International Trade Theory (What Is Porter’s Diamond Of Competitive…
International Trade Theory
Govt. nvr attempt to restrict what citizens can buy/sell from another country
Why Is Free Trade Beneficial?
International trade allows a country to;
1) Specialise in efficient production of manufacture and export of p&s
3) Import efficiently produced p&s in other countries
2) Limits on imports may be beneficial to producers, but not consumers
What Is Porter’s Diamond Of Competitive Advantage?
Can lead to competitive advantage :!:
Nation’s position in factors of production necessary to compete in a given industry
Relating and supporting industries
Presence / Absence of supplier industries and related industries that are internationally competitive
Can spill over and contribute to other industries
Successful industries tend to be grouped in clusters in countries
Nature of home demand for the industry’s product or service
Sophisticated & demanding customers pressure firms to be competitive
Influences the development of capabilities
Firm strategy, structure, and rivalry
Conditions governing how companies are created, organized, and managed, and the nature of domestic rivalry
Different management ideologies affect the development of national competitive advantage
Vigorous domestic rivalry creates pressures to;
Invest in upgrading advanced features
Does Porter’s Theory Hold?
Government policy can
2) Influence rivalry through regulation & antitrust laws
3) Impact the availability of highly educated workers and advanced transportation infrastructure.
1) Affect demand through product standard
Porter’s theory has not been sufficiently tested to know how well it holds up :!: