Porter's Model of National Competitive Advantage - Essay Example

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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 ...Download file to see next pagesRead More