02 Fragen

explain competetiveness in a focussed and comprehensive way

Poters Diamond = “Competetiveness of Nations”

natural resources+human resources+ innovation+productivity

impact of environment included

role of nations:

• high standard of living for people

• home base to firms

crucial to wealth standards

—

competetiveness of a firm adapted to a nation

conects many aspects

overall approach

insights from company insights

high quality specialised inputs

• human resources

• capital resources

• natural resources

• physical infrastructure

• administrative infrastructure

• information infrastructure

• scientific infrastructure

Example:

• Switzerland: abandon labour intensive watches; focus on high end watches

• Sweden: short building phase + high construction costs —> pre-fabricated houses

local and context rules that encourage productivity (oncentives, intellectual property protection)

open and vigorous local competition - between locally based rivals

Examples:

• Japan: high costs for land —> Just in time inventory techniques

• Italian tile market: Rivalry intensive because of low entry barriers

customers

tell you what to do

Example:

• Japan: love to Cameras made them innovate (canon, minolta…)

• French/Italian wine industry: consumers tend to spend a lot of money —> winemakers invest more —> better wine

connect with local experts

presence of clusters instead of isolated industries

needed to survive

Example:

• Italy: Tiles: enamel production was available + glaze production was favorable —> reduce transportation (=production) costs

• Switzerland: success in pharmaceutical industries related to success in technical chemical industry

• Germany Car: Bosch, Knorr Bremse, Michelin, Conti …

  • huge suppliers

• VW; Mercedes; Porsche, Audi

Chance = Coincidence

• discoveries

• large technological breakthroughs

• fluctuation in price of capital equipment

Example: Carglass = South African firm (Coincidence?)

• Tewa from Israel - generic pharmaceuticals

  • largest generics Firm

• DELL - New Zealand

• SAP - GER

State = Government

• can have impact on all other 4 elements of diamond (pro and con)

• foundation of rules

• cost reduction through local agglomeration / networked infrastructure / lower costs of transaction

  • services

  • finance

  • suppliers

• better access to specific resources

• local access to “social capital” (experts, engineers, universities)

• “spillover-effect”

  • knowledge sharing through personal exchange

• public founding

Software - Silicon Valley

Luxery Cluster - Paris

Car - Germany

Oil - Saudi Arabia

South west GER- printer industry, Car industry

Watches - Switzerland

1) Resource Infrastructure driven economy -> opportunity to innovate

2) become specialist in newly innovated product

Mid-16th Century, Breat Britain

• maximize wealth by maximizing exports and minimizing imports

  • generate wealth

• nations wealth depends on accumulated treasure

• gold and silver = currency

• maximize exports

  • through subsidies

• minimize inputs

  • tarrifs and quotas

    
    

China still today?

Absolute Cost Advantage

Adam Smith 1723-1790

Trade between nations senseful if:

• one country more efficient in producing 1 good, other nation more efficient in producing other good

Saudi Arabia - oil

germany - cars

—

Comparative cost advantage

David Ricardo 1772-1823

• countries produce the same products - makes sense to collaborate

• trade between nations even sensefull if one nation in more efficient in producing all goods

• same set of products , more or less same effefictiveness —> still makes sense to exchange

• histroical background: England was best in almost everything

• RELATIVE effectiveness

china: low-cost labour

North america: fertile agricultural earth

saudi arabia : oil

colombia: climate for coffee

Zambia: copper mines

Australia: raw materials

india: IT people

Chinas cheap labor (compared with EU or US)

US: specialised capitalintensive labor

Germany: machines, cars

France: Machines, cars

—> germany better in both

• France has to pay more to produce

What greece can do?

maybe olives and cheese?

still has to produce other things: metal , …

TRUMP: make America great again: closing trade = bad

american wealth comes from international exchange

the more you produce, the cheaper it gets (per piece)

Fixed costs decrease

Knowledge

Contracts

When copying a product:

costs start lower (knowledge) rapid learningA

innovating and imitating

exports arise through the existence of differences in technology between the home country and foreign countries

Demand Gap

• innovative country creats demand in own country, no demand in other countries

Imitation Gap

• as soon as exports start

• until production in country B starts (copy)

germany, us starts —> china / vietnam copy

BioNtech: innovated new vaccine —> astra zenica copy —> patent of bioNtech —> Gap not closed yet

Demand Gap

• innovative country creats demand in own country, no demand in other countries

• periode of time from innovative product in local market and first time there is a demand in other country (nowadays maybe very short)

Imitation Gap

• as soon as exports start

• until production in country B starts (copy)

• when other country produces (more or less) the same product

any product

Smartphone ,…

introduction, growth, maturity

compareable to gap theory

price pressure

going to country with lowest wage