Porter's competitive advantage of nations, cluster and the new Term Paper

Porter's competitive advantage of nations, cluster and the new economics of competition - Term Paper Example Despite this, the country has a lot of unskilled employees and with good strategic planning, it is possible to train some of the locals in non-demanding professional skills and import only the labor that is impossible to reproduce locally. There is a high supply of raw materials in South Africa owing to the extensive scope of the mining and manufacturing industry. Steel and plastic which and other materials which are required for production of toys can be locally procured thus cutting on the costs that could have been incurred if the material were to be imported. Demand conditions The demands conditions in South Africa are conducive for a toy market since the population of young middle class is growing as the economy grows many of these especially the educated ones will likely increase demand for toys products. In addition, the toy market has of late diversified to encompass the production of technology based games which are popular among children and younger adults. As a result, the local demand is likely to push firms in manufacturing the country to produce more products customized for them. Normally, a demanding local market is good for local industries since when the demand is high, innovation improves since the firms have to come up with ways to deal with the demand. As such, a firm investing in South Africa is more likely to be highly innovative since the locals will pressure it to make quality and diverse products so they will not have to buy imported goods. Related and Supporting Industries   In South Africa the toy and gaming market is dominated by a few large companies which maintain their market position by continuously broadening their portfolios and acquiring international licenses. Prima Leisure, Just Fun Group and Kids II lead the industry which offers a wide range of products in the local market (Toy and Game Companies 2012). Contrary to popular assumption the existence of these industries can be seen as incentive for new entrants because they actively participate in market upgrades and stimulate growth. In addition the state actively tries to encourage investment South Africa as to create jobs for the local, this is done by giving investors subsidies and tax cuts. Firm Strategy, Structure, and Rivalry The structure and the management of different firms in various countries are different and this can impact the competitiveness of the firms operating within. South African companies can generally be categorized as a blend of hierarchical systems and organic, this is more so in the toy and games industry and as a result the competiveness is moderated. The home market in as far as toy manufacture is concerned is very competitive, nevertheless, this will work to the advantage of new entrants. The domestic competition also encourages firms to diversify their products, this way a new firm venturing in South Africa will find that there exists a ready market for their products both locally and abroad. While the porter 5 forces ma ke low rivalry seem attractive, the contrary is true in the diamond model; this is because when low rivalry may be good for the firm in the short run, in the long run it will even be more beneficial. In South Africa for instance, the toy manufacturing market is dominated by a few major companies which will undoubtedly provide formidable opposition. On the other hand, this way the new firms will be motivated