Country Comparative Advantage: Japanese Fax Industry BM499 Strategic Management David J. Bryce December 3, 2002

Competitive Advantage of Nations (National Perspective) Firm strategy, structure, and rivalry Related and supporting industries Factor Conditions Demand Conditions Source: M. Porter Skilled designers, engineers Fax demand - language - lack substitutes - control subs Copier companies Semiconductor companies Thermal print components Laser printers Thermal paper Strong rivalry Innovation focus JAPANESE FACSIMILE INDUSTRY Government - NTT promotion - “legal” docs

Traditional view of Comparative Advantage Traditional view of Comparative Advantage A focus on national factor endowments: Countries differ in factor endowments and countries should produce goods for which their factor endowments offer a comparative advantage. Countries differ in factor endowments and countries should produce goods for which their factor endowments offer a comparative advantage. Location-Specific Advantage

Enlightened” view of Comparative Advantage Enlightened” view of Comparative Advantage Countries possess factor endowments but also differing national abilities to create new endowments from the existing resource base (which includes factor endowments, education levels, skills, cultural propensities, etc.) Countries possess factor endowments but also differing national abilities to create new endowments from the existing resource base (which includes factor endowments, education levels, skills, cultural propensities, etc.) A country’s ability to create new endowments from its resource base stems in large part from A country’s ability to create new endowments from its resource base stems in large part from 1 – The country’s starting point when developments began (“path dependence”) 2 – The institutions and governmental processes that support or hinder development

Globalizing for Competitive Advantage (Utilizing country comparative advantages) Land: supply, usability, location (geography) Natural resources: abundance, type Labor : plentiful (cheap) Size of local population: size of home market Skilled labor: effective education systems and productive workforce Technology/knowledge base Financial, economic and political environment Culture: costs of transacting, demanding users, inventiveness of human resources Factor Endowments Created Endowments

Selected Top Export Industries United States Pop: 275mm Automobiles Aerospace/aircraft Computer equip./ software Pharmaceuticals Medical Equipment Entertainment (motion pictures) Food Processing/ consumer pdts. Waste management Japan Pop: 140mm Automobiles & motorcycles Consumer electronics Computer equip./ semiconductors Robotics Cameras/watches Musical instruments Machine tools Shipbuilding/steel Germany Pop: 70mm Automobiles (Performance) Machine Tools Printing presses Chemicals Surgical Instruments Cutlery Pens & pencils Optical instruments Italy Pop: 55mm Ceramic tiles Knitwear/textiles Leather goods and footwear Ski Boots Jewelry Lighting/glass Furniture