Determinants of National Advantage
Determinants of
National
Advantage
Determinants of National
Advantage
i.
Factor Conditions
•
ii.
Factors of production e.g. Skilled labour, infrastructure required Demand Conditions
•
Nature of home demand for industry’s product or service
Determinants of National
Advantage
iii. Related and supporting industries
•
Presence/absence in a nation of supplier and related industries that are internationally competitive
iv. Firm structure, strategy and rivalry
•
•
Conditions in a nation governing how companies are created, organised, managed i d d Nature of domestic rivalry
Porter’s Diamond of National
Advantage
Source: http://t2.gstatic.com/images?q=tbn:ANd9GcQl0yaHmYgq0kTJhkovIfwORUKW3th‐ jcbF9JGCHWaOqtisBUCw Porter’s Diamond of National
Advantage
• The effect of one point depends on the others
• The diamond also is a self‐reinforcing system
Factor Conditions
Factor Conditions
• Factors are Inputs necessary to compete (labour, land, natural resources, capital, infrastructure).
• Nations are endowed with different factors which relate to
Nations are endowed with different factors, which relate to the competitive advantage role of those firms in the market.
• Stock of factors is less important that the rate at which these are applied and grown.
Factor Conditions
Factor Conditions
• Factors most important to competitive advantage are created by a nation, not inherited.
• These factors are upgraded / deployed over time to meet
These factors are upgraded / deployed over time to meet the demand.
• Local disadvantages force innovations, new methods and hence comparative advantage.
Factor Conditions –
Factor Endowment
i.
Human Resources – quantity, skills, cost of personnel
ii.
Physical Resources – abundance, accessibility, quality, location of physical resources p y
iii. Knowledge Resources – nation’s stock of scientific, technical and market
National
Advantage
Determinants of National
Advantage
i.
Factor Conditions
•
ii.
Factors of production e.g. Skilled labour, infrastructure required Demand Conditions
•
Nature of home demand for industry’s product or service
Determinants of National
Advantage
iii. Related and supporting industries
•
Presence/absence in a nation of supplier and related industries that are internationally competitive
iv. Firm structure, strategy and rivalry
•
•
Conditions in a nation governing how companies are created, organised, managed i d d Nature of domestic rivalry
Porter’s Diamond of National
Advantage
Source: http://t2.gstatic.com/images?q=tbn:ANd9GcQl0yaHmYgq0kTJhkovIfwORUKW3th‐ jcbF9JGCHWaOqtisBUCw Porter’s Diamond of National
Advantage
• The effect of one point depends on the others
• The diamond also is a self‐reinforcing system
Factor Conditions
Factor Conditions
• Factors are Inputs necessary to compete (labour, land, natural resources, capital, infrastructure).
• Nations are endowed with different factors which relate to
Nations are endowed with different factors, which relate to the competitive advantage role of those firms in the market.
• Stock of factors is less important that the rate at which these are applied and grown.
Factor Conditions
Factor Conditions
• Factors most important to competitive advantage are created by a nation, not inherited.
• These factors are upgraded / deployed over time to meet
These factors are upgraded / deployed over time to meet the demand.
• Local disadvantages force innovations, new methods and hence comparative advantage.
Factor Conditions –
Factor Endowment
i.
Human Resources – quantity, skills, cost of personnel
ii.
Physical Resources – abundance, accessibility, quality, location of physical resources p y
iii. Knowledge Resources – nation’s stock of scientific, technical and market