(a) Porter identified four factors that determine competitiveness of countries and for that matter Central African countries.

1. Factor Conditions/Endowments – The first dimension in Porter’s model is the factors of production. This dimension refers to the inputs necessary to compete in any industry – labour, land, natural resources, capital, and infrastructure (such as transportation, postal, and communication systems). There are basic factors (for example, natural and labour resources) and advanced factors (such as digital communication systems, technological and scientific know-how and a highly educated workforce). Other production factors are generalized (highway systems and the supply of debt capital) and specialized (skilled personnel in a specific industry, such as the workers in a port that specialize in handling bulk chemicals).
   Advanced factors tend to give countries more competitive advantage than the basic factors of production. If a country has both advanced and specialized production factors, it is likely to serve an industry well by spawning strong home-country competitors that also can be successful global competitors. Since Central African countries are more endowed in basic factors of productions and less endowed in advanced factors they are likely to be less competitive when compared to other advanced economies such as Japan, United States, France, etc.
2. Demand conditions – refer to the demands that consumers place on an industry for goods and services. Consumers who demand highly specific, sophisticated products and services force firms to create innovative, advanced products and services to meet the demand. This consumer pressure presents challenges to a country’s industries. But in response to these challenges, improvements to existing goods and services often result, creating conditions necessary for competitive advantage over firms in other countries.
   Countries with demanding consumers drive firms in that country to meet high standards, upgrade existing products and services, and create innovative products and services. The conditions of consumer demand influence how firms view a market. This, in turn, helps a nation’s industries to better anticipate future global demand conditions and proactively respond to product and service requirements.
3. Related and supporting industries – enable firms to manage inputs more effectively. For example, countries with a strong supplier base benefit by adding efficiency to downstream activities. A competitive supplier base helps a firm obtain inputs using cost-effective, timely methods, thus reducing manufacturing costs. Also, close working relationships with suppliers provide the potential to develop competitive advantages through joint research and development and the ongoing exchange of knowledge.
   Related industries offer similar opportunities through joint efforts among firms. In addition, related industries create the probability that new companies will enter the market, increasing competition and forcing existing firms to become more competitive through efforts such as cost control, product innovation, and novel approaches to distribution. Combined, these give the home country’s industries a source of competitive advantage.
4. Firm Strategy, Structure, and Rivalry – Rivalry is particularly intense in nations with conditions of strong consumer demand, strong supplier bases, and high new entrant potential from related industries. This competitive rivalry in turn increases the efficiency with which firms develop, market, and distribute products and services within the home country. Domestic rivalry thus provides a strong impetus for firms to innovate and find new sources of competitive advantage.
   This intense rivalry forces firms to look outside their national boundaries for new markets, setting up the conditions necessary for global competitiveness. Among all the points on Porter’s diamond of national advantage, domestic rivalry is perhaps the strongest indicator of global competitive success. Firms that have experienced intense domestic competition are more likely to have designed strategies and structures that allow them to successfully compete in world markets.

(b) Opposing Pressures and Four Strategies

International strategy
Explanation
Multinational companies that are confronted with low cost pressures and low pressures for local responsiveness pursue “International Strategy”. An international strategy is based on diffusion and adaptation of the parent company’s knowledge and expertise to foreign markets. Country units are allowed to make some minor adaptations to products and ideas coming from the head office, but they have far less independence and autonomy compared to multidomestic companies. The primary goal of the strategy is worldwide exploitation of the parent firm’s knowledge and capabilities. All sources of core competencies are centralized. This strategy type is ethnocentric since the foreign activities only secure the home-country company. A strong dependence of the foreign subsidiary on the resources of the home country is a consequence.
Risks associated with international strategy
(i) Different activities in the value chain typically have different optimal locations. The international strategy, with its tendency to concentrate most of its activities in one location, fails to take advantage of the benefits of an optimally distributed value chain.
(ii) The lack of local responsiveness may result in the alienation of local customers.

Global strategy
Explanation
The multinational companies facing low pressure for local adaptation and responsiveness but high pressure to lower cost pursue “Global Strategy”. Companies that pursue a global strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale and location economies; that is, their business model is based on pursuing a low-cost strategy on a global scale. A global strategy emphasizes economies of scale due to the standardization of products and services, and the centralization of operations in a few locations. These companies try not to customize their product offerings and marketing strategy to local conditions because customization, which involves shorter production runs and the duplication of functions, can raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale.
Risks associated with Global strategy
(i) A firm can enjoy scale economies only by concentrating scale-sensitive resources and activities in one or few locations. Such concentration, however, becomes a “double-edged sword.” Thus, decisions about locating facilities must weigh the potential benefits from concentrating operations in a single location against the higher transportation and tariff costs that result from such concentration.
(ii) The geographic concentration of any activity may also tend to isolate that activity from the targeted markets. Such isolation may be risky since it may and needs.

Multidomestic/Multinational strategy
Explanation
Multidomestic strategy is the reverse of global strategy since the company faces high pressure for local responsiveness and adaptation but with low pressure to lower costs. A firm whose emphasis is on differentiating its product and service offerings to adapt to local markets follows a multidomestic strategy. Decisions evolving from a multidomestic strategy tend to be decentralized to permit the firm to tailor its products and respond rapidly to changes in demand. This enables a firm to expand its market and to charge different prices in different markets.
Risks associated with Multidomestic/multinational strategy
(i) Decreased ability to realize cost savings through scale economies.
(ii) Greater difficulty in transferring knowledge across countries as a result of localization of core competences.

Transnational strategy
Explanation
Transnational strategy is adopted by company that simultaneously faces both strong cost pressures and strong pressures for local responsiveness. In essence, companies that pursue a transnational strategy are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company’s global network of operations. As attractive as this may sound, the strategy is not an easy one to pursue because it places conflicting demands on the company.
Risks associated with Transnational strategy
(i) The choice of a seemingly optimal location cannot guarantee that the quality and cost of factor inputs (i.e. labor, materials) will be optimal. Managers must ensure that the relative advantage of a location is actually realized, not squandered because of weaknesses in productivity and the quality of internal operations.
(ii) Although knowledge transfer can be a key source of competitive advantage, it does not take place “automatically.” For knowledge transfer to take place from one subsidiary to another, it is important for the source of the knowledge, the target units, and the corporate headquarters to recognize the potential value of such unique know-how.