Knowledge Series

Greetings everyone,

Business Theory Demystified

The Importance of Trade Theories in Business

As an MBA student at SRCC, I had the privilege to learn from the brilliant mind of Mr Sidharth Balakrishna , who taught us the intricacies of various theories related to trade and competitiveness. Inspired by his teachings and my passion for Indian startups and MSMEs, I am starting a new series of posts that will explore the dynamics of these theories in the context of Indian businesses.

I am thrilled to introduce this series, which I have named "Business Theory Demystified" Through this series, I will delve deeper into various theories of trade, including Mercantilism, Absolute Advantage Theory, Comparative Advantage Theory, Competitive Advantage, Porter Diamond Theory, and more.

Along with this, I will also discuss the role of national industrial policies, international entrepreneurship, and emerging technologies like AI, which are changing the dynamics of global trade.

Story:

Let me start with a story about Rakesh and Rajat, two childhood friends who grew up in the same neighbourhood and went to the same college. After graduation, Rakesh started a small business manufacturing handicrafts, while Rajat joined a multinational company as a software engineer.

Despite having limited resources, Rakesh was determined to make his business successful. He decided to apply the principles of comparative advantage theory to gain a competitive edge. Rakesh realized that his company's strength lay in skilled artisans who could produce unique and high-quality handicrafts. So, he focused on exporting his products to countries where such goods were in demand.

On the other hand, Rajat's company was at the forefront of technological innovation, and he was part of the team working on an AI-powered project. He realized that the company's competitive advantage lay in its ability to leverage technology and data to solve complex problems.

As Rakesh and Rajat pursued their respective goals, they both faced challenges. Rakesh struggled with the lack of infrastructure and government support for MSMEs. Meanwhile, Rajat's company faced stiff competition from global tech giants.

However, they both persevered and worked hard to overcome these challenges. Rakesh sought help from various government schemes and worked on improving his supply chain and distribution network. Rajat's company invested heavily in R&D and developed new AI-powered solutions that could outperform the competition.

In the end, both Rakesh and Rajat succeeded in their endeavours. Rakesh's handicrafts gained popularity in international markets, and his company expanded to employ more artisans. Rajat's company became a leader in AI-powered solutions and attracted global clients.

Conclusion:

The stories of Rakesh and Rajat illustrate the importance of understanding trade theories and applying them to gain a competitive advantage. It also highlights the need for government support and investment in MSMEs and emerging technologies.

In the next post of this series, I will discuss how the Porter Diamond Theory can help Indian startups and MSMEs to become more competitive in the global market. I look forward to your suggestions and feedback on this series and what you would like to read in future posts.

Thank you all for your time and support.

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