Question

What are the elements of national competitive advantage?

Use book (Business essentials 12th edition) Chapter 4

Answer 1

National Competitive Advantage, also known as Michael Porter’s Diamond Model, explains that certain companies in nations or gropus have certain factors available to them, that can drive competitive advantage and improve a nation's position or economy over another in a globally competitive economic environment.

The elements are:

(i) Firm Strategy, Structure and Rivalry:
- Company strategies
- Structure of the organisation
- Managerial system
- Intense competetion between local rivals

(ii) Factor Conditions:
- Natural resources
- Human resources
- Capital resources
- Infrastructure
- Scientific knowledge
- Technological innovation

(iii) Demand Conditions:
- Size of the domestic market
- Sophisticated and demanding domestic customers
- Customer needs that anticipates those elsewhere

(iv) Related and Supporting Industries:
- Presence of competitive related and supporting industries
- Domestic suppliers that are strong global players themselves

Additional Factors:

(v) Goverment:
- Government policies
- Industry regulation
- Government role as a catalyst and a challenger

(vi) Chance:
- Random events
- Natural disasters
- Scientific break-throughs
- Terrorist attacks