What is 'Competitive Advantage' ?
- Competitive advantages are conditions that allow a company or country to produce a good or service at a lower price or in a more desirable fashion for customers.
- These conditions allow the productive entity to generate more sales or superior margins than its competition.
- Competitive advantages are attributed to a variety of factors, including cost structure, brand, quality of product offerings, distribution network, intellectual property and customer support etc.
Determinants of National Competitive Advantage: Porter's Diamond
Factor endowments (factors of production) can lead to competitive advantage
Can be either basic or
advanced
Basic factors can provide an initial
advantage that is extended by investment in advanced factor.
Demand conditions
- The nature of home demand for an industry’s product or service.
- Influence the development of capabilities.
- Sophisticated and demanding customers pressure firms to be more competitive and to produce quality, innovative products.
Related and
supporting industries
The presence of supplier industries and
related industries that are internationally competitive. Investing in these
industries can spill over and contribute to success in other industries.
Firm strategy,
structure, and rivalry
- The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry.
- There is a strong association between vigorous domestic rivalry and the creation and persistence of competitive advantage in an industry.
By:
Suman Sharma
161244
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