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Competitive Advantage Framework

A competitive advantage is a theory which was introduced by Michael E. Porter. This theory suggested that a business should consist of policies that can lead a firm for the creation of better goods that they can sell in the market at higher rates. This theory is based on the fact that cheap labor is available everywhere and the natural resources are not the major thing to affect the good economy of an organization. Competitive advantage occurs or takes place when an organization develops a set of attributes or combination that lead to outperformance of the organization and better than its competitors in the market. The competitive advantage can be achieved only if the current strategy of any firm leads to better production and even better than its all competitors. A competitive firm can enter the market with a challenging resource that has the ability to perform better than all its other competitors in the market.[ad#ad-4]

One of the frameworks that resulted from the competitive advantage is the Michael Porter’s National Diamond framework.  It is used to find out the ability of firm to work in national market, as well as national markets ability to compete in an international market.

It introduces four main components or conditions of research namely, factor conditions, demand conditions, related and supporting industries and strategy and rivalry. One should undertake these conditions or factors while analyzing the ability of any organization, particularly while checking for the international market level. It is also helpful in comparative analysis tool for recognizing the country which is best suited for a firm to expand its business. These four conditions play an important role for an organization in its success.

Written by: Matt

We also suggest this relevant article if you have time: Five Forces Analysis – Porter’s 5 forces


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