The nature of firm strategy, structure, and rivalry is the final determinant of a nation's diamond. What does this statement refer to? How does domestic rivalry differ from foreign rivalry? Please explain in detail

Question

What will be an ideal response?

Answer 1

Domestic rivalry in a single national market is a powerful influence on competitive advantage. A good example is the PC industry in the United States which created a strong domestic rivalry. It keeps the industry dynamic and creates continual pressure to improve and innovate. The rivalry between Dell, HP, Gateway, Compaq, Apple, and others forces all the players to develop new products, improve existing ones, lower costs and prices, develop new technologies, and continually improve quality and service to keep customers satisfied. Rivalry with foreign firms may lack this intensity. Domestic rivals have to fight each other not just for market share, but also for employee talent, R & D breakthroughs, and prestige in the home market. Eventually, strong domestic rivalry will push firms to seek international markets to support expansions in scale. The absence of significant domestic rivalry can lead to complacency in the home firms and eventually cause them to become noncompetitive in the world markets. The intensity of the competition is more important rather than the number of domestic rivals. Also, the quality of the competitors makes a difference. It is also important that there be a fairly high rate of new business formations to create new competitors and safeguard against the older companies becoming comfortable with their market positions and products or services. New industry entrants bring new perspectives and new methods. They also find pockets of markets that were not explored by the incumbent companies. Differences in management styles, organizational skills, and strategic perspectives also create advantages and disadvantages for firms competing in different types of industries. The intensity of domestic rivalry also depends on them.