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The competitive advantage of nations Introduction Globalization has brought revolutionary changes in this world. Business is one segment in which globalization exerted significant changes. Most of the prominent organizations are operating internationally or cross culturally at present because of globalization…
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Download file to see previous pages... In his opinion, firm strategy, structure and rivalry, factor conditions, demand conditions, related and supporting industries are the factors governments should control in order to manage the competitive power of nations. The following illustration provides a brief idea about the factors which affect the competitive power of nations. (Vision on Innovation: 2. Models on the dynamics of innovation, 2009). Michael Porter while teaching in Harvard University in the 70’s and 80’s has made lot of researches with the help of his associates formulated a frame work to assess the competitive advantages of nations which is illustrated above. Porter has introduced parameters such as clusters of companies, suppliers, related industries and institutions in particular locations as the factors which affect the competitive power of a nation in international market. This framework is known as Porter’s ‘diamond’ of National Competitive Advantage. This paper analyses the competitive power of nations with the help of Michel Porter’s diamond model The competitive advantage of nations According to Porter (1990), “A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade. Companies gain advantage against the world’s best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers” (Porter, 1990). It is difficult for firms to survive in the market without innovation. The market is changing rapidly because of the advancements in science and technology and the arrival of new products. Competition or rivalry in the market always forces nations and firms to innovate new products. Until the beginning of 2000, Nokia was the leader in the mobile phone industry. However, Apple Inc introduced the touchscreen mobile phones at the beginning of 2000 and the leadership of Nokia in the mobile phone industry is slowly diminishing now. Apple controlled the mobile phone industry until recently. However, Samsung captured the leadership of this industry from APPLE at present with the help of innovative smartphones such as Galaxy S2, S3 etc. In short, rivalry and ability to innovate new products determine the success and failures of companies in the market at present. No organization or country can take the leadership for granted. For example the technological dominance of America is currently challenged strongly by Asian countries such as China, Korea and India. America maintained leadership in the technology market until recent times; however, their supremacy seems to be challenged by many other countries at present. The following table provides the strengths and weakness of America as a country at present in the global market. Strategic Issues For the United States Strengths Weaknesses Innovation Science, technology, R&D Entrepreneurship Free and open competition Capital markets (current uncertainty) Economic decentralization Human resources challenges Need to restructure public education Access to higher education Training Americans vs. low skilled immigration Falling U.S. leadership in international economic development U.S. influence, authority, and focus has diminished Weak transitional “Security Blanket” Retraining system Pension security Health insurance access and mobility Unnecessary cost of doing business. Burdensome regulations Litigation costs High-cost / high complexity tax system Energy inefficiency High healthcare ...Download file to see next pagesRead More
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