy - MyAssignmenthelp.com

Question: Discuss about the Journal of the International goods Academy. Answer: Introduction The market of video rentals is replaced by online streaming. Internet streaming is considered to be the fastest way of accessing internet-based contents. Streaming is a process that enables the viewers to use online contents before the file has been downloaded. The online data get automatically deleted after it has been viewed. Fast data connection is the main requirement for online streaming of video (Adhikari et al. 2012). Streaming of video cannot be easily copied and this helps in piracy protection. Companies can reach a wide range of audiences by video streaming. Netflix is an online streaming service that is based in U.S. Netflix had started its business with DVD-by-mail service in 1997 (Amatriain 2013). Later on in the year 2007, Netflix launched its video streaming services that led to the decline of physical video rental stores and services. Netflix has become the leader in the market of video streaming and is focusing on original content production. This report describes how Netflix beat Blockbuster. It discusses the history of Netflix and Blockbuster in brief. The following report shows the role played by the changing technology in the video rental and video streaming market. It compares the characteristics of online operations with the retail outlets and shows how online operations have helped Netflix to achieve success. This report outlines the pricing strategies and the innovations of Netflix. It also predicts whether Netflix will remain the dominant player of video streaming. The following report discusses the reasons behind the demise of Qwikster. It shows how Netflix regained its position by providing original content. This report also shows the future scope of Netflix. Institutional Background A brief history of Blockbuster Blockbuster was founded by David Cook in the year 1985 after Cook Data Services had stopped supplying software to the oil and gas industry of Texas. The first retail store of Blockbuster was opened in Dallas, Texas, U.S.A (Freedman 2012). Blockbuster became the largest video rentals in the world. In the year 1987, Blockbuster was sold to three investors. In the year 1992, Blockbuster had more than 2800 stores across the world. In the year 2004, Blockbuster had gained market share with around 9000 retail stores around the world. In 2004, 10 percent of its revenue was from the late fees that customers had paid because they were unable to return the rented movies. In the year 2010, Blockbuster had filed for bankruptcy protection against a debt of $1 billion. With the advanced technological growth and business strategy of Netflix, Blockbuster was facing problem in the video market. The old or traditional business model and strategy of Blockbuster had allowed its competitors to take most of the market share (Davis and Higgins 2013). Dish Network had bought the retail stores and other assets of the company in 2011. In the year 2013, Dish Network had announced to close all the retail stores in U.S.A. Blockbuster has been able to operate at least 10 stores across U.S.A. A brief history of Netflix Netflix was founded in the year 1997 when Internet retailing was gaining importance over traditional retail stores. Netflix had offered the delivery of DVDs to the customers via mails (Cook 2014). Initially, Netflix had concentrated on the early-technology adopters with a marketing strategy of developing cross-promotional programs with the sellers and manufacturers of DVD players. Netflix had charged $4 for each movie along with $2 handling and shipping charges. Netflix had a cash-induced strategy. Customer complaints regarding high price and slow delivery of the DVDs led to the formation of the prepaid subscription strategy and service in the year 1999. A recommendation system was offered to the customers based on customer surveys. In 2002, Netflix had allowed the customers to unsubscribe over the Internet by completing a survey form for explaining the reason for unsubscribing. Netflix attempted to split the streaming businesses and DVD by creating Qwikster in 2011. This idea did no t work well and was dropped within one month. The explicit strategy of Netflix led to its growth and success. In the year 2013, Netflix had moved to original programming with the House of Cards series. How Netflix beat Blockbuster Changing technology Netflix could beat Blockbuster by effectively utilizing the functionalities of emerging technologies. Its executives and leaders had understood the importance of the emerging and advanced technologies and had supported the idea of Internet streaming (McDonald and Smith-Rowsey 2016). Netflix had adopted a strategy of Internet streaming that allowed its customers to access movies over a virtual platform. It was more convenient for the customers as they did not have to visit the stores (Hiller 2017). Netflix could deliver high level customer service. Reed Hastings could predict that the renting of movie and video cassettes would come to an end. The role of compression technology helped Netflix to achieve success (Lusted 2012). People were gaining access to the Internet services, and this enabled the streaming of video files over the Internet. Netflix could change its strategy to video streaming from its strategy of sending DVDs through mail by utilizing the functionalities of Internet a nd compressed technology. Netflix had adopted an open-source strategy and approach for distributing movies on computers, DVD players, mobile phones, laptops and TVs. The subscription strategy allowed the customers of Netflix to watch movies and videos based on their demand (Sherman and Waterman 2016). Netflix had adopted a pay-per-view programming approach. The search engine of Netflix had helped the customers to search and sort by the name of the movie, actor and genre. Netflix developed a recommendation system based on customer preferences that used an algorithm to give proper suggestions to the users (Hallinan and Striphas 2016). Customers of Netflix were asked to go through a survey after they created a new account. Based on the survey as well as the searches of the users, the proprietary algorithm of Netflix could give appropriate movie and series recommendations to the users. This recommendation system based on machine learning as well as algorithm had proved to be convenient for the customers. The adoption of advanced technologies and algorithms had helped Netflix to flourish and beat Blockbuster. Retail outlet versus operating online Netflix could beat Blockbuster because of the advantages that it provided by operating online. Blockbuster had retail outlets where the customers had to visit. The online operations of Netflix had allowed the customers to watch movies and series over the Internet in real-time. This online approach was convenient for the users. The users did not have to visit the retail video rental stores for hiring video cassettes. The online video streaming concept had saved the cost and time of the customers. Netflix could save the cost of operating retail outlets and maintaining sales executives (Summers et al. 2016). Netflix could operate its business at a low cost as compared to Blockbuster. Blockbuster was still using the traditional strategy of operating retail stores. Netflix could offer several advantages to the customers. Netflix offered several choices of movies to the users over its online platform. Users having high-speed connection of Internet could easily watch web series and movies i n real-time. Users could get access to video games and movies at their doorsteps. Netflix could offer customized packages based on customer preferences that were not available in any retail video rental stores. The recommendation system of Netflix had helped the customers to choose movies and series easily. The original contents provided by Netflix had played a major role in its success (Villarroel, Taylor and Tucci 2013). Netflix could update the online programs and channels on a regular basis. The various features and facilities offered by Netflix through the online operations have helped in beating the retail stores of Blockbuster. Pricing strategies Netflix had initially adopted a traditional pricing model where the customers had to pay for each rented movie, and this charge also included the shipping as well as handling charges. The customers had to return the DVDs before a specific date or else they had to pay extra charges. This strategy was not appreciated by the customers as Netflix had a slow delivery service as compared to its competitors. Netflix had adopted a prepaid subscription pricing model to overcome the limitations of slow delivery services. This subscription model had allowed the customers to get four movies at once and receive four new movies every month. This new pricing strategy had turned the disadvantage of the slow delivery service into an advantage as the users could watch the other movies. Later on Netflix had further improved its pricing strategy (Allen, Feils and Disbrow 2014). The next pricing model of Netflix was to offer unlimited rentals at the first time. Subscribers were allowed to have three movies at one time. The subscribers could exchange the movies as many times as they wanted to. This pricing strategy of offering unlimited rentals had attracted new customers and users. Netflix did not charge any late fee to the customers. The main focus of Netflix was to provide convenience to the customers. Blockbuster used to rent movies and charge for late fee when the customers were unable to return t he video cassettes within a specified time. The overall expense of the customers was more when they used to hire video cassettes from the retail stores of Blockbuster (Baccarne, Evens and Schuurman 2013). The subscription plan of Netflix was effective and customers had found it to be more convenient as compared to that of Blockbuster. The subscription pricing strategy or model of Netflix had played a significant role in beating Blockbuster in the video rental market. Innovations of Netflix Netflix is considered to be one of the most innovative companies across the world. Unlike other broadcasters, Netflix does not aim to reach a broad range of audiences. Netflix aims to effectively cater to the needs of niches (Euchner and Ganguly 2014). The key innovation of Netflix was to build streaming video demand by providing free service along with the DVD that was delivered by mail. It keeps on upgrading and adding innovative ideas for growing its business. The innovative idea of video streaming had led to the close down of the traditional video renting businesses. The subscription plan of Netflix was also considered to be creative. Netflix had used the concept of online library and recommendation systems for providing convenience to the customers (Gomez-Uribe and Hunt 2016). Initially, Netflix had used a different and innovative approach to rent movies to its customers via mail. Later on the idea was modified and the features of Internet were utilized for streaming the videos online. Netflix believed in disruptive innovations. The recommendation system of Netflix used an algorithm to get an insight into the customer choices and preferences. Netflix had also offered a Netflix Prize of $1 million to the public for getting a better and advanced algorithm for its recommendation system (Hallinan and Striphas 2016). Netflix had also used innovative ideas to bring the concept of original programming where it broadcasted original web series such as House of Cards (Tryon 2015). Netflix has recently updated its static images on the user-interface platform to custom-created videos. The innovations and creativity of Netflix also allows the users to download the videos and watch them offline (Villarroel, Taylor and Tucci 2013). The main strategy of Netflix is to add devices for allowing subscribers to stream content. The creative approach of Netflix was mainly responsible for beating Blockbuster. Will Netflix remain the dominant provider of online video streaming Netflix stumbles: the demise of Qwikster Netflix had announced a hike in price for its combined streaming as well as DVD service in the month of July in 2011. Netflix had realized that DVD-by-mail service was completely different from streaming businesses. They had different marketing as well as cost structures. Netflix had identified that both the businesses could be run independently. Netflix wanted to resolve this issue by separating the two businesses into two different entities. Netflix had decided that the DVD-by-mail business would be conducted by Qwikster. Qwikster was planned in response to the negative reaction of the price hike that was announced by Netflix. There were several reasons behind the failure of the Qwikster plan. The split of the website made it inconvenient for the users to manage the different queues and accounts in the separate websites (Som.yale.edu 2018). Separate ratings, separate preferences and separate bills for Qwikster and Netflix would create problem for the users. This plan had showed tha t Netflix was focusing on its own benefits rather than the benefits of the customers. Netflix wanted to focus on the streaming business as this was considered to be beneficial for the company in the future. It had seemed to the investors that Netflix wanted to focus on its own benefits by separating the business of DVD-by-mail service and the video streaming service. DVD-by-mail service had to incur high cost because of the acquisition of pay-for-postage and physical discs. The operational cost of the business associated with the DVD-by-mail service would be high, and this business would become obsolete in future. No investor would show interest in buying a cost-intensive company that would become obsolete in the near future. The business strategy developed by Netflix was outraged by its customers and it had lost several customers along with a fall in its share price. Netflix could have used a smarter strategy by increasing the price of the subscription plan by a small amount for fe w years, and after reaching a certain limit it could have split the businesses. Netflix had lost a huge number of members with the hike in price and the Qwikster plan. Netflix rebuilds: The rise of original content After the demise of the Qwikster plan, Netflix decided to invest in content production and original programming. Netflix had contracted with an independent studio for creating 26 episodes of the House of Cards series. The series was a success and it had set a success standard for original programs and ventures (Tryon 2015). Netflix had focused on original programming for developing a competitive edge in the video streaming business (Stelter 2013). Netflix had spent a major portion of the budget on original content production. The unique approach and strategy of Netflix had helped it to gain several subscribers. Netflix focused on delivering high quality content for its growth. The company started focusing on balancing the mix of original contents and licensed series for gaining competitive advantage in the streaming market (CNN 2018). The concept of original programming was considered to be a key to the success of Netflix. Netflix had collected customer information and data for produ cing original contents that could satisfy the needs of the subscribers (Goldfayn 2012). The customer data was initially used for improving the recommendation system of Netflix. Later on the details were used for creating appropriate original contents that would satisfy the users. Netflix could beat its competitors: Amazon Prime and Hulu by providing better quality contents (Adhikari et al. 2015). The concept of original programming and content had helped Netflix to succeed and become the leader in the video streaming market. The future of Netflix Netflix is supposed to spend around $8 million on original programming in the year 2018. It will also announce a hike in the price of the subscription plan. This plan would edge the price towards the price offered by other competitors such as HBO (Harvard Business Review 2018). This can be a challenging factor for Netflix in the future. The rise in competition in the market can affect the business of Netflix. Netflix will get international growth opportunities in the future. Netflix has observed substantial growth in the international markets such as Brazil, Canada and Mexico and expects to have further growth in the international market (Tippie.biz.uiowa.edu 2018). International competition is considered to be lighter as compared to domestic competition, and it will enable the expansion of Netflix in the future. As the number of competitors is expected to increase in the domestic market, Netflix will need to invest more in the production of original contents. With the spending of $8 million on original content, Netflix is expected to run with a negative free cash flow in 2018. The original content can play a significant role in contributing to the additional growth of the subscriber and increase the future earnings of Netflix (Tryon 2015). If there is continuous growth in economy, then Netflix will be able minimize the negative effects due to increased competition. The main focus of Netflix is to invest in original content in the future. Netflix will add more original programs and contents to its library for maintaining its position in the streaming market. The library of Netflix is expected to consist 50 percent of original content such as original films and TV series by the end of 2018. Netflix is expected to remain the dominant leader of online video streaming by using its innovative strategies. Conclusion This report concludes that utilization of emerging technology has helped Netflix to achieve success in the video streaming market and beat the business of Blockbuster. Blockbuster had the leading video rental business in 1987. It had around 9000 retail stores across the world. The traditional business strategy had led to the downfall of the business of Blockbuster. Netflix had offered DVD-by-mail service to the users. Netflix had adopted an advanced business strategy, and had focused on streaming video by utilizing the features of compressed technology. The recommendation system of Netflix had helped it to improve customer experience by giving appropriate movie and series suggestions. Online operations had provided more convenience to the customers, and they had started to prefer online streaming and operations over retail outlets. This report pointed out that the prepaid subscription pricing strategy and model of Netflix was one of the main factors behind the success of its business . According to this report, innovations of Netflix include custom-created videos on the user-interface, original programming and the use of recommendation system. This report highlighted certain reasons for the demise of Qwikster such as high operating costs and chance of becoming obsolete in the future. It showed how the idea of original content had helped Netflix to regain its position in the market. This report said that Netflix is planning to invest $8 million on the original content production in 2018. 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