Scenario: Better Mousetrap Inc.
Better Mousetrap Inc. is a manufacturing company that sells pest control products. Recently the company launched an innovative mousetrap with a unique design that has been selling well in the U.S. market. Senior Vice President Marc Wallace, even recommended expanding sales overseas in order to increase company revenues.
-National competitive advantage theory states that a nation's competitiveness in an industry depends on ________.
A) the capacity of companies to create barriers to entry
B) the capacity of the industry to innovate and upgrade
C) the availability of government subsidies for industry development
D) the availability of cheap factors of production in the nation

Question

Quizplus · Accepted Answer

The national competitive advantage theory, developed by Michael Porter, states that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade, which includes factors such as research and development, technology, and skilled workforce. While factors such as government subsidies and cheap factors of production can support industry development, they are not the primary drivers of competitiveness in an industry, according to Porter's theory. Therefore, option B is the best choice.