Competitive Advantage Of Nations Essay
The Competitive Advantage of Nations
Competitive advantage is a business concept which describes to us the characteristics necessary
that allow an organisation to outperform its competitors. This can be achieved through many
avenues such as providing consumers with greater value by either lowering prices or providing a
product or services that justifies a higher cost .Prevailing attitude on this subject matter would
suggest that factors like labour cost, interest and exchange rates and economies of scale are
principal factors in determining national success. However, we learn from Porters article that real
competitive advantage is developed by innovation applied to the Diamond Model or The Diamond
of National Advantage,which in essence
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The arrival of industry often motivates local supplies to develop and
innovate in order to meet that industries production, marketing and distribution needs. Competition
among local suppliers leads to lower prices and high quality products which then in turn strengths
an industries competitive advantage in world markets. An example of this would be Hollywood in
the film industry and its success due to the local availability of specialist input suppliers like
special effect firms, casting directors, costume and set designers and stunt coordinators.
Firm strategy, structure and rivalry
These are the circumstances and factors in the nation governing exactly how firms are created,
organised and managed as well as dealing with domestic rivalry. In order to survive firms that face
fierce competition domestically must ensure that they try to reduce in cost, increase product and
productivity while constantly trying to develop innovation. It is important that proper structures are
put in place where company goals and motivation for employers and employees are aligned with
sources that lead competitive advantage.
In addition to the four points discussed as part of the diamond model, Porter talks about two
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