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Modern firm based theories: Porters theory of national competitive…
Modern firm based theories: Porters theory of national competitive advantage P191-194
What is it?
A theory that highlights how country and firm based elements (4 elements) creates success
Factor conditions
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Endowment of factors affects the ability to compete internationally
This also includes advanced factors such as Education level of workforce, infrastructure
Demand factors
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The existance of a large, advanced economic domestic cosumer base allow firms to develop their product to meet international need
This is because Marketing research allows firm to receive feedback quicker and make changes where needed
Product life cycle
Companies entering new markets want access to new advanced economic consumer base
Related & supported industries
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The availability and further development of suppliers
Development of suppliers :star:
Suppliers react to new innovation of clients by innovating themselves to stay competitive in their market
Emergence of new industry creates innovation within suppliers
Suppliers will find cheaper ways to manufacture
The availability of suppliers :star:
The amount of suppliers within that industry will affect how innovative and efficient they are due to rivalry
Agglomeration economies
Firm strategy, structure & rivalry
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Strategy :star:
R&D investment creates competitiveness
Develop skills to compete internationally
Invest in human capital
Law
Affects the way a product will be produced
Rivalry :star:
Competition in foreign markets shapes the way firms strive for innovation, reduction of costs etc
Agglomeration economies
Occurs when cost of production declines as the number of firms in that industry increase within a given area
Structure :star:
laws in markets affect firms strategies
BMW make high quality, high performance cars as their Autobahns do not have speed limits
