Competitive advantage of nations porter review

porters national competitive advantage theory ppt

Competitive advantage results from the presence of world-class institutions that first create specialized factors and then continually work to upgrade them. Conventional wisdom argues that domestic competition is wasteful: it leads to duplication of effort and prevents companies from achieving economies of scale.

National competitive advantage definition

He was able to take certain knowledge of industrial economics and bridge them with the views of business strategy. The debate, nevertheless, over the degree to which sanctions and other strategies influenced the recent changes in South Africa has only begun. All of these can be advantages in international competition. Nations gain factor-based comparative advantage in industries that make intensive use of the factors they possess in abundance. Moreover, competing domestic rivals will keep each other honest in obtaining government support. German exports of cars are heavily skewed toward high-performance cars, while Korean exports are all compacts and subcompacts. A new theory must move beyond comparative advantage to the competitive advantage of a nation. Nowhere is the role of fierce rivalry more apparent than in Japan, where there are companies competing in machine tools, 34 in semiconductors, 25 in audio equipment, 15 in cameras—in fact, there are usually double figures in the industries in which Japan boasts global dominance. Static efficiency is much less important than dynamic improvement, which domestic rivalry uniquely spurs. In other words, they converted factor disadvantages into competitive advantage.

Industry clusters versus global webs: organizational capabilities in the American economy. Each contains some truth; but a broader, more complex set of forces seems to be at work.

the competitive advantage of nations summary

A generalized double diamond approach to the global competitiveness of Korea and Singapore. By the same token, a nation need not be competitive in all supplier industries for its companies to gain competitive advantage.

the competitive advantage of nations citation

Both views are incorrect. Clusters influence competitiveness in several ways.

Competitive advantage of nations porter review

More recently, the argument has gained favor that competitiveness is driven by government policy: targeting, protection, import promotion, and subsidies have propelled Japanese and South Korean auto, steel, shipbuilding, and semiconductor industries into global preeminence. Some of the specific policy approaches to guide nations seeking to gain competitive advantage include the following. The eclectic OLI paradigm of international production: past, present and future. Competitiveness also does not mean jobs. Sophisticated, demanding buyers provide a window into advanced customer needs; they pressure companies to meet high standards; they prod them to improve, to innovate, and to upgrade into more advanced segments. We avoided industries that were highly dependent on natural resources: such industries do not form the backbone of advanced economies, and the capacity to compete in them is more explicable using classical theory. Home-demand conditions help build competitive advantage when a particular industry segment is larger or more visible in the domestic market than in foreign markets. The owners all lived in the same area, knew each other, and were the leading citizens of the same towns. The innovation reduced high labor costs—which had been a substantial selective factor disadvantage facing Italian tile manufacturers. Competitiveness in a specific industry results from convergence of the management practices and organizational modes favored in the country and the sources of competitive advantage in the industry. Government has critical responsibilities for fundamentals like the primary and secondary education systems, basic national infrastructure, and research in areas of broad national concern such as health care. Management compensation is heavily based on annual bonuses tied to individual results. But change is an unnatural act, particularly in successful companies; powerful forces are at work to avoid and defeat it. These conclusions, the product of a four-year study of the patterns of competitive success in ten leading trading nations, contradict the conventional wisdom that guides the thinking of many companies and national governments—and that is pervasive today in the United States. In Porter's view, geographic concentration magnifies the intensity of domestic rivalries.
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(DOC) Porter's Competitive Advantage of Nations