How Convincing Is Porter's Model of National Competitive Advantage in Essay

How Convincing Is Porter's Model of National Competitive Advantage in Explaining the Workings and Achievements of Major Nation - Essay Example This research will begin with the statement that international competitiveness of different countries is a great concern on governments and organizations. Countries do their best in order to ensure that they remain competitive in the international market. The interest on the competitiveness of countries has led to debates on the understanding and the true meaning of the international competitiveness of different countries. The purpose for the debates is due to the assumptions that underlie the theories of management that the competitiveness of firms may be transferred to countries. This was popularized by porter according to his diamond framework. Corporate strategies should be looked at from a global context. In spite of any given organization not having any plans of exporting or importing any goods directly. The management team of the organization is supposed to consider the international environments. This is because the action that the different organizations make on such issues as the competitors, sellers, buyers, substitute providers and the persons joining the market usually have a great influence on the domestic market. Michael Porter came up with a model that may be used to analyze the reasons as to why some nations may be more competitive compared to others and some given industries may be more competitive within a nation compared to others. This model may be used as a factor of determining national advantage and it is mostly referred to as the Porter’s diamond. The model suggests that an organizations national home base plays a great role in defining the extent that the organization is likely to be successful in the global scale as well as having a competitive advantage. The home base is able to provide some basic factors that may act as support for success and may at time hinder some organizations in building advantage grounds in a global competition. This model distinguishes four different determinants. The first determinant is the factor co ndition. This is the situation in a given country based on the factors of production such as infrastructure and skilled labor which may be relevant to make the country competitive in some industries. These factors may be placed in groups that include human resources, material resources, knowledge resource, infrastructure and capital resources. These factors also include research quality done by universities, liquidity of the national stock market or deregulation of the labor market. These factors may provide some advantage in the market and may act as a competitive advantage. The second condition is the home demand conditions. This condition describes the amount of home demand that the services and products produced in a given country are demanded within the country. The demand at home may influence the factor conditions. It helps shape the direction that the product development and innovation take. This model states that the demand within a country may shape the competitiveness of the country in the global market. The third condition is the supporting and related industry. When a country has one industry that is successful, it may reinforce internationalization and innovation in the industry at a later stage on the value system. Both the supplying industries and the related industries play a great role in a country’s competitiveness. These industries may coordinate some given activities together in the market, especially those that are related, which will in turn offer competitive advantages. The last condition is the structure, strategy and rivalry of the firm. In different nations, some factors such as management structures, interaction between companies and working morale may be shaped differently. This may provide some disadvantages and advantages for particular industries.