Transcript Слайд 1 - Moscow State Institute of International

PORTER’S COMPETITIVE
ADVANTAGES OF NATIONS
THEORY
Practical work
Please explain your decision, using Porter’s diamond. (6
points)
You are going to develop your production in the foreign
country on the base of your subsidiary. Please, compare
the competitive environment in Russia and other country
and substantiate your choice.
2. Please explain your decision, using Porter’s diamond. (6
points)
You are going to expand your sales operations to the
foreign country on the base of your subsidiary. Please,
compare the competitive environment in Russia and other
country and substantiate your choice.
 Students have a right to choose the area of
production/services and two countries.
COMPETITIVE ADVANTAGES
OF NATIONS ACCORDING TO
PORTER’S THEORY
effective use of all resources available.
BASIC DETERMINANTS OF
COMPETITIVENES
1. Factor conditions.
2. Demand conditions.
3. Related and supporting industries.
4. Firm strategy, structure and
rivalry.
Factor Conditions:
Labor (qualified and non-qualified)
Natural resources, land;
Capital
Technology and Knowledge Base
Infrastructure
Factors:
Non-key or general use
Specialised (more difficult to duplicate)
Demand Conditions.

Quantitative and Qualitative
Characteristics
 Consumers and Industrial
Demand
Sophisticated domestic market –
important element.
Porters Determinants of National
Competitive Advantage
Force Major
Firm Strategy,
Structure & Rivalry
• Intensity of local rivalry
• Extend of corporate
investment
Factor Conditions
Demand Conditions
• Basic Factors (Land, Labor)
• Advanced Factors (Highly
educated workforce, digital
communications)
• Generalized Factors
(Capital, infrastructure)
• Specialized Factors
(Skilled personnel)
• Home country may support
scale efficient operations by
Itself
• The level of sophistication
of home demand
• Pressure from local buyers
to upgrade
Related &
Supporting Industries
• Availability & Quality of
local suppliers
• State & development of
clusters
State
“Diamond” as a System

Non-key factors as a base
for the specialised

Concentration of factors
depends on the demand

Internal competitiveness is a
motivation for the better use of
factors
Factor Stage
Comparative advantage, virtually
all internationally successful industries
in the nation draw their advantage
from basic factors of production eg
natural resources, favourable growing
conditions, or abundant and
inexpensive pool of labour.
 Compete on the basis of price.
 Technology is drawn largely from
other nations and not created.

Investment Driven Stage




Standardized, price sensitive
products
technology, usually obtained overseas is a
little dated but is increasingly not just
applied, but improved on.
Intense domestic competition and early
stages of internationalization
Successful industries are those where the
nation has strong home demand
Government may play a leading role in
facilitating and undertaking investment.
Innovation Driven Stage

Diamond interaction
 Reliance on higher-order factors
 Compete in differentiated
industry segments
 Government's role more limited
in this stage as the appropriate
signals emanate from the private
sector. Most effective policies
indirect e.g. stimulating more
advanced factors, preserving
domestic rivalry, improving the
quality of domestic demand.
Wealth Driven Stage
Drift and ultimate
decline, due to:
 ebbing rivalry
 focus on preserving rather
than improving position
 lobbying to insulate position
through government
protection
