Country Comparative Country Comparative Advantage:Advantage:

Japanese Fax IndustryJapanese Fax IndustryBM499 Strategic ManagementBM499 Strategic Management

David J. BryceDavid J. Bryce

December 3, 2002

Competitive Advantage of NationsCompetitive Advantage of Nations(National Perspective)(National Perspective)

Firm strategy,structure, and

rivalry

Related andsupportingindustries

FactorConditions

DemandConditions

Source: M. Porter

Skilled designers,engineers

Fax demand- language - lack substitutes - control subs

Copier companiesSemiconductor companiesThermal print componentsLaser printersThermal paper

Strong rivalryInnovation focus

JAPANESEFACSIMILEINDUSTRY

Government - NTT promotion - “legal” docs

Traditional view of Comparative Traditional view of Comparative AdvantageAdvantageA focus on national factor endowments:A focus on national factor endowments:

Countries differ in factor endowments and Countries differ in factor endowments and countries should produce goods for which countries should produce goods for which their factor endowments offer a their factor endowments offer a comparative advantage.comparative advantage.

Location-Specific AdvantageLocation-Specific Advantage

Location-Specific AdvantageLocation-Specific Advantage

Enlightened” view of Comparative Enlightened” view of Comparative AdvantageAdvantage

Countries possess factor endowments but also differing Countries possess factor endowments but also differing national abilities to create new endowments from the national abilities to create new endowments from the existing resource base (which includes factor existing resource base (which includes factor endowments, education levels, skills, cultural endowments, education levels, skills, cultural propensities, etc.)propensities, etc.)

A country’s ability to create new endowments from its A country’s ability to create new endowments from its resource base stems in large part fromresource base stems in large part from

1 – 1 – The country’s starting point when developments The country’s starting point when developments began (“path began (“path dependence”)dependence”)

2 – 2 – The institutions and governmental processes that The institutions and governmental processes that support or support or hinder developmenthinder development

Globalizing for Competitive Advantage(Utilizing country comparative advantages)

• Land: supply, usability, location (geography)

• Natural resources: abundance, type

• Labor : plentiful (cheap)• Size of local population: size

of home market

• Skilled labor: effective education systems and productive workforce

• Technology/knowledge base• Financial, economic and

political environment• Culture: costs of transacting,

demanding users, inventiveness of human resources

Factor Endowments Created Endowments

Selected Top Export Selected Top Export IndustriesIndustries

United States

Pop: 275mm

• Automobiles

• Aerospace/aircraft

• Computer equip./

software

• Pharmaceuticals

• Medical Equipment

• Entertainment

(motion pictures)

• Food Processing/

consumer pdts.

• Waste management

Japan

Pop: 140mm

• Automobiles &

motorcycles

• Consumer

electronics

• Computer equip./

semiconductors

• Robotics

• Cameras/watches

• Musical instruments

• Machine tools

• Shipbuilding/steel

Germany

Pop: 70mm

• Automobiles

(Performance)

• Machine Tools

• Printing presses

• Chemicals

• Surgical Instruments

• Cutlery

• Pens & pencils

• Optical instruments

Italy

Pop: 55mm

• Ceramic tiles

• Knitwear/textiles

• Leather goods

and footwear

• Ski Boots

• Jewelry

• Lighting/glass

• Furniture