Michael Porter Case Study

Michael Porter in his study of national competitive advantage, Michael Porter identified four sources or determinants that can affect the global competitiveness of companies located in particular countries .These four sources are: factor endowments; demand conditions; related and supporting industries; and the strategy, structure and rivalry of the companies located in a country.Porter created a model linking these four sources in a diamond (see figure 1 below) and argued that firms are most likely to succeed in industries or industry segments in which the four sources are favourable. He also argues that the sources in the diamond form a mutually reinforcing system in which the effect of one determinant or source is dependent on the state of the others.

The four sources that a company may need to depend on can be characterised as follows.
Factor endowments
There are two kinds of factor endowments - the basic factors of production such as land, labour, capital and materials; and advanced factors such as technological know how, managerial skills and physical infrastructure. human resoureces refers to the quantity, skills, and cost of personnel. Physical resources referes to the abundance, quality, accessibility, and cost of the nation’s land, water, mineral, or timber deposits, hydroelectric power sources, fishing grounds, and other physical traits. Knowledge resources refers to the accumulated scientific, technical, and market knowledge in a nation in the