Michael E Porte Competitive Advantage Analysis

Based on subtopic 1 that emphasize about competitive advantage from Michael E Porter that said competitive advantage is economic situation that make a firm become more superior than its competitors in term of various perspective such as superior market position, skills, resources and many more. This theory also address some of criticism of other theory of international business which is comparative advantage. As mention in subtopic 1, comparative advantage theory is concept in economics that a country should specialize in producing and export only those goods and services which it can produce more efficiently which in other words produce goods and services with lowest opportunity cost but Porter address few criticism which recognize by other scholar through his book, Michael E …show more content…
Three alternative theories of how firms can use FDI to retain competitive advantage are monopolistic advantage theory, internalization theory and Dunning’s eclectic paradigm. These theories have their own key characteristics that help a firm to sustain their own competitive advantage. Monopolistic advantage theory explain that a firm can use monopoly power against its competitors by controls resources and provide unique products and service. Next, instead of outsources from outsiders, a firm may acquires numerous value-chain activities within the firm. This refer to internalization theory. A firm internalize its value-chain activities can reduce the disadvantages of a Moreover, Dunning’s eclectic paradigm specifies three conditions which are necessary to retain competitive advantage. These are ownership-specific advantages, location-specific advantages and internalization advantages. Any of these theories can be applied by a firm to sustain competitive advantage hence maintain position of the firm in market and guarantee the survival of the firm for the long