PORTER'S DRIVERS OF NATIONAL COMPETITIVE ADVANTAGE

Michael Porter developed a model that helps identify countries or geographical regions where conditions support its competitiveness globally in a specific industry. As an example, France has historically been a world leader in wine; Italy historically a world leader in shoes; and India currently is a world leader in software development, Each country's leadership was due to strong supporting conditions in the four key factors that Porter identified as critical to regional competitive success.

Porter's Model identifies four factors that, working together, can result in a regional or world competitive advantage: 1. FACTOR CONDITIONS (skilled labor, land, capital, technology, know-how, and infrastructure); 2. Local DEMAND CONDITIONS (strong local demand with sophisticated and demanding customers); 3. RELATED AND SUPPORTING INDUSTRIES (the extent to which companies' domestic suppliers and other complementary industries are developed and helpful.); 4. RIVALRY, STRATEGY, AND STRUCTURE OF DOMESTIC COMPETITORS (refers to how challenging it is to survive domestic competition-strong competition makes the industry stronger).

In the United States, Silicon Valley in Northern California has been competitive globally to develop many of today's advanced technologies. Apple, Google, Facebook, Intel, H.P., and Oracle are a few of the many successful technology companies in Silicon Valley.

Analyze each of the four key factors or conditions (Factor Conditions; Local Demand Conditions; Related and Supporting Industries; and Rivalry, Strategy, and Structure of Domestic Competitors) that support Silicon Valley, the U.S. as a global leader in technology development. Give specifics for each of the four factors. The analysis should answer the question: 'why has Silicon Valley in the U.S. been a dominant world leader in technology development?"

Silicon Valley in the U.S has been a dominant leader in technology because of Porter's drivers of national competitive advantage as detailed in the explanation below:

Step-by-step explanation

1. Factor Input Conditions

i) Labor: One of the big factor resources in Silicon Valley are the universities and R&D firms. Universities are essential because one thing in common that every organization claimed, was that there is a lack of talent and more open positions than available bodies. Universities, such as Stanford, stand as a double input to the cluster. Stanford has one of the best Computer Science programs in the world and develops outstanding talents for the software industry and they also have a very good research program. 

The other strong input, is the research firms. The research firms collaborate with a lot of the businesses, and support work on research ideas or solving problems.

ii) Infrastructure: it was much more or less reflected by commercial real estate, which in many cases was previously owned by another or former member of the group. For instance, the premises Google currently occupies, which is situated in Mountain View, was once owned and managed by Silicon Graphics. The California neighborhood has seen technology firms settle down and pull out, so Google's decision to plant roots there is nothing new for Mountain View. Through buying buildings which were already accessible in Silicon Valley, Google guarantees itself an advantage with exposure to other conditions required to successfully participate in the cluster.

2. Related and Supporting Industries

i) Capable Suppliers: The population is more than half of the ecosystem of a cluster. For example; Intel produces microprocessors for computers. These computer needs these processors to engineer newer, better software for other computers. The software company may have purchased 100 Intel microprocessors to upgrade their present system. Now, these two firms have in fact become collaborators within the cluster, or are at very least working in partnership to improve the group as a whole.

ii) Sponsor Forums: Employees are encouraged not only to work on their own idea, but the collaborate with others, and the industry as a whole. This method has given us some of the apps and services we use every day, such as Gmail. Merely by allowing one employee to make what he or she considered useful and transform it into a tangible product not just for consumers to use, but to boost the utility and productivity.

3. Demand Conditions

i) Local demand: Demand at home can define segments in the market where businesses can distinguish their product. Products may be distinguished by consistency, price, reliability, or functionality. Our visit to Evernote expanded on the concept of distinction. They have variants of the Evernote app based on user choice such as Evernote Hello for a simple way to collect business cards or Evernote food for those who want to take pictures of their food. Intel is launching them into the tablet market with the Samsung Tablet, the very first tablet with an Intel processor.

ii)Demand conditions: In the United States, customers are more demanding of computers, tablets, and appliances which can be considered a catalyst for development and innovation. Joonyung Kim, Senior Engineer of Intel, said that being in Silicon Valley pushes them to be constantly ahead of the competition in efficiency and changes with their Intel processors.

4. Strategy and Rivalry

i) Location strategy: Silicon Valley is situated within the state of California, which by global standards is a stable government. Due to the extreme sheer scale of the local and state economies, it plays a vital role in the entire economy of the US. With over 38 million people, California is the most populated US state. California is among the most complex tax systems in the US with varying income groups and a complicated investment scheme. This is significant as it plays a large role in the growth of the cluster and promoting innovation. Given the need for outside funding (seed funding, venture capitalists, bank loans), there is an immense need to simplify the taxation system to spur innovation.

ii) Export promotion: The banks of Silicon Valley, like Silicon Valley Bank and City National, play an important role in investment and export growth. Investment bankers like JP Morgan play a significant role in the industry, by providing low risk loans and investment in helping the business within Silicon Valley export their goods.