International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
firm may want to source some materials and some components
overseas.
2. First mover advantages: There are a number of advantages associated
with early entry in to an industry. The firm that enters first are likely
to gain customers loyalty and access to distribution channels.
Moreover, first mover may enjoy economies of scale. To the extent
that diamond is mutually reinforcing, early advantages might
snowball.
Implications for the government
1. An early lead in an industry is reinforced through the dynamics of the
diamond.
2. The government should also focus on creating specialized factors such
as education, apprenticeship, promotion, support for basic research,
high quality infrastructure etc.
3. The government should limit direct cooperation among industry
rivals. A recent trend is cooperative research ventures. While these
may provide benefits for developing broad-based technology on a
limited basis, they will blunt the motivational force of strong rivalry.
4. The government should enforce strong domestic snit-trust policies.
While strategic alliances and mergers have become popular, they
undermine vigorous competition.
If we supply this model to the Indian automobile industry, IT industry, gem
and jewellery industry, we will see the current advantages and the decisions
necessary to be taken, for them to have a competitive edge over their
competitors in the world.
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