The multinational corporations for example minimize

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The multinational corporations for example minimize the importance of national boundaries whenever it is legally and culturally possible by developing their strategies on economic terms. These corporations remain generally apolitical with their loyalties to their shareholders wherever they are located rather than to any one country. ANALYZING THE DIAMOND Michael Porter suggests that some nations industries are more internationally competitive than others. He does not believe that countries or nations as such are competitive but rather that the conditions within a country may help firms to compete. Porter identifies 32
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four principal factors or determinants of national competitive advantage which he referred to as the diamond. 1. Factors conditions These are a country’s endowment of inputs to production. Human resources (skills, price, motivation, industrial relations). Physical resources (land, minerals, climate, location relative to other nations). Knowledge (scientific and technical know-how, educational institutions). Capital (amounts available for investment, how it is deployed). Infrastructure (transport, communication, housing). Porter distinguishes between basic and advanced factors. a) Basic factors are natural resources , climate , semiskilled and unskilled labour . They are inherent, or at best their creation involves little investment. They are unsustainable as a source of national competitive advantage since they are widely available e.g. the wages of unskilled workers in industrial countries can be undermined by even lower wages elsewhere. b) Advanced factors – are associated with a well-developed scientific and technological infrastructure and include modern-digital communications infrastructure, highly educated people (e.g. computer scientists) university research laboratories etc. They are necessary to achieve high order competitive advantages such as differentiated products and proprietary production technology. An abundance of factors is not enough. It is the efficiency with which they are deployed that matters. Porter also notes that generalized factors such as transport infrastructure do not provide as decisive and sustainable bases for competitive advantage as do specialized factors. These are factors that are relevant to a 33 Firm strategy, structure, rivalry Factor conditions Demand conditions Related and supporting industries.
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limited range of industries such as knowledge bases in particular fields and logistic systems developed for particular goods or raw materials. Such factors are integral to innovation and very difficult to move to other countries. 2. Demand conditions (The home market) The home market determines how firms perceive, interpret and respond to buyer needs. This information puts pressure on firms to innovate and provides a launch pad for global ambitions.
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Christopher Reinemann
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