International Business Lecture No,23 By Dr.Shahzad Ansar.

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International Business Lecture No,24 By Dr.Shahzad Ansar

International Business Lecture No,22 By Dr.Shahzad Ansar

Presentation transcript:

International Business Lecture No,23 By Dr.Shahzad Ansar

Porter’s Diamond (Harvard Business School, 1990)‏ The Competitive Advantage of Nations. Looked at 100 industries in 10 nations. –Thought existing theories didn’t go far enough.

Question: “Why does a nation achieve international success in a particular industry?”

Determinants of National Competitive Advantage Factor endowments: nation's position in factors of production such as skilled labor or infrastructure necessary to compete in a given industry. Demand conditions: the nature of home demand for the industry’s product or service.

Related and supporting industries: the presence or absence in a nation of supplier industries or related industries that are nationally competitive. Firm strategy, structure and rivalry: the conditions in the nation governing how companies are created, organized, and managed and the nature of domestic rivalry.

Porter’s Diamond Determinants of National Competitive Advantage Factor Endowments Firm Strategy, Structure and Rivalry Demand Conditions Related and Supporting Industries Figure McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

The Diamond Success occurs where these attributes exist. –More/greater the attribute, the higher chance of success. The diamond is mutually reinforcing.

Determinants of National Competitive Advantage Government Company Strategy, Structure, and Rivalry Demand Conditions Related and Supporting Industries Factor Conditions Chance Two external factors that influence the four determinants McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

Taken from Heckscher-Olin Basic factors: –natural resources –climate –location –demographics Taken from Heckscher-Olin Basic factors: –natural resources –climate –location –demographics 4-33 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

Advanced factors: –Communication –skilled labor –research –technology Advanced factors: –Communication –skilled labor –research –technology 4-33 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.