Complete Issue - Shippensburg University

Edward Pitingolo: Competitive Structure of the Global DBO Water Supply Industry 61from which companies may build additional competitiveadvantages.• Demand conditions prognosticate via homecountry customer wants and needs, products andservices, signaling demand trends internationally.Market signals, Porter contends, provide nationaladvantages if the signals extend to internationaltrends.• Related and supporting industries present inthe home country offers competitive advantages.Often industries develop within a network ofassociated industries and the presence of theseindustrial partners aid in advancing a nationalcompetitive advantage.• Firm strategy, structure, and rivalry encompassconditions in a home country that establishorganizational structure, management methodologies,and the attributes of domestic competitiveness.In the home country, cultural aspects playa significant role in determining the competitiveadvantage in international operations.Figure 2, Porter’s Diamond (1990).Utilizing Porter’s diamond, companies’ access anddevelop home country aspects enabling a competitiveadvantage on a global basis. At the national level,Porter’s diamond enables governmental policy makersto favor developing competitive advantages in variousindustries.Employing Porter’s diamond to evaluateVeolia’s home country competitive advantage thattranslates to an economic benefit in the Chinesemarket aids in developing corporate strategy. Forexample, France has a sufficient skilled labor pool,industrialized infrastructure, and enjoys groundbreakingtechnological advances related to the water systemsupply organization. Demand conditions for a pureand stable supply of water enabled Veolia to developservices comparable to those needed in China. Veoliaalso developed sewage treatment in France, againallowing for cross boundary trading in this particularservice. Since the Imperial Decree by Napolean III,governmental policy has favored the water supplysystem industry.Refining Porter’s diamond, Dunning (1993)distinguished parameters for international components.Defining multinational enterprises (MNEs) the authorasserts companies enjoy a more pluralistic motivationfor global trade. As this relates to Veolia in China,its status as a MNE allows a systematic advantage oflowering its transaction costs in international markets.Veolia’s multi-national enterprise status (MNE)provides tools for continued strength in the marketplace(Dunning 1993).Veolia’s involvement in China requires strategicplanning to enhance its competitive position. Part ofthat strategic planning is accessing the competitiveadvantage Veolia brings to China based uponcompetitive advantages enjoyed by Veolia in its homecountry, France. Porter’s diamond presents a modelfor evaluating the competitive position translatingfrom France to China. After analyzing the homecountry competitive advantage of Veolia, we cansurmise the various attributes included in Porter’sDiamond consisting of economic factors, factors ofproduction, consumer demand, interrelated industries,and governmental policy, present Veolia a significanthome country competitive advantage. This benefittranslates globally particularly in its Chinese operationsand contributes to the success of Veolia as the premiersource for water system supply in China.Virtuous expanding cycle versus vicious cycle ofdecline on a sliding scale. Global trade and the factorscomposing trade often further industries and theirrespective companies. These decision processes amplifyin magnitude creating a composite affect. This affectsometimes represents positive momentum and Porter(1990) defines this as a virtuous expanding cyclewhere forward momentum causes positive benefits forcompanies, their industries, and the foreign countriesin which they do business. Conversely, negativeattributes expand in a cause and effect relationship aswell. The amplitude and direction of these negativeaffects is the vicious cycle of decline. This cause andeffect relationship, amongst multiple factors in theinternational trade environment, allow for economicgrowth or economic decay. Part of the reason ThirdWorld countries experience delayed development incomparison to the rest of the world rests partly withthis theory. As various policies, procedures, and culturalattributes prohibit economic development, a viciouscycle of decline exists. Industrialized nations benefitfrom their related set of economic attributes that enablea virtual expanding cycle. This concept applies toindustries, home countries, and international tradingpartners in its application (Porter 1990).Global environment. A virtuous expanding cycleexists for the water system supply industry asglobalization spurs potential development of previouslyunderdeveloped countries. This positive cycle existsbecause of the human demand for stable and purewater supplies plus the fact positive developments in