Model Answer E2: Competitiveness of Nations October 2010
Model answer E2: competitiveness of nations
October 2010 To help you revise, Velocity publishes regular model answers to practice questions. Before attempting this question, please read the article E2: enterprise management, competitive advantage of nations from this edition. By Alan Marsden, distance learning MBA Tutor, Warwick University Business School.
T Company manufactures ceramic tiles for floors, kitchens and bathrooms. Until recently, its international competitive advantage depended partially on favourable government policies in IY- the country where its manufacturing plants are located. The national debt caused by excessive government borrowing and spending in the years leading up to 2010 however, has caused IY’s government to reign back on its spending and so the energy subsidy and help with R&D that the tile industry used to enjoy have been removed. T Company will now have to rely on other sources of competitive advantage.
Required:
(a) With reference to Michael Porter’s diamond model, describe the key determinants of international competitive advantage that T Company may need to depend on to sustain its competitive position in international markets. (15 marks)
(b) Like other models that seek to explain the basis of international competitiveness, Porter’s model has its limitations. Explain briefly the main limitations of the model. (10 marks)
Total (25 Marks)
Answer
Part (a)
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 like IY.
These four sources
October 2010 To help you revise, Velocity publishes regular model answers to practice questions. Before attempting this question, please read the article E2: enterprise management, competitive advantage of nations from this edition. By Alan Marsden, distance learning MBA Tutor, Warwick University Business School.
T Company manufactures ceramic tiles for floors, kitchens and bathrooms. Until recently, its international competitive advantage depended partially on favourable government policies in IY- the country where its manufacturing plants are located. The national debt caused by excessive government borrowing and spending in the years leading up to 2010 however, has caused IY’s government to reign back on its spending and so the energy subsidy and help with R&D that the tile industry used to enjoy have been removed. T Company will now have to rely on other sources of competitive advantage.
Required:
(a) With reference to Michael Porter’s diamond model, describe the key determinants of international competitive advantage that T Company may need to depend on to sustain its competitive position in international markets. (15 marks)
(b) Like other models that seek to explain the basis of international competitiveness, Porter’s model has its limitations. Explain briefly the main limitations of the model. (10 marks)
Total (25 Marks)
Answer
Part (a)
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 like IY.
These four sources