EITR Summative Assessment Case Study

ITR Summative Assessment Case Study

Porter’s Examination of International Competitiveness (Diamond Framework)

Porter’s model attempts to theorize what determines the competitiveness of industries and, thereby, nations that engage in global trade (Smit 2010). Through this examination line, Porter places a significant emphasis on the development of national economic traits that filter through to corporate behaviors and institutions that create competitive behaviors upon the global economic stage, where other competitiveness trade theories base their assumptions on factors of production and product development (such as the product life cycle (Hymner 1960)).

The inherent advantages are nurtured through national culture, institutions, and market dynamics that determine the firm/industry/nation’s level of competitiveness on world markets and trade. In this vein, Porter tries to examine the rise of modern economies, MNEs, and their associated success in understanding how nations become more competitive (Ketels 2006).

Is a case study a summative assessment?

 

“Japanese auto manufacturers had developed capabilities and resources
far more sophisticated than their US counterparts. In the end, this would translate to both cost advantages (for smaller cars in the order of 10 percent) and differentiation advantages (increased mileage and quality of the product). This would go for Toyota but also for Nissan, Honda, and the other car manufacturers. During the 1980s, US auto firms put on a powerful lobby in Washington that led to severe trade barriers for Japanese car imports. This only led to the Japanese carmakers setting up plants in the USA and transplanting their capabilities into unknown territory in the South, not the old cluster in Detroit. Using the Diamond model, Porter would point to factors such as quality and specialization of factor conditions, fierce rivalry in the backyard of Japanese automakers, sophisticated buyers, and access to dynamic clusters of interlinked industries (Porter et al., 2000). The notion of competitiveness was now turned into a dynamic one, emphasizing tough policy, factor disadvantages (expensive energy, expensive steel input, etc.), and detailed demand specifications (spotless finish of the product, fuel efficiency, safety features, etc.).” Sölvell (2015: 476)

What are formative and summative assessment examples?

 

The international competition at the firm level has changed markedly in the prior decades because of changing patterns of world trade, globalization, and advances in technology that have given the rise of transnational organizations (Smit 2010).

“It is the first multilevel theory to realistically connect firms, industries, and nations, whereas previous theories only work on one or two dimensions.” Hill (2009: 193)

However, Porter’s approach hasn’t been accepted universally, and there exist contrasting views on the application and accuracy of Porter’s theory. Economists such as Krugman (1996) state that countries do compete internationally as firms. Similarly, Kohler (2006:140) states:

“A country’s welfare is…determined by its absolute level of productivity, in a trading world productivity is magnified by international exchange”.

So the debate that is raised within the economic literature is the notion of competitiveness, how it’s defined in the realm of national boundaries. Further, New Trade theory addresses level-industry trade within the confines of economies of scale and specialization with government policy to shift trade specialisms potentially override Porter’s Diamond Framework.