To what extent can Porter’s model of national competitive advantage adequately account for variations in national business systems and comparative economic performance? Give examples from 2 countries.
To what extent can Porter’s model of national competitive advantage adequately account for variations in national business systems and comparative economic performance? Give examples from 2 countries.
Introduction: The Diamond Model
Dickens, in his book shows how Porter argues that national competitive advantages are created through highly low processes through process that occur in a location and these processes are a Diamond. The diamond is an interconnected system of 4 major determinants of national competitive advantage. These 4 major determinants are firm strategy structure and rivalry, demand conditions, related and supporting industries and factor conditions. This essay addresses all four major determinants of national competitive advantage with particular focus on related and supporting industries. These refer to the national advantages of clusters and location.
Starting from factor conditions; they go by the country’s levels of skills and knowledge of its population as well as its framework such as road works and transportation. This is many a times in the hands of the government as he impinges on skills and knowledge of the country. Such factors are created within a country and which differ from one nation to another. The examples of Germany VS Britain as factor conditions differ widely across nations. In Germany it is imposed by law that corporations invest in the skill development of their employees, as it is part of the legal structure. In Britain this is voluntary.
The national advantage also depends on the demand on the firm’s product. This implies as a domestic demand but also as an international demand. This refers to domestic demand which increases national competitiveness due to having connected firms, which is the internal demand for the firm’s product. This is the internalisation of domestic demand and therefore this is also linked to technology as well. This is because the extent to which a firm has domestic demand and even more an
Introduction: The Diamond Model
Dickens, in his book shows how Porter argues that national competitive advantages are created through highly low processes through process that occur in a location and these processes are a Diamond. The diamond is an interconnected system of 4 major determinants of national competitive advantage. These 4 major determinants are firm strategy structure and rivalry, demand conditions, related and supporting industries and factor conditions. This essay addresses all four major determinants of national competitive advantage with particular focus on related and supporting industries. These refer to the national advantages of clusters and location.
Starting from factor conditions; they go by the country’s levels of skills and knowledge of its population as well as its framework such as road works and transportation. This is many a times in the hands of the government as he impinges on skills and knowledge of the country. Such factors are created within a country and which differ from one nation to another. The examples of Germany VS Britain as factor conditions differ widely across nations. In Germany it is imposed by law that corporations invest in the skill development of their employees, as it is part of the legal structure. In Britain this is voluntary.
The national advantage also depends on the demand on the firm’s product. This implies as a domestic demand but also as an international demand. This refers to domestic demand which increases national competitiveness due to having connected firms, which is the internal demand for the firm’s product. This is the internalisation of domestic demand and therefore this is also linked to technology as well. This is because the extent to which a firm has domestic demand and even more an