Nаtionаl prоsperity is creаted, not inherited. It does not grоw out of a country’s natural endowments, its lаbor pool, its interest rates, or its currency’s value. A nation’s cоmpetitiveness depends on the capacity of its industry to innоvate and upgrade. Cоmpanies gain advantage against the world’s best cоmpetitors because of pressure and chаllenge. Thеy benefit from having strong domestic rivals, аggressive hоme-based suppliers, and demаnding local custоmers (Harvard Business Review, The Competitive Advantage Of Nations, Michael E. Porter). The Nаtional Competitive Advantage is basically an evaluation of hоw competitively a nation participates in international markets. Porter offers a diamond-shaped diagram to outline the frаmework of 4 key …show more content…
Porter) of the application of Porter’s theory of competitive advantage of nations
to the Japanese Fax Machine Industry. Japanese firms achieved the dominance in this industry for the following reasons.
• Japanese Factor Conditions: Japan has a relatively high number of electrical engineers per capita.
• Japanese Demand Conditions: The Japanese market was very demanding because of the written language.
• Large number of related and supporting industries with good technology, for example, good miniaturized components since there is less space in Japan.
• Domestic Rivalry in the Japanese fax machine industry pushed innovation and resulted in rapid cost reductions.
• Government support – NTT (the state-owned telecom company) changed its cumbersome approval requirements for each installation to a more general type approval. To sum up, each of these four attributes defines a point on the diamond of national advantage, the effect of one point often depends on the state of others. To my mind, Porter's Diamond is more relevant in understanding intra-industry trade of differentiated goods than other theories. This relates in particular to competitive and dynamic industries where each element in Porter's Diamond would be very relevant in influencing product change while other country-based specifics play a minimal
Michael Eugene Porter is an economist, author, advisor and a researcher. He is the creator of Porter Five Forces theory, which is a framework for a business. The model “identifies and analyzes five competitive forces that shape every industry, and helps determine an industry 's weaknesses and strengths” (Investopedia LLC, 2016). The five forces are competitive rivalry, bargaining power of buyers, bargaining power of suppliers, threat of new entry, and threat of substitution. This is a very important theory which a business can strengthen their position.
Over the years, Japan has been working on advancing their economy since post-World War II. They now have a very strong work ethic, high resolution technology and a very comparatively small defense allocation, one percent of the gross domestic product. Two key characteristics are the interlocking structures of manufactures, suppliers, and distributors, and guarantee of employment for a substantial portion of the urban labor force (CIA,2017). With natural resources of Japan becoming inadequate, they reliant on imported raw materials and resources especially since the complete shutdown of nuclear reactors
Combining imported technology with their domestic innovation was translated in the inception of the Japanese low-cost mass productions system. Technological improvements such as the one mentioned above played a huge role in the country’s economic growth, as improvement of technology in one industry often influenced the growth of other industries. For instance, Japan’s steel industry was successful in improving the quality of steel used in manufacturing automobiles, due to the technological process in the casing of parts; the automobile industry too benefited and hence could reach a level where it could compete with its international
People own a lot of technology from Japan, a country that wouldn’t have been able to compete with the West two hundred fifty years ago. Now, we regularly buy items from them like smartphones, and gaming consoles, cars; some of the most cutting-edge technology is from Japan. It’s easy to image that if Americans were to cut off ties to Japan today, that they might outstrip us technologically in a few
Ships plied the Pacific in great numbers with the first containerised freight (of military hardware and supplies. On the return trip, rather than return with empty containers, the ships began to stop at Japan and fill those containers with inexpensive Japanese cars and TVs and other electronic appliances. It was the beginning of Japan's real economic boom. And the beginning of the end for US competitiveness in a host of areas, which gave us the economy we see
From the time following World War II, Japan's government cooperation, work ethics, and highly defense technology have helped built up a strong advanced economy. Two
After the Second World War (WWII), Japan started from scratch, and its business succeeded very well, first on the domestic market and then on a world-scale. In the 1970s, Westerners were looking at Japan in awe, and tried to know how it could be such a good
Since the end of World War II, Japan's economic strategy for growth was based on exports, that allowed the development of its powerful industrial sector. During the 1980s, Japanese automakers in particular were enjoying an unprecedented and largely unexpected period of prosperity. They managed to establish a successful domestic automobile industry and to gradually sell their products abroad. Thanks to their competitive advantage in producing cars with respect to foreign competitors, due to labor differences, technical efficiencies (lighter and fuel-efficient cars), better designs, and of
In the article “The Competitive Advantage of Nations” Michael Porter describes a diamond shaped relationship of forces that define a country’s potential for being competitive in a specified industry. The four points on the diamond representing the different forces are: factor conditions; demand conditions; firm strategy, structure and rivalry; and related and supporting industries. According to Porter, the four points apply pressure to each other resulting in a national
Competitive advantage is explained by Mahoney and Pandian (1992) as the function of industry analysis, organizational governance and the firm’s effects in the form of resource advantages and strategies. In order for a firm to be competitive it must adapt to the volatile business environment and through strategic management decisions establish a competitive advantage that will ultimately produce superior performance relative to its competitors (Akimova 2000).
The Competitive advantage is a set of unique attributes of a nation. It is an advantage, capability, ability, strategy,
Any country should use porter diamond theory of national advantage. It's designed to help understand the competitive advantage nations. It suggests that the national home base of any organizations are playing a supportive role in shaping the size or scoop to which it is likely to achieve advantage on a global scale. This home base provides basic factors, which support organizations from building advantages in international competition. Porter classifies four determinants: Factor Condition, Diamond Condition, Relatives & supporting and Structure, strategy & Rivalry. Egypt government acts to catalysts to improve Egypt position in a globally competitive economic environment. They found that they can create new factors such as skilled labor and high technology (Porter M., 1990). Porter's diamond model suggests threat there are inherent reasons why some nations are more competitive than others on an international market. Another factor that influence in competitive advantages such as the policies that put by government. One of the most influencer policies is (FDI) Foreign direct investment
The points of the Porter's Diamond are described as four broad attributes. And these attributes promote or impede the creation of competitive advantage.
To better understand why some nations are more competitive than others, Porter conducted the research in order to ‘look for determinants in the national business environment that can explain why in some countries firms in particular industries are more successful than those in other nations’. (Ard-Pieter de Man, 1997, p. 48) The research culminated in framework known as diamond which describes the determinants of competitive advantage. Porter ‘ identified four attributes that promote or impede the creation of competitive advantage: (1) factor conditions, (2) demand conditions, (3) related and supporting industries, and (4) firm strategy, structure, and rivalry’. (Dirk Morschett, 2015, p. 176)
Internal rivalry: Porter believes that the power and size of market rivals goes a long way to show the strength a business. If a firm has a much larger market share then any of its market rivals it may not incur as much competition on price or non-price dimensions of the product/service in question and therefore will be a much more powerful business compared