e. In 1990, Michael Porter identified four factors that he argued promoted or impeded
the creation of competitive advantage in an industry. Together, he called these factors the
diamond of competitive advantage.
i- The first factor, called factor endowments, refers to a country’s position in the factors of
production that can lead to a competitive advantage - things like the skilled labour or
infrastructure that were important to achieving a competitive advantage in a particular
ii- Demand conditions, the second factor, refers to the nature of home demand for the
iii- The third factor, related and supporting industries, refers to
the presence or absence of supplier and related industries that are internationally competitive
and contribute to other industries.
iv- The fourth
factor, firm strategy, structure, and rivalry, refers to the conditions in the nation that govern
how companies are created, organized, and managed, and the nature of domestic rivalry.
When domestic rivalry is strong, there is greater pressure to innovate, improve quality, reduce
costs, and invest in advanced product features.