Business structures and competitiveness of Canada Analysis using Essay

Business structures and competitiveness of Canada Analysis using Michael Porters Diamond Model of International Competitiveness - Essay Example Factor conditions 7 4.2 Demand conditions 8 4.3 Supplier industries in Canada 8 4.4 Business establishment, management and rivalry in the domestic market 9 5. Conclusions - Recommendations 10 6. References 12 7. Appendix 13 Executive Summary A series of criteria tends to be used for evaluating the performance of economies in the global market. Usually, the ability of countries to cover their debts and to respond to the needs of local population is considered as indication of economic strength. In practice, it has been proved that the competitiveness of countries refers to a variety of requirements; these requirements need to be met in order for a country to be characterized as highly competitive. The particular issue has been explored in the literature, due to its critical importance. The most common framework for evaluating the competitiveness of countries is the Diamond model of national competitiveness. This model promotes the view that national competitiveness can be related most ly to four elements (Figure 1, Appendix). The Porter’s Diamond model has been used in this paper in order to evaluate the competitiveness of Canada. Using the model for developing the above task a contradiction has been revealed: Canada seems to perform high in two of the model’s elements while its performance in the rest two elements is low (Figure 5, Appendix). This contradiction could be explained as follows: Canadian economy is quite strong and the development of business activity is highly promoted by the government. However, the measures taken are not adequate and gaps are unavoidable. Therefore, the competitiveness of the country seems to be high or low depending on the elements of the economy on which each part of the Diamond model is based. 1.0 Introduction The competitiveness of countries in the context of the international market is difficult to be measured, especially due to the instability in economies and the strong social conflicts worldwide. Porter has introduced a model that can be used as the basis for measuring and evaluating the national competitiveness; this is the Diamond model. The value of this model is high since no similar theoretical frameworks are available in the literature. At the same time, the effectiveness of the specific model has been already tested in practice leading to credible findings in regard to national competitiveness. A key advantage of Porter’s Diamond model is the following one: the model can be used for evaluating the competitiveness of countries with various cultural and social characteristics. Porter’s Diamond model has been used in this paper for measuring the national competitiveness of Canada, a country with a quite strong economy, at least as compared with other western countries. Porter’s Diamond model has verified the strength and the prospects of the Canadian economy; however, there are certain practices of the country’s government that should be alternated, a ne ed that has been revealed through Porter’s Diamond model. 2.0 National competitiveness – characteristics When referring to the competitiveness of a nation it is difficult to choose the criteria that would be most appropriate for taking a relevant decision (Porter 1990). Most commonly, national competitiveness is related to issues such as ‘exchange rates, interest rates and government deficits’ (Porter 1990, p.76), being related to macro-economy. The view that national competitiveness can be related mostly to the natural resources of a country has not been widely accepted (Porter 1990) as it could not respond to the following question: how countries such as Germany and Italy that