Nataional Competetiveness Term Paper Example | Topics and Well Written Essays - 1250 words

Nataional Competetiveness - Term Paper Example The four factors are, factor endowments, domestic demand condition, related and supporting industries and structure, strategy and rivalry among firms (Hills and Jones 248). Figure 1: Diamonds Theory (Source: Peng 135) According to Porter, the above four factors constitute the diamond which is referred to as a jointly reinforcing scheme and therefore the competitive advantage of the firm depends on the favorability of the diamond for the specific industry in which the firm belongs (Misra and Yadav 83). The paper talks about the automobile industry in America and is analyzed with the help of Porter's â€Å"National Competitiveness Model† or the Diamond Theory. American Automobile Industry Factor Conditions/Endowment As stated in Porters Diamond Model, factors refer to the types of resources which are necessary for the industry and they are physical resources, human resources, capital resources, knowledge resources and other infrastructure. The nation tends to gain advantage wher e the factors are accepted and well mixed. The factor condition is further divided into two, natural and advanced factors (Walker 178). The automobile industry includes those companies which are involved in marketing, production and also maintenance of automobiles. As per the US Bureau of Labor Statistics, the automobile sector had employed about 700,000 workers in 2011. The labor dynamics affects the employment level in industries such as plastics and steel manufacturing. The American automobile industry has been experiencing upward pressure with respect to wages and a downward pressure on benefits and is competing with other strong economies for skilled labors. In the recent global financial turmoil which has also affected US, the automobile sector is unlikely to support comfortable living for the working class affecting the industry’s ability to attract skilled workers, thus having negative impact on the competitive advantage (Basu, â€Å"What Factors Affect the Labor Sup ply and Demand for the Automobile Industry?†). However in the 20th century, the American automotive industry had maintained prominence in the domestic economy. The American auto industry had sprouted from Henry Ford and currently in its blooming stage. But the issue with workers remained the same (Wall 8). Domestic Demand Condition The home demand condition plays an important role in national competition as it tends to gain competitive advantage only if the demand from the domestic customers forces the industry to carry out innovation, lead the global market and gain profit. The US is in the process of recovery and the automobile sector has been contributing to a large extent. In 2012, the annual sales for automobiles along with light truck amounted to 14.8% higher compared to previous years (Spross, â€Å"The Comeback of the U.S. Auto Industry†). America is a developed country with growing population which means that the industries are developed and has entered the mat ured stage. Retail sales in the US are boosted by demand from automobiles along with gasoline prices restricting the customers to spend on other goods. Some of the major automobile makers reported that the sales of cars increased 19.9%