Good Trade Patterns Of USA And Scope For South-West Airlines Essay Example

Theory of comparative advantage suits the pattern of trade done by United States. The very evidence of the same comes from the fact that amongst total exports by USA, export of capital goods comprises 39% and industrial goods comprises of 28% of the total export. In comparison, it imports the same good, that is, capital goods and industrial goods in percentages which make up for 29% and 24% of the total import percentages respectively.
Amongst FDI policies, USA exhibits a free market view policy, meaning that the MNE be used as an instrument to utilize resources across the world, thereby enhancing the overall efficiency. In a way, this mode of FDI disperses the production of goods and services in such a manner so that best resources can be utilized across the globe. In recent trends, however, United States has become one of the major receivers (2nd largest) of the inward FDI and total IFDI amounts to approximately $ 253 billion, which is whopping compared to the other countries receiving IFDI. This, however, has increased the chances of local businesses facing competition from the outside companies. Nevertheless, it also offers the nation possibilities and opportunities to expand the number of jobs and increase the pay scales. Thus, the USA sits in a comfortable cot when it comes to FDI and balance of accounts. On the other hand, the outward FDI by USA has shown upward trends. In the year 2013, US had an outward FDI flow of approximately $338 billion.
South-west Airlines is an established name in the world of low cost airlines in USA. However, with the competition amongst airline carriers already at its peak, a record number of at least five airlines, including US Air, Delta, Northwest, United etc have filed for bankruptcy over the past decade. The other operational airlines (low-budget) too are regularly reporting falling margins and increasing losses with every passing year. Nevertheless, considering the mode of operations adopted by Southwest airlines from the very beginning, it already has a loyal clientage. In present scenario, where other, less efficient airlines are going bust, it provides the southwest airlines with an extremely lucrative business preposition. By acquiring these bankrupt airlines, or maybe by simply offering to purchase some of the fleet, or operating stations, southwest can expand its operations at a cheap price. This will not only bring effectiveness to its operations, it will also help cut its acquisition and expansion costs.