Question

Review Porter’s Theory of Competitive Advantage and assess the extent to which the model can be used to explain (fully or partially) growth and development in the Caribbean region. How inline is the model with the views of economic development of the dual economy and plantation economy?

Answer 1

Competitive advantage by Porter explains the criticisms of comparative advantage. When an organisation develop at an attribute level will allows them to perform high level among the competitors. The advantages of one business firm over other firms in the industry shows the competitive advantage. For example, 640 GB drive having competitive advantage over 500GB drive in both the cases of cost and value. The theory explains that the business should be accepted policies related to high quality goods which sell higher price in the market. The growth of productivity emphasis national strategy. This theory gave more preference to the maximisation of economies of scale which garner the premium prices. Adoption of new technologies like robotics and IT will make a competitive advantage. There are three determinants of this theory. They are benefits, target market and competition. Benefits are mainly the real benefits which offer real value. The producer should know about the product and to its advantages. Which make benefit to the consumer. The relevance of internet newspapers reduces the extra cost for the newspapers. The producer should know about the futures and needs of their customers. The creation of demand among the consumer will induce the economic growth. Finding the market competitors are also on e of the important strategy of the producer. The proper messaging to the consumers like advertising, proper relations and other aids for sale. In Caribbean region there is a high amount of resources, which should be used properly by the firms will create competition among the firms.

If this theory used in a dual economy, it will improve the production in both sectors through high level of competition. The relative position of the firms in both the sectors will determine their level of competitiveness. There are two main strategies by the firm, low cost or differentiation. Theses to things will increase the scope of activities and the performance f all the firms. The strategy of differentiation makes the firm unique, which attract valued customers. If also have uniqueness with premium price also. The low cost leadership will attract more customers. With low cost the economies of scale, higher technology preferential access to the raw materials and other factors were achieved.