What Are The Four Factors That Influence Competitive Advantage?

I am going the review the Article "The Five Competitive Forces That Shape Strategy" written by Micheal E. Porter. This article was published in Harvard business Review in year 2008.

Define the concept of comparative advantage. How can a country gain or lose its comparative advantage in the production of a good?

Comparative advantage in economics is when a country can produce a good at a lower opportunity cost relative to other producers. It is because of this theory that output will increase because a producers within a country specializes Countries will gain the ability to maximize their efficiency and their labor force which facilitates mass-production of products, resulting in higher profits and international trade. This is because the economies of scale reduces overall cost, by producing more units. If the two countries moved towards protectionism and attempted to become self-sufficient then the production of goods would then

Michael Porter investigated why nations have a competitive advantage in specific industries his findings saw two basic types of competitive advantage that firms could pose low cost or differentiation. If you combine the two types of competitive advantage and allow room for a way in which firm wish to achieve them this will lead to three generic strategies which will achieve higher average performances in industries: cost leadership, differentiation and focus.

When one country is able to be more efficient in producing one good or service compared to a different country, a comparative advantage has occurred. This usually takes place when a country is able to focus and specialize in a product or service so they will have a stronger dominance in what they do. The United States have exceeded in creativity and innovation, which accounts for the advantage in technology (Macroeconomics, 24-38). The U.S. also has a trade surplus in services and is the forerunner in the worlds’ service exports (Global Trade in Services, 84).

In the article, “The Five Competitive Forces that Shape Strategy,” Michael Porter argues that the five forces are an important element for managers and investors in the business industry. Porter stated that it is important to “understand the competitive forces, and their underlying causes” which many companies will use to determine if they will gain profit or not (Porter 80). Companies determine their profitability of the industry through the level of the force that they face. For instance, when the forces are favorable, most companies will be profitable. Porter gives a detail description of the five forces and explains the importance of each force. The five forces are the threats of new entrants, the power of the buyers, the power of the suppliers, the threats of substitute for products or services, and the rivalry among existing competitors. Porter believes that “a company strategist who understands the competition extends well beyond existing rivals will detect wider competitive threats and be better equipped to address them” (Porter 93). In other words, when strategists understand the different forces it will benefit them to make better decisions and to be ready to face the different challenges between competitors. In the article, Porter’s main goal is to present the importance of the five forces to the audience.

Example: It takes the U.S. 20 hours to make a tractor, and it takes China 6 hours. It takes the U.S. 5 hours to make a lawn mower, but it takes China 2 hours to make one. In order for the U.S. to make a tractor they would have to give up 4 lawn mowers, while China would only have to give up 3. This shows that China has comparative advantage over the U.S. when it comes to making

There exist classical theories of international trade which discuss the reasons why particular industries and particular economies are more competitive than the rest. In his book The Competitive Advantage of Nations, Michael E Porter argued or analyzed the broad factors which determined the competitiveness of certain economies and industries. This model is based on four nation’s specific factors and two external variables. The four cornerstones of the diamond model are the factor conditions, the demand conditions, the related and supporting industries and

Comparative advantage is determined by the “price” of one good in terms of the other good within each country.

First of all we need to define what the comparative advantage is. One obvious concept is that country’s ressources can

1. What is competitive advantage, and how does it relate to a company’s business model?

Chapters twenty and twenty-one went over the relationship of international markets in a global economy. In an increasingly interconnected world, global trade has caused countries to shift to specializations in their markets. Therefore, raising average wages due to increased productivity. Countries can have absolute or comparative advantages in a certain market. As written in the text, an example of absolute advantage would be Saudi Arabia in the oil industry. This is because they have such an abundance of easily assessable oil very few countries can complete in that market. A comparative advantage is when a country can produce a product at a much lower cost. Comparative advantage is a balance of opportunity cost that leads a nation to specialized in a specific market. Comparative advantage can also be gained through the exploitation of workers or practices that are severity destructive to the environment. To protect a nations cultural, economic, and social interest a country will use tariffs, import quotas, and non-tariff barriers to deter domestic companies from purchasing goods from counties who practice unpleasant or morally object able methods, such as child labor.

Riordan Manufacturing is a leader in the industry of plastic injection molding. Business strategies require assurance that the organization can anticipate business conditions for the future that will improve performance and profitability. Organizations should create a strategic framework for a noteworthy achievement. The framework entails formulating a mission that defines the business product of the organization. This paper will discuss competitive advantages Riordan has in common with Nike and T–mobile and what Riordan can use to improve innovation. Competitive strategies can have an effect on the long term organizational performance. Riordan will also

In the article “The Competitive Advantage of Nations” Michael Porter describes a diamond shaped relationship of forces that define a country’s potential for being competitive in a specified industry. The four points on the diamond representing the different forces are: factor conditions; demand conditions; firm strategy, structure and rivalry; and related and supporting industries. According to Porter, the four points apply pressure to each other resulting in a national

Any country should use porter diamond theory of national advantage. It's designed to help understand the competitive advantage nations. It suggests that the national home base of any organizations are playing a supportive role in shaping the size or scoop to which it is likely to achieve advantage on a global scale. This home base provides basic factors, which support organizations from building advantages in international competition. Porter classifies four determinants: Factor Condition, Diamond Condition, Relatives & supporting and Structure, strategy & Rivalry. Egypt government acts to catalysts to improve Egypt position in a globally competitive economic environment. They found that they can create new factors such as skilled labor and high technology (Porter M., 1990). Porter's diamond model suggests threat there are inherent reasons why some nations are more competitive than others on an international market. Another factor that influence in competitive advantages such as the policies that put by government. One of the most influencer policies is (FDI) Foreign direct investment