National prosperity is created not inherited A nations Competitiveness depends on the capacity of its industry to innovate and upgrade

e To achieve real competitive advantage advanced nations need to analyze the internationally successful industries without regard to traditional ideologies A comprehensive research over a period of four years conducted to understand why nations gain competitive advantage

Companies achieved success through acts of innovation

Innovation can be manifested in the form of new

product design or a new marketing approach Innovation can be done by serving a market segment that others might have ignored Information plays an important role in innovation Innovation may occur as company diversifies by bringing new resources, skills or perspectives

Competitive advantage should be sustainable

To sustain a competitive edge is to upgrade it To have a sustainable advantage, it must make its

existing advantage obsolete

The impact of one attribute depends on the state of the others Weakness in one attribute constrains the industrys potential for advancement and upgrading

Sophisticated buyers and no investment in creating

factors of production No rivalry will not motivate innovation in spite of disadvantages in factors of production

Self Reinforcing

Domestic rivalry Geographic concentration

Creates linkages
Vertical Buyer, seller relationship Horizontal- customers, technology, channels

Geographic concentration Mutually supportive

Overcome inward focus Become more flexible New opportunities

Supporter of the industry Ignores the fact certain government policies can hurt the companies in the long run

Diminished govt. presence Ignores the fact that the government is involved in creating a stimulating environment

Real role: Catalyst as well as Challenger

Focus on specialized factor creation Avoid intervention in factor & currency mkts Enforce strict product, safety and environmental standards Limit direct cooperation Promote goals leading to sustained investment Deregulate competition Enforce String domestic antitrust policies Reject managed trade

Ultimate responsibility to achieve and sustain competitive advantage Should aim at innovation Early warning detection systems Improve the national diamond Welcome domestic rivalry Tap selective advantages by globalizing Selective alliances Locate home base to support competitive advantage

Leaders should
Believe in change Promote and push their company towards

innovation Pose challenges