National Competitive Advantage Business Assignment Help Theory of National Competitive Advantage
The theory of national competitive advantage defines that the competitive advantage of an industry in different nations depends upon the four different factors. This theory is based on the aspect that the international trade is based on the productivity differences in the different nations. Country factor endowments, firm structure, rivalry & strategy, domestic demand conditions and related and supportive industry are the four major aspects, which can create the competitive advantage for the industries in an economy in the comparison of other country.
This theory identifies why a particular industry within a specific nation is more competitive internationally from the same industry in other economy. For example, Japan’s technology and electronic industry has competitive advantage over the global market, but its service industry is not much efficient. Similarly as per business assignment help experts, Italy has the competitive advantage in producing ceramic tiles, while Switzerland has the competitive advantage in making watches. The following chart shows the factors, which facilitate the theory of national competitive advantage: (Source: Peng, 2009) The above chart makes it clear that these four factors are related to each other and effectiveness of these aspects contributes to create competitive advantage for an industry. The country factor shows the factors of production in a country that can be utilized by a particular industry successfully. The creation and advancement of the product is crucial for the advantage of an industry as Japan has skilled labour to produce automobiles, which makes its industry competitive. Demand is another factor as it should be presented in the domestic market from beginning of production. Thus, market size and the intensity and sophistication are important to develop competitive advantage for the industry. The supportive and related industries facilitate backward and forward linkages, competition and also a close working relationship, which also facilitates competitive advantage for the industry.
It is because high competition will force the firms in a particular industry to produce quality products at lower cost to survive, which creates competitive advantage for the industry at global level. Last factor, which creates competitive advantage for an industry is firm’s own strategies. If the firm chooses the strategy on the basis of home and host country specific aspects then it creates competitive advantage for the industry. Influence of Chance and Government on Character of National Diamond Besides the above discussed four factors, governmental policy and role of chance of events also have significant influence on the four factors of national competitive advantage.
The government policy related to taxation may control the availability of various resources and can change the pattern of demand. At the same time, incentives for the supportive and related industries can also encourage/discourage. Similarly, chances such as war, natural disasters, and innovations may also influence the supply of inputs, which may affect the advantages possessed by competitors. Thus, these chances of events and governmental policies may change the character of national diamond. Now you can avail 100% original and complete assignment help services from our experts. We are the most trusted and experienced writers of US,UK and Australia.