Bhuvnesh Chetal; Student Id- 1481988

Summary: The article talks about how national prosperity is created, not inherited
and how companies achieve competitive advantage through constant innovation.
Porter dismisses the prevailing thinking, labor costs, interest rates and economies of
scale are the most potent determinants of competitiveness. In companies, the
words of the day are merger, alliance, strategic partnerships, collaboration and
supernational globalization. These approaches fundamentally misperceive the true
source of competitive advantage. He talks about how companies achieve
competitive advantage through acts of innovation and that in order to sustain
competitive advantage, one has to constantly upgrade itself to move to more
sophisticated ways. Furthermore it discusses the four attributes of a nation that
individually and as a system constitute the diamond of national advantage Factor
Conditions such as skilled labor or infrastructure, necessary to compete in a given
industry. Demand Conditions - nature of home market demand for the industrys
product or services. Related and Supporting Industries existence or non-existence
of supplier industries and other related industries which are internationally
competitive. Firm Strategy, Structure and Rivalry - It concerns the structure followed
that govern how companies function and the rivalry between them. These four
attributes define a point on the diamond of national advantage; the effect of one
point often depends on the state of the other. But the points of the diamond are also
self-reinforcing: they contribute a system. In the long run, both nations and
companies must aim for international competitiveness and constantly upgrade the
product and services they offer in order to keep their competitive advantage.
1. The watch industry is much globalized and the competition in this industry is
more associated with the countries where the watches are manufactured rather
than the companies themselves, for example the competition is associated between
Switzerland, Japan and U.S. rather than Swatch, Tissot and other watchmakers.
There is a geographical diversity in the industry with many countries like India and
Korea rising as watchmakers. Also many of the watchmakers are now not producing
their own parts and are outsourcing the parts from different companies across the
world.
The dependence on outsourcing has increased over the years; the supply chain is
global and not just local since the companies have been trying to reduce the cost of
production and achieve a competitive advantage.
2. Swiss emerged as a European leader due to several reasons. First, they worked
collectively and overthrew British Supremacy. Second, their watches were sold
exclusively through jewelry and upscale stores and found ready acceptance
throughout Europe and later in the U.S. in part because of the promotion by
jewelers. Third, they worked towards creating a global Swiss made brand and
invested in education and training by setting up academies. Finally, Swiss
constantly emphasized in quality, technology, accentuating fashion and creating
new niche products.
3. Timex offerings strove to address variety of consumer trends from sports
watches to classic style watches. They came up with new technology watches
which were durable, multifunction and cheaper. They were rejected by jewelry
stores and found new distribution channels, creating a new low cost market for
the consumers who could not afford Swiss made watches. Seiko watches were

Bhuvnesh Chetal; Student Id- 1481988

technologically accurate, sophisticated. Additionally, they were being produced in
large volumes which lead to low production and were sold through mass
distribution channels.