Question

Consider National Competitive Advantage and determine whether firms from a particular country have a global advantage in their firm’s industry.

Answer 1

• There is something called Diamond Theory of National Advantage, created by Michael Porter which states that features of a home country are crucial for an organizations' success in global markets.
• Various determinants are used such as Factor conditions, Demand conditions, Firm strategy and Supporting industries that are essential for the success of a firm.
• Factors of Production - The nation's advantage in having the required natural resources and skilled labor is essential for competing in the global industry.
• Demand Conditions- Strong demand conditions in home markets force the companies to be more focussed on quality and it will generate the demand even more because of the rivalry in the industry..It will also create demand in the global market.
• Related & Supporting Industries - Related industries also have to be grown which should be competitive which widens the market for the allied sectors.
• Firm Strategy, Structure & Rivalry- The strategies helping the companies to grow varies from one another and innovate strategies could work more.
• According to those above criteria, the most important brain storming has to be done at the strategy making level where adequate weightage should be given to innovative ideas that cater the needs of both domestic and foreign needs. Nowadays, innovation in services are widely a open industry with thousands of opportunities.
• Regular market surveys needs to be done to understand the demands of the consumers and accordingly, changing the strategy is important. This will result in sustaining the customers over time.
• Creating a cluster of co-related industries can make a mutually supportive business ecosystem.For eg, all those industries that are co-related with, in an automobile industry such as steel, tyres, etc can mutually benefit from their informal associations as well.
• Government policies are an important feature as business friendly measures have to be taken by the government to promote a healthy and Sustainable market and also reduce the burden on companies. Measures such as corporate tax cuts in some countries recently is a major progressive step.
• The Governments, in this stage of de-globalization where countries are promoting their own domestic companies by imposing tariffs on cross border trade is definitely going to benefit those countries become successful in the domestic market.
• Making the environmental and quality standards high can improve the quality of goods and Services which in turn will increase the demand for those in international markets.
• Improve the research and development ecosystem which is crucial to the innovation sector and allowances must be given to those eco-friendly products and services which will boost the domestic industry standards high and internationally acceptable.
• Since, companies are a major provider of jobs in Organized sectors, adequate consideration should be given to them in case of employee provident funds which will reduce the burden on the companies and they can invest the extra money the save, into fueling the economy.
• Limiting direct cooperation among rivals may also help because this will reduce the competitiveness the economy require to gain advantage.
• Considering all these factors, of course, firms from a particular country can have advantage in the global economy with ample support from the government, innovations, better strategy and competition from rivals.