...Strategic Management Journal, Vol. 12, 535-548 (1991) PORTER'S 'COMPETITIVE ADVANTAGE OF NATIONS': AN ASSESSMENT ROBERT M. GRANT Management Department, California Polytechnic State University, San Luis Obispo, California, U.S.A. Porter's Competitive Advantage of Nations is an important book which bridges the gap between strategic management and international economics while contributing substantially to both. Porter's analysis ofthe impact of national environment on international competitive performance demonstrates the potential for the theory of competitive strategy to rescue international economics from its slide into refined irrelevance, while simultaneously broadening the scope ofthe theory of competitive strategy to encompass both the international dimension and the dynamic context of competition. Nevertheless, the breadth and relevance of Porter's analysis have been achieved at the expense of precision and determinancy. Concepts are often ill defined, theoretical relationships poorly specified, and empirical data chosen selectively and interpreted subjectively. The Competitive Advantage of Nations is an important book. Among Porter's books to date, it is the broadest in scope and the most ambitious in intent. The book addresses a question which lies at the heart of economic and managerial science: 'Why do some social groups, economic institutions, and nations advance and prosper?' (Porter, 1990: xi).This is no new issue: the same question stimulated Adam Smith's...
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...The Competitive Advantage of Nations Writer : Michael E. Porter (2001) Main contents “We need a new perspective and new tool” : An approach to competitiveness that grows directly out of an analysis of internationally successful industries, without regard for traditional ideology or current intellectual fashion.” • Natural Prosperity - Be Created / Not be inherited - Does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value , as classical economics insists • Competitiveness - A nation’s competitiveness : depends on the capacity of its industry to innovate and upgrade - Companies’ competitiveness : Gain advantages against the world’s best competitors because of pressure and challenge ( Benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers. - Competitive advantage : is created and sustained through a highly localized process. ( differences in national values, culture, economic, structures, institutions, and histories contribute to competitive success. - Every country has different environment ( Striking differences in the patterns of competitiveness - According to prevailing thinking : Labor cost, interest rates, exchange rates, and economic scale are the most potent determinants of competitiveness. ( So, Managers are pressing for more government support for particular industries...
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...adaptation in global marketing strategy and to explain the dynamics of standardization. Design/methodology/approach – This is a conceptual research paper that has been developed based on gaps in prior frameworks of standardization/adaptation. A three-factor model of standardization/adaptation of global marketing strategy was developed. The three factors include homogeneity of customer response to the marketing mix, transferability of competitive advantage, and similarities in the degree of economic freedom. Findings – The model through the use of feedback effects explains the dynamics of standardization. Research limitations/implications – Future research needs to empirically test the model. To enable empirical validation, reliable and valid measures of the three factors proposed in the model need to be developed. Additionally, the model may be used in future research to delineate the impact a variable may have on the ability of a firm to follow a standardized global marketing strategy. Practical implications – The three-factor model aids decisions relating to standardization in a global marketing context. Originality/value – The paper furthers the discussion on the issue of standardization. Through the identification of three factors that impact standardization/adaptation decisions, and the consideration of feedback effects, the paper provides a foundation for future research addressing the issue....
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...Group: 2 Research Project Factors of HR Planning Affecting Company’s Competitive Advantage Prepared By: Trishita Chowdhury 081 358 030 Tahmina Jahan 082 302 030 Sharmin Akhter Khan 082 635 030 Tahasin Ali 093 0523 530 Tania Sultana 093 0541 030 Md. Abu Sayed 093 0216 030 Naved Mohammad Khan 101 0549 530 Prepared By: Trishita Chowdhury 081 358 030 Tahmina Jahan 082 302 030 Sharmin Akhter Khan 082 635 030 Tahasin Ali 093 0523 530 Tania Sultana 093 0541 030 Md. Abu Sayed 093 0216 030 Naved Mohammad Khan 101 0549 530 Prepared For AKM Mominul Haque Talukder (MHT) Senior Lecturer Course: Human Resource Planning Course Code: HRM 360 North South University Date of Submission: 11th April 2012 April 09, 2012 A.K.M. Mominul Haque Talukder Senior Lecturer, School of Business & Assistant Proctor North South University Bashundhara, Dhaka 1229 Dear Sir, Subject: Research Report on Level of Satisfaction of the employees of Avery Dennison. We have the honor to present to you the research report entitled ‘Factors of Human Resource Planning Affecting a Company’s Competitive Advantage’. The main purpose of this report was to assess the relationship between the seven different variables of human...
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...Critically evaluate Porter’s Diamond of National Competitive Advantage as an aid to understanding national competitiveness. Table of Contents Table of Contents 2 1. The diamond model by Michael Porter 3 1.1 Introduction 3 1.2 Diamond model Theory 4 1.2.1 Factor Condition 4 1.2.2 Demand conditions 5 1.2.3 Firm strategy, structure and rivalry 5 1.2.4 Related and supported industries 6 1.2.5 The role of Government 6 1.3 Criticism of the framework 7 1.4 Practical Example 7 1.5 Conclusion 8 1 2 3 4 5 6 7 8 9 1. The diamond model by Michael Porter 1 1.1 Introduction According to Recklies (2001), increasingly corporate strategies have to be seen in global context and even if an organization does not plan to import or to export has to look at an international business environment, in which actions of competitors, buyers, sellers, new entrants of providers of substitutes may influence the domestic market and information technology has been reinforcing this trend. The classical models and theories related to international trade before Michael Porter’s Diamond theory, mainly proposed that the comparative advantage resides in the factors endowments that a country may be fortunate enough to inherit and these factors mainly consisted of land, natural resources, labour and the size of the local population but Porter argued though his...
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...SMR001 rP os t MIT Massachusetts Institute of Technology Summer 1985 Designing Global Strategies: Comparative and Competitive Value-Added Chains No Bruce Kogut tC op yo Volume 26 Number 4 Do Reprint 2642 This document is authorized for use only by Fernando Juarez until October 2010. Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860. PDFs I Reprints I Permission to Copy I Back Issues Electronic copies of MIT Sloan Management Review articles as well as traditional reprints can be purchased on our web site: www.mit-smr.com or you may order through our Business Service Center (9 a.m.-5 p.m. ET) at the phone numbers listed below. op yo To reproduce or transmit one or more MIT Sloan Management Review articles by electronic or mechanical means (including photocopying or archiving in any information storage or retrieval system) requires written permission. To request permission, use our web site (www.mit-smr.com), call or e-mail: rP os t MITSloan Management Review Toll-free in U.S. and Canada: 877-727-7170 International: 617-253-7170 e-mail:smrpermissions@mit.edu To request a free copy of our reprint catalog or order a back issue of MIT Sloan Management Review, please contact: MIT Sloan Management Review 77 Massachusetts Ave, E60-100 Cambridge, MA 02139-4307 Do No tC Toll-free in U.S. and Canada: 877-727-7170 International: 617-253-7170 Fax:...
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...developing countries, economies, companies, and people. But not every country is able to use these opportunities on the same level. It depends on the level of social-economic country’s development. It is called Triad Power: bigger technological, economic, social and cultural integration is present among three most developed regions of the world: North America, west of Europe, east and south-east Asia.- it is a center of the world. (highly educated people, good organization of their work, capital) General results of globalization 2. Globalization changes borders of markets. Local markets are too small Factors for export: Pro- active driving force (results from the internal needs of the company) Reactive driving force (is a reaction to external conditions) - Demand for bigger profits - managers’ aspirations - Ownership of unique products and technologies - Advantages of...
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...to its owner a sustainable competitive advantage. Therefore, resources and competencies approach first appeared as a theory of competitive advantage or a theory of “performance of the firm” (Argyres & Zenger, 2007). It is only recently, in the last 20 years that organizations have started using the resource based view approach on strategy. Nowadays, they view it as the most important key development in international business research and strategic management, an approach that gives a coherent vision based on a firm's capabilities to help determine the strategic resources necessary for the firm's survival and growth within a particular market place. As Hitt et al (2001) stated, “the resource based model assumes that each organization is a collection of unique resources and capabilities that provides the basis for its strategy and that is the primary source of return.”. It suggests that in order for a firm to sustain competitive advantage, it must not only have resources and capabilities but also have a firm control over it and they must meet certain basic criteria such as being: valuable, rare, inimitable and non substitutable such that it is impossible to be copied or replicated (VRIN). Although a resource based view strategy sounds like the better way to go, others have wondered if this approach is at all necessary or bring any more insight than the traditional understandings into a successful strategy to survive and thrive into a competitive market,...
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...pharmaceutical industry. Moreover, an assortment of products has expanded. In 1990s, the new non-traditional types of products became available for customers, such as dietary supplements and homeopathic remedies. A variety of products in pharmacies has increased three times due to an introduction of products-substitutes by different producers. In order to gain a substantial market share and make a profit, pharmacies’ managements invent new marketing and business strategies. (36i6, Medical Portal) To sustain competitive advantage in the industry, a pharmacy has to concentrate on high quality products, provide its customers with clear information about its products, and efficiently manage a sale system. The main reason of company’s inefficient operations is the lack of information about market values of the industry. High volumes of production are not the measure of competitive advantage anymore; other indicators should be created in order to evaluate the company’s competitive advantage. The research of the pharmaceutical industry in Russia is important for investigating the influence of unstable economy on firms’ activities and developing a methodology for complex evaluation of pharmacies’...
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...Competitive Advantage Creating and Sustaining Superior Performance Author: Michael E. Porter Michael E. Porter's Competitive Advantage explores the underpinnings of competitive advantage in the individual firm. Porter's groundbreaking concept of the value chain disaggregates a company into "activities," or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Giving readers a comprehensive understanding of business strategy and how to create a sustainable competitive advantage for their organization, Porter explores how a firm can put the generic strategies of cost leadership, differentiation and focus into practice. This essay will explore Competitive Advantage and the underlining theory that to compete in any industry, companies must perform a wide array of discrete activities that are narrower than traditional functions. It will analyze the real core of the book which is to determine whether companies profit from creating value for customers, or whether that value is competed away. INTRODUCTION “Competitive Advantage is at the heart of a firm’s performance in competitive markets. After several decades of vigorous expansion and prosperity, however, many firms lost sight of competitive advantage in their scramble for growth and pursuit of diversification. Today the importance of competitive advantage could hardly be greater. Firms throughout the world face slower growth as well as domestic and...
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...The Diamond model of Michael Porter for the Competitive Advantage of Nations offers a model that can help understand the competitive position of a nation in global competition. This model can also be used for other major geographic regions. Traditionally, economic theory mentions the following factors for comparative advantage for regions or countries: A. Land B. Location C. Natural resources (minerals, energy) D. Labor, and E. Local population size. Because these factor endowments can hardly be influenced, this fits in a rather passive (inherited) view towards national economic opportunity. Porter says sustained industrial growth has hardly ever been built on above mentioned basic inherited factors. Abundance of such factors may actually undermine competitive advantage! He introduced a concept of "clusters," or groups of interconnected firms, suppliers, related industries, and institutions that arise in particular locations. As a rule Competitive Advantage of nations has been the outcome of 4 interlinked advanced factors and activities in and between companies in these clusters. These can be influenced in a pro-active way by government.These interlinked advanced factors for Competitive Advantage for countries or regions in Porters Diamond framework are: 1.FACTOR CONDITIONS -a country creates its own important factors such as skilled resources and technological base. -these factors are upgraded / deployed over time to meet the demand. -local disadvantges force...
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...going to have in your answer [such as 'theoretical discussions', 'critical discussions'] - “The contribution by Porter (1990) on the competitive advantage of nations has led to an extensive discussion among academics and practitioners on the sources of international competitiveness (Grant, 1991; Gray, 1991). However, in order to understand why so much emphasis is placed on the diamond framework in the management literature, this essay will discuss Porter’s concept of the Diamond and the factors that contribute to the development of national competitive advantage. This paper will begin with a theoretical approach followed by the reception of different authors and schools of thoughts who disagreed with his management thinking, and then goes on to consider empirical issues which have arisen subsequently, followed by a conclusion.” Theoretical Discussions (explain the 'main theory' [such as 'Late/Early industrialization', 'Managerial enterprise', 'Weber's theory about impacts of culture'] in this question) - “Porter’s theory of national competitive advantage is based upon a study of the characteristics of the national environment which identifies four sets of variables, and an additional two, which influences a company’s ability to establish and maintain competitive advantage within international markets. These interacting determinants are: factor conditions; demand conditions; related and supporting industries; and firm strategy, structure and rivalry and form what Porter refers...
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...CHAPTER 2 THE CONTEXT OF MANAGING STRATEGICALLY DESCRIBE THE DIFFERENT PERSPECTIVES ON COMPETITIVE ADVANTAGE A. Managing strategically means formulating and implementing strategies that allow an organization to develop and maintain competitive advantage. B. Competitive advantage is what sets an organization apart or its competitive edge. 1. Having something that competitors don't 2. Doing something better than other organizations do 3. Doing something other organizations can't C. Competitive advantage is a key ingredient for long-term success and survival of all organizations, including not-for-profits and governments. 4. Failure can be traced to: a) Failure to recognize the impact of important external factors b) Failure to capitalize on organizational resources and capabilities D. Represent different perspectives on what it takes to capture competitive advantage—that is, how to manage strategically (refer to Table 2.1). 5. Industrial Organization View (I/O) The industrial organization (I/O) view suggests organizations look at the impact of important external factors. Focus is on: a) The structural forces within an industry b) The competitive environment (i.e., the firm's position within the industry) c) How these influence competitive advantage 1) Firm’s position in the industry and the underlying industry characteristics will, determine profitability...
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...acknowledged to be otherwise. I assert that the preparation of this work has been completed in accordance with ethical standards appropriate to students of UNSW@ADFA and is a true representation of my current capabilities in this course. What factor or factors would give a firm market power as a purchaser? How might a firm possessing market power use procurement to build and sustain competitive advantage derived from (end) product innovation? In being able to determine any single or set of contributing factors that may give a firm market power as a purchaser, it is best to first agree a definition for market power and how it applies to purchasing. In its broadest definition market power can be defined as the ability of a firm to be able to influence or control terms and or conditions on which goods are bought and sold. There are also numerous schools of thought as to what precisely constitutes market or buyer power. The traditional sense is to define it in terms as an inverse of a monopoly, whereby the buyer can set prices profitably below competitive levels, in what some label a monopsony where there is either only one or a concentrated number of buyers within a competitive selling market (Mellsop and Counsell 2009). However a more holistic approach to buyer power is rather than forcing lower prices, being able to negotiate more favourable terms. However, market power through pure monopsony and according to a review by Chen...
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...The competitive advantage of nations: is Porter’s Diamond Framework a new theory that explains the international competitiveness of countries? A.J. Smit ABSTRACT The focus of this article is to clarify the meaning of international competitiveness at the country level within in the context of Porter’s (1990a) thesis that countries, like companies, compete in international markets for their fair share of the world markets. At a country level, there are two schools of thought on country competitiveness: the economic school, which rejects Porter’s notion of country competitiveness, and the management school, which supports the notion of competitiveness at a country level. This article reviews and contrasts the theories pertaining to these two schools of thought with specific reference to trade theories and the ‘theory’ of the competitive advantage of nations originally advanced by Porter (1990a, 1997a, 1998b, 1998c, 2000). Although Porter’s Diamond Framework has been extensively discussed in the management literature, its actual contribution to the body of knowledge in the economic and management literature has never been clarified. The purpose of this article is to explain why Porter’s Diamond Framework is not a new theory that explains the competitiveness of countries but rather a framework that enhances our understanding of the international competitiveness of firms. Key words: Porter, Diamond Framework, international competition, competitiveness of countries, international business...
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