The Competitive Advantage of Nations

Michael Porter, in his book ‘The Competitive Advantage of Nations’, represents the determinants of national advantage as a diamond, whose corners represent four broad attributes of a nation that shape the environment in which local firms compete and which promote or impede the creation of competitive advantage:

1. Factor conditions. The nation’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry.
2. Demand conditions. The nature of home demand for the industry’s product or service.
3. Related and supporting industries. The presence or absence in the nation of supplier industries and related industries those are internationally competitive.
4. Firm strategy, structure, and rivalry. The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry. [1]
Factor Conditions:
Factor conditions refer to inputs used as factors of productio...