comparative advantage

if you have read loads of bullsh*t on management, i am sure you have heard this. however, for the sake of the people who don't know, i'll try to give little explanation here as far as i can remember. 

it will be easier to start with competitive advantage (next will be addressed as comp). so, comp is simply an absolute advantage of a certain side to produce a certain product. (okay, i know it sounds confusing, i'll try harder! so, chill!)

for example: it will be a lot cheaper to grow rice in the country side as compared to grow it in the big city. we'll have cheaper labours and cheaper rent for the land. for a bigger scale example, we can safely say that everything produced in China will be much cheaper than to produce it in Singapore. so, China has a competitive advantage compared to Singapore in, erm, you just name it. cellphones, tea, coffee, rice, cars, biscuits, and even women-related services. 

nah! meanwhile, comparative advantage (next will be addressed as compar) is a little bit different. compar is the comparative advantage of a certain side to produce a certain product. :p

 

i'll just go with an example to make things simple. for example: let say, my marketing ability is at the level of 60, and my ability in finance is around 70. next, let say, Mr. Obama has marketing ability of 100, and, in finance, about 85. and, in a simple world, where one person can assume only one task, i would be said to have a comparative advantage of doing finance compared to Mr Obama, simply because we can have higher total value when i am assigned in finance and Obama in marketing. it is not that i am better than Obama in finance, but simply because he can't do all things by himself. 

i believe many know this simple theory, but little has really applied it through and through. still wondering if you are in this category or not? you'll know it in minutes. 

have you declined a help offer from a financial planner in a thought that you can plan yourself? well, i just did, and one of my friends also had done. 

have you ever thought that you don't need a property agent, and you can just look for the house and buy it yourself, and you can save up on the commission? 

how about doing photography tasks yourself? save up on the marketing cost. lamenting the high fee for wedding organizer and thinking of doing it ourselves? 

expensive fee for designers being it fashion designer, graphic, interior and many more, and opt to go for it ourselves? 

the list will go on, but i am sure this is enough to deliver my point. all of those people are having at least comparative advantage if not competitive advantage on the topics mentioned. after all, we can't do everything ourselves. 

i don't know if it is greed, or over-estimation of ourselves. but, surely, it is ehm... 

well, i don't know. hindrance? virus? illness? stubborn? stupidity? 

okay, i think i just really don't know.