- Factor Conditions
- To achieve competitive advantage, factors of production must be created
- •Industry specific
- •Firm specific
- •Pool of resources at a firm’s or country’s disposal is less important than the speed and efficiency with which the resources are deployed
Demand Conditions
Demands that consumers place on an industry for goods and services
•Demanding consumers push firms to move ahead of companies from other nations
•Demanding consumers drive firms in a country to
nMeet high standards
nUpgrade existing products and services
nCreate innovative products and services
- Related and supporting industries
- •Enable firms to manage inputs more effectively
nStrong supplier base adds efficiency to downstream activities
nCompetitive supplier base lets a firm obtain inputs using cost-effective, timely methods
•Allow joint efforts among firms
•Create the probability that new entrants will enter the market
- Firm strategy structure and rivalry
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- •Rivalry is intense in nations with conditions of
•Strong consumer demand ;Strong supplier bases
•High new entrant potential from related industries
•Competitive rivalry increases the efficiency with which firms develop, market, and distribute products and services within the home country
•Competitive rivalry increases the efficiency with which firms
•Develop within the home country
•Market within the home country
•Distribute products and services within the home country
•Competitive rivalry increases the efficiency with which firms
•Develop within the home country
•Market within the home country
•Distribute products and services within the home country
•Domestic rivalry provides a strong impetus for firms to
•Innovate
•Find new sources of competitive advantage
•Domestic rivalry forces firms to look beyond national borders for new markets
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