In his model, Michael E. Porter makes an argument that a nation can fashion new highly developed factor endowments such as a strong technology, skilled labor, knowledge base, culture, and government support. Porter made use of a diamond shaped illustration to be the basis of his framework to show the determinants of national advantage. …
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Porter's Diamond of National Advantage
Corporate strategies are ever increasing and thus have to be observed from a global context. This is because, even when an organization has no plans to import or to export commodities directly, the management staff has to gaze at the international business environment, where the actions of buyers, sellers, competitors, and new entrants of providers of alternatives may have an impact on the domestic market. Through this trend, information technology can be reinforced.
Michael Porter’s model that allows for the analyzing of why some countries are more aggressive than others are, and the reason why some industries within countries are more aggressive than the way others are. All this is written in the book he published titled “The Competitive Advantage of Nations”. From the insight revealed in his writings, his representation of determining factors in national advantage has come to be known as Porters Diamond. This model proposes that the nationalized home base of a business plays a considerable role in determining the scope to which it is expected to achieve a competitive advantage on an international level. This home base presents basic factors that may support or hinder businesses from creating advantages in international competition (Held and McGrew 2001). ...
Michael Porter makes out four determinants. These are: Factor Conditions When it comes to factor conditions, a country can create its own essential factors such as skilled labour and a strong technological base. It should be noted that the reserve of these features at a given time is not as much important than the degree that they are improved and implemented. Local demerits in features of production drive better innovation. Unfavorable circumstances such as labor shortages or inadequate raw materials may force organizations to come up with new methods, and this originality often goes ahead to a national comparative advantage. Demand Conditions There are situations when the market for a certain product is bigger locally when compared to foreign markets. In this situation, the local organizations give more attention to that commodity than foreign organizations do, thus leading to the element of competitive advantage as soon as the local organizations start exporting the commodity in question. From this understanding, it becomes clear that when there is a high demand in the local market for a particular commodity, a national advantage results. In the spirit of good business, a strong, trendsetting local market can help local organizations look forward to global trends (Salvatore, 2002). Related and Supporting Industries In every industrial process there are always supporting and related industries. This leads to the element of competition between these industries. In the local setting, supporting industries are sometimes competitive, and thus organizations enjoy additional innovative and cost effective inputs. The suppliers get an additional advantage if their businesses are set up in a global
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The SAFRI was expected to generate total revenue of $73.9 billion in 2011 which amounts to compounded annual growth rate (CAGR) of 11 percent between 2007 and 2011. The most lucrative areas in food retailing are expected through hypermarkets, supermarkets and discounters in South Africa.
For example, America is the strongest country on earth at present and they are using their military and economical power for increasing their competitive power on global issues. At the time of writing this paper, America and its allies succeeded in getting the permission from United Nations for establishing a no fly zone over Libya.
This research will begin with the statement that Michael Porter’s model of national competitive advantage is one of the highest acclaimed works in the world which answers many questions about the economics and managerial sciences. He presented this model in his book ‘The Competitive Advantage of Nations’ in 1990.
The World Economic Forum ranks countries in terms of their international competitiveness in the world market. Porter’s diamond model extends firm competitiveness to country competitiveness. This has opened up debate among economists and scholars based on the management theories.
The countries he mentioned as the global leaders in competitive advantage have been proven to be leading in exports across the entire global. These are the United States, Japan and Germany. These claims can be greatly supported by international business analysts.
Koen (2005) argues that Porter’s model brought in a generic value chain mould that comprises of a series of activities found to be similar to a wide variety of firms. Porter identified main and support activities. The core value chain activities are inbound movements, sales and marketing and services.
In this paper, we find out that because of its present competitive advantage, of lower production cost, good network infrastructures, a good international port with access to different parts of the world, ample investment, and well thought out operations and information technology have given the country a greater leap forward.
It's feasible to consider the degree of attractiveness here. In fact it's this particular characteristic that determines the level of industry profits. Thus the opposite is true when unattractive industries incur losses as in the case of those industries that constantly develop characteristics of perfect competition.
The conclusion from this study states that Porters’ model of national competitive advantage provides a degree of variation of national business systems and a comparative economic performance across different nations and industries. The model, however, fails to consider the effects of vital variables such as culture and history in the explanation of economic success in a nation.
This research will begin with the discussion of the Porter’s Diamond Model critics and pros, detailing on the authenticity of the study. The paper then uses Porter’s Framework to analyze IT Outsourcing industry in China, USA, UK, Germany, and Japan. Recommendations and outcomes are discussed at the end of the paper.
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