The Determinants of national competitive advantages


Competitive advantage is not a vague idea. Michael Porter of the Harvard Business School has extensively dealt with the concept of competitive advantage of nations. Economic factors are of concern to marketing firms because they are likely to influence, among other things, demand costs prices and profits. These economic factors are largely outside the control of the individual firm, but their effects on individual enterprises can be profound.

As in the case of enterprises, nations to build competitive advantage through a planned process and effort spread over time. Different countries have competitive advantage in different industries. Porter asserts that national competitive advantage often occurs in a cluster of industries rather than in an economy. For example, Germany is spotted for high performance autos, Japan for consumer electronics, Switzerland for banking, and Italy for footwear and the USA for commercial aircraft.

Porter says that it is the nations' firms that have competitive advantage and not the nation itself. He has given four-dimensional model of competitive advantage and two external variables that play an important role in determining the competitiveness of the nations. This 4-D model has factor conditions, demand conditions, industries and strategies and domestic rivalry.


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Businesses emphasize the importance of R&D, innovation, brand building and supply chain management so as to increase customer satisfaction. In other words, it is patently obvious that there is not a single global approach to management and strategy in businesses around

the world.

Martin (1997) pointed out that, 'Going global' is not the only possible approach to the 21st century business challenge. It is also feasible to build a company strategy around defending a home market.'

For the trans­national business, the strategic challenge of the 21st century is to combine global scope with the responsiveness and flexibility necessary to compete with local domestic producers. Further, it is necessary to balance the pressures for globalization resulting from the benefits of economies of large-scale production against the need to respond flexibly to increasingly erratic customer preferences. On the other hand, companies that choose to defend their domestic positions rather than going global will only do so successfully if they remain alert to the changes taking place at a global level.

Within this environment, organisations may follow a range of strategies which are planned, entrepreneurial, ideological, umbrella type, process driven, uncon­nected, consensus driven or imposed (Mintzberg 1987).

Pamel and Prahalad (1989) argue that' strategy has to be developed in a way that stretches and leverages an organisation. Market analysis and then strategy formulation as practised by many marketers is not enough to position an organisation for sustain­able growth and to enable it to gain competitive advantage over its rivals. An organisation needs to understand and leverage its core competencies.

DEEPENING fears about Dubai's debt problems shook European stock markets, with the FTSE 100 index suffering its worst one-day loss since March.

The FTSE fell by 3.2 per cent, losing more than 170 points to 5,194.13, while leading indices in France and Germany were also down sharply. Wall Street was closed for Thanksgiving.

Banking shares took a severe battering as investors worried about their exposure to the debt-laden emirate. Barclays and Royal Bank of Scotland plunged nearly eight per cent and Lloyds Banking Group fell by nearly six per cent, while Standard Chartered and HSBC were down by 4.8 per cent and 4.7 per cent respectively.

Shares in the London Stock Exchange dropped by 7.4 per cent as investors fretted about the fate of the 20.56 per cent stake held by Dubai Borse. And nerves were frazzled when the LSE suffered a near four-hour trading outage.

With $59bn (£35.9bn) of liabilities, Dubai World is responsible for the bulk of Dubai's $80bn debt burden, accumulated during a construction spree that was brought to an abrupt halt by the global downturn. Analysts at Credit Suisse estimate European banks are exposed to half Dubai's debt pile, with Barclays and RBS badly hit.

Dubai tried in vain to restore confidence by announcing that its profitable DP World, which operates over 40 ports around the world, would not be involved in the restructuring. DP World is majority owned by Dubai World but has a separate share listing.

Analysis and discussion

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Many of the organisations looking forward to spread their business globally to improve their competitiveness. Different controversy has arisen in recent years regarding the use of exact strategies in international markets. They have to take a good decision on globalisation of markets, if the market is facing difficult issues, choice of managers and their organisation. Before approaching to the global market the firm must consider both the external and internal factors affecting the business.


With the growth of international markets increases the growth of competition globally which implies that it is going to adapt a planning marketing strategy.

There are mainly two strategies that should enhance the company, first part is dealing with the industry is to be spread world wide and the other part deals with competitiveness in the world. After all a firm is to achieve all it global competitiveness through different techniques or approach.

From the ideas available from the literature is integrated in a comprehensive manner with a frame work in which strategies has been generated. This paper also help us the topic about the international marketing strategies which support in developing the global competiveness.

Globalization is defined in terms of expanding the growth of economic activity and politically defined national and regional boundaries. It has increased the performance across the boundaries of good and services.

Trade and Investment are the two aspects of globalization and peoples migration towards here and there affect the migration. It is mostly driven by certain factors such as organisation, banks and people; they only need profit under high pressure of competition in the markets.

In reality, global market has emerged due to the use of advanced technology, modern ways of communication and transporting facilities such as supply chain management system etc. The ways of introducing new techniques benefits most of the company in their economies scale in production, distribution, sales and marketing. If they have been reduced prices for products that has introduced in the market they can achieve the victory over the competitor who having old assumptions and knowledge about the world work, do not have much knowledge about the modern world concept. An industry does not globalize on its own and every industry cannot be a global one.

Industry Globalization Drivers

There are mainly four drivers to drive the industry globally such as market, cost, Government and competition .Only through this four set of drivers that all industry will have high potential to achieve its targets globally. These drivers are uncontrollable by world wide business.

As a part of globalization, the market has evolved to international level competition, there are different strategies has been formulated. In a global market the different function in a business such as marketing, finance and government policies etc do not remain constant; it has been varied according to global changes and coordination.

International Alliances:

Alliance with the other country in business and marketing field has played an important part in global strategy since they can have link or trade between the different countries become another implication of globalization.

Organizational Challenges:

They need to work effort to overcome some organizational changes which creates some complex in business globally some of the organisational challenges are it firm structure, communication gap and reporting hierarchies of authority.


There might have global competition in global firm to strengthen their position in the world, by competing it can enlarge its resources and also through globalization a company can take care of the issue happening with in the firm by formulating a appropriate strategy for handling these sorts of issues.

In a globalized marked it is very important to have a relation with foreign government. Suppose a business is spreads to one part to other part of the world in each area different government policies and regulations so they have to follow rules and regulation of that country in doing business here the foreign government will much muscle power and they can decide whether to shift the power equilibrium.