Porter's Competitive Forces Analysis

Michael Porter supposes the competitiveness of a country as a equation of four major determinants: factor conditions; demand conditions; related and supporting industries; and, firm strategy, structure, and rivalry. Although these determinants impact the presence of competitive advantage of whole nation, their nature refers that they are more specific of a particular industry instead of typical of a country. The reason is that in Porter’s theory the basic unit of analysis for understanding competition is the industry. “The industry is the arena in which the competitive advantage is won or lost.” Thus, seeking to separate the competitive advantage of a nation means to clarify the role played by national attributes like a nation’s economic environment, institutions, and policies for promoting firms’ ability to compete in a specific industry.
Factor conditions being the inputs which influence competition in any industry contain a number of broad categories such as Physical resources, Human resources, Knowledge resources, Capital resources and Infrastructure resources. When analyzing these factors as a precondition for building competitive advantage, it is relatively not important to emphasize just their quantity or participation in a …show more content…
They contain natural resources, weather, position, labor, and capital. On the other side advanced factors which can include highly educated workforce, modern infrastructure, and etc. demand wide and often sustained investments for their development. Factor development which has been carried out over fundamental investment, in turn, provides for the creation of a higher-order competitive advantage and, therefore, supposes greater importance for