Question

Using Porter's diamond model for national competitive advantage, discuss several barriers to entry that prevent companies from entering certain countries or regions.

Answer 1

Porter’s theory of national competitive advantage suggests that four attributes of a nation influence the pattern of trade: (a) factor endowments, (b) domestic demand conditions, (c) related and supporting industries, and (d) firm strategy, structure, and rivalry” .According to Porter’s model for national competitive advantage, there are several barriers that may prevent a company or business from entering other foreign countries or regions. One of the main barrier that prevents a company’s entry is government policies. Certain governments may prevent the entry of certain business due to several reasons such as certain tax classifications, aircraft distribution and shipping costs, competition between existing home countries, religious beliefs or affiliation to certain organizations or groups, and. Another barrier of entry that would prevent a company from entering another country or nation would be location, natural resources, infrastructure, and available related and supporting 3^rd party suppliers. The location, natural resources available and infrastructure availability also plays a major role in entry to a country or nation due to the fact that a company must find a location and building that meets the requirements of the local government’s compliance laws first. Also, the company must obtain prior authorization from the local government for operation permits and zoning ordinances. Lastly, another major prevention of a company from entering foreign soil is rivalry between the existing countries. If there is an open war between the company’s home country and the country they are trying to move to, there would be several restrictions and red flags preventing the company’s entry.