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PMD59
Case

The Competitive Advantage of Nations

Cat: ECO
Pub: 1990
#1512b
Michael E. Porter
up 15529
Title

The Competitive Advantage of Nations

国々の競争力優位

Index
Tag
Innovation; National diamond; Home base; Currency markets; Selective advantages;
Why?
  • This was then latest case at PMD59; 'The Competitive Advantage of Nations' was just published in 1990
  • I can well remember the vivid presentation of M.E. Porter at our class in 1990, when Japanese economy was the summit.
  • I added some 25-year-delayed questions or comments from 2015.
  • これは出版された当時最新のケースであった。
  • 1990年PMDクラスでのM. ポーターの生き生きとした講義を思い出す。当時日本経済は頂点だった。
  • 2015年から見た25年後のコメントを追記する。
Résumé
Remarks

>Top 0. A nation's competitiveness

  • National prosperity is created, not inherited. A nation's competitiveness depends on the capacity of its industry to innovate and upgrade.
    • As the basis of competition has shifted to the creation of knowledge, the role of the nation has grown.
    • According to prevailing thinking, labor costs, interest rates, exchange rates, and economies of scale are the most potent determinants of competitiveness.
  • >Top Innovation can be manifested in 1) a new product design, 2) a new production process, 3) a new marketing approach, 4) or a new way of conducting training.
    • Much innovation is mundane and incremental than on a single, major breakthrough.
    • When competitors are slow in respond, such innovation yields competitive advantage.
    • Japanese companies gained initial advantage by emphasizing smaller, more compact, lower capacity models that foreign competitors disdained as less profitable, less important, and less attractive.
    • The lure of the huge US defense market has diverted the attention of US materials and machine-tool companies form attractive, global commercial markets.
  • Information plays a large role in the process of innovation and improvement:;
    • it comes often from effort and from openness and from looking in the right place unencumbered by blinding assumptions or conventional wisdom.
    • innovation usually requires pressure, necessity, and even adversity; the fear of loss often proves more powerful than the hope of gain.
  • Sustaining competitive advantage: innovation and change are inextricably tied together.
    • adopt a global approach to strategy; to locate production or R&D facilities in other nations to take advantage of lower wage rates, to gain or improve market access, or to take advantage of foreign technology.
    • make its existing advantage obsolete; or a competitor would do it for them.
    • but change is an unnatural act; past approached become institutionalized in standard operation procedures and management controls.

0. 国の競争力:

  • 国の繁栄は遺産ではなく創造による。

 

  • イノベーションとは

 

  • イノベーションにおける情報の役割

 

  • 競争力の維持

>Top 1. National competitive diamond:

  • US, Germany, Japan as the world's leading industrial powers.
    • also UK, Denmark, Sweden, Switzerland, Italy, Korea, & Singapore
    • 10 nations accounted for 50% of total world exports in 1985.
    • each nation was successful in 1971, 1978, and 1985.
  • Selected over 100 industries:
    • a large share of total exports in each nation;
      • 20% of Japan, Germany and Switzerland;
      • and more than 40% in Korea.
    • International success stories:
      • Germany; auto, chemical
      • Japan; semiconductors, VCR
      • Swiss; banking and pharmaceutical
      • Italy; footwear, textile, ski boots
      • US; commercial aircraft and motion pictures
      • Korea; piano
      • UK; biscuits
  • >Top National diamond: Determinants of national competitive advantage:
    1. Factor conditions: Geographic concentration:
      • the nation's position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry
      • a factor must be highly socialized to an industry's particular needs (world-class institutions)
        • such as diabetes studying in Denmark, cultivation of flower in Holland.
        • when companies face a selective disadvantage, like high land costs, labor shortages, or the lack of local raw materials, they must innovate and upgrade to compete (Japan, Italy, Swiss with labor shortage)
    2. Demanding buyers: demand conditions:
      • the nature of home-market demand for the industry's product or service
        • Japan: light, thin, short, small products)
        • Sweden; for handicapped people
        • Denmark; water-pollution control equipment and windmills
        • US: fast food and credit cards
    3. Supporting industries:
      • The presence or absence in the nation of supplier industries that are internationally competitive.
      • Internationally competitive home-based supplier crate advantages in downstream industries.
        • Italian gold and silver jewelry companies (2/3 of the world jewelry making)
        • Italian footwear cluster
        • Swiss pharmaceuticals
        • Japanese electronic musical keyboards
      • Suppliers and end-users located near can take advantage of short lines os communication.
    4. Domestic Rivalry: self-reinforcing system
      • The conditions in the nation governing how companies are create, organized, and managed
      • They compete not only for market share but also for people , for technical excellence, for bragging rights
      • Individual motivation to work and expand skills.
  • Demanding buyers in the domestic market:
    • they pressure companies to meed high standards; they prod them to improve, to innovate; to respond to ought challenges. 
  • Once a cluster forms, the whole group of industries becomes mutually supporting.
    • Aggressive rivalry in one industry spreads to others in the cluster, through spin-offs, through the exercise of bargaining power, and through diversification by established companies.

1. 国の競争力ダイアモンド:

  • 10カ国調査
  • 1990時点では、中国は対象外

 

 

 

 

  • 国の競争力4要因:
  • <National Diamond>:
    National Competitive Advantage:
    the diamond promotes industry clusters.

nationalcompetitiveadvantage

  1. 国の諸要素
  2. 厳しい買い手
  3. サポート産業
  4. 国内競合相手

>Top 2. International trade and investment

  • International trade and foreign investment can both improve a nation's productivity as well as threaten it.
    • No nation can be competitive in everything.
    • The ideal is to deploy the nation's limited pool of human and other resources into the most productive uses.
    • The expansion of exports because of low wages and a weak currency may bring trade into balance or surplus but lowers the nation's standard of living.
    • Competitiveness is the type of jobs, nut just the ability to employ citizens at low wages, that is decisive for economic prosperity.
  • >Top Home base:
    • why a nation provides a favorable home base for companies that compete internationally.
    • the home base is the nation in which the essential competitive advantages of the enterprise are created and sustained.

2. 貿易と国際投資:

  • 貿易と国際投資の役割

 

  • ホームベース

>Top 3. The role of government:

  • Advocates of government help for industry frequently propose policies that would actually hurt companies in the long run and only create the demand for more helping.
  • Advocates of a diminished government presence ignore the legitimate role that government plays in shaping the context and institutional structure surrounding companies.
  • Government cannot create competitive industries; only companies can do that.
    • Competitive time for companies and political time for governments are fundamentally at odds. It often takes more than a decade for an industry to create competitive advantage; human skills, investment; building cluster, penetrating foreign markets
    • But in politics, a decade is an eternity; subsidies, protection, and arranged mergers.
  • >Top Avoid intervening currency markets:
    • Japan has been rocked by the sudden Nixon currency devaluation shock, tow oil shocks, and the yen shock - all of which forced Japanese companies to upgrade their competitive advantages.
  • Enforce strict product, safety, and environmental standards
    • Strict government regulations can promote competitive advantage by stimulating and upgrading domestic demand.
  • Rasing the rate of sustained investment:
    • Tax incentive for long-term (5 years more) capital gains restricted to new investment in corporate equity.
  • Enforce strong domestic antitrust policies:
    • R&D projects should be in areas of basic product and process research, not in subjects closely connected to a company's proprietary sources of advantage.
    • especially for horizontal mergers, alliances, and collusive behavior.
  • Deregulate competition:
    • Regulation of competition stifles rivalry and innovation as companies become preoccupied with dealing with regulators and protecting what they already have.
  • Better than managed trade; pursue open market access:
    • rather than promoting innovation in a nation's industries, managed trade guarantees a market for inefficient companies.

3. 政府の役割:

  • 大きな政府vs.小さな政府

 

  • 政府は産業競争力を創出できない。

 

  • 為替に干渉するな

 

  • 製品の安全性、環境問題

  • 投資促進税制

 

  • 独占禁止強化

 

  • 競争力のための規制緩和

 

  • 市場開放

>Top 4. Pressures for innovation:

  • A company should seek out pressure and challenge, not avoid them.
    • Seek out the most capable competitors as motivators.
    • The best managers always run a little scared; they respect and study competitors.
  • Establish early-warning systems.
    • companies can take actions that help them see the signals of change and act on them, thereby getting a jump on the competition
    • bring some outsiders into the management team.
  • Improve the national diamond:
    • play an active role in forming clusters and to work with its home-nation buyers, suppliers, and channels to help them upgrade and extend their own competitive advantages.
    • the health and strength of the national cluster will only enhance the company's own rate of innovation and upgrading.
  • Welcome domestic rivalry:
    • vigorous domestic rivalry creates sustainable competitive advantage.
  • >Top Globalize to tap selective advantages in other nations:
    • innovating to offset local factor disadvantages is better than outsourcing; developing domestic suppliers and buyers is better than relying solely on foreign ones.
    • the correct approach to globalization is to tap selectively into sources of advantage in other nations' diamonds.
    • recognizing that competitive advantage comes from continuous improvement, not from protecting today's secrets.
    • use alliances only selectively.
  • Locate the home base to support competitive advantage:
    • ultimately, competitive advantage is created at home; the core product and process technology is created.
  • The role of leadership
    • Misperceive the nature of competition: focusing on improving financial performance, soliciting government assistance, seeking stability, and reducing risk through alliances and mergers.
    • they energize their organizations to innovate continuously; leaders recognize the need for pressure and challenge.
    • they are prepared to sacrifice the easy life for difficulty and sustained competitive advantage.

4. イノベーションのための圧力:

  • 企業は圧力と挑戦を避けるな

 

  • 国内4要因の強化

 

  • 国内競合相手歓迎

 

  • グローバル化は特定分野のみ

 

  • ホームベースは競争力支援のため

 

  • リーダーシップの役割
Comment
  • This logic seems still valid in 21c, after the lost two decades of Japan.
  • Leaders of the present Japanese government and corporations should reread this thesis.
  • 日本の失われた20年後の21世紀の現在もこの論理は有効に思える。
  • 現在の日本の政府、企業のリーダーは本論文を再読すべきと思う。

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