Porters Model of National Competitive Advantage Essay

Porters Model of National Competitive Advantage - Essay Example This paper illustrates that in the book ‘The Competitive Advantage of Nations’ Michael Porter discussed the reasons why some nations, social groups and economic institutions advances than others. His work focused on the collective competitive advantages of the firms in the nation rather than the performance of the individual firms. The orientation of his work is positive rather normative focusing on the international patterns of competitive advantage. He developed this model by combining theories in the fields of strategies to compete and international economics and performed an inductive and deductive analysis. Porter’s model was a result of the analysis and the study of 100 industries in 10 countries which included counties from Europe, Asia, and America, regarding their competitive performance. His work showed how industrial competiveness with a different insight can be incorporated into company’s strategy. Porter used strategic management theories and a nalyzed them with international trade and economy. The book emphasizes the fact that the national competitiveness is determined by the firms rather than the nations. The theory suggests that the influence the nation has on the competitiveness of the firms depends on the firm’s competitive success that the environment built over time. The nation acts as a ‘home base’ for the firms, this home base helps in developing the firm’s strategy, culture, character of its management, the availability and quality of resources, technology and helps it in establishing prior to its expansion internationally as the firms grow domestically before they plan their expansion internationally. The theory basically analyses the characteristics, rather four variables of the national environment which are the basis of competitive advantage and determines firm’s ability to compete and sustain itself in international markets. The Porter referred these variables as ‘Nati onal Diamond’. These four variables are firm’s strategy structure and rivalry, factor conditions, demand conditions and related and supporting industries.