helen mba _2 - Nelson Mandela Metropolitan University

attractiveness of a country as a place in which to live and work. Examples ofsuch factors are housing, schooling and cultural institutions.According to Porter (1990:75) firms gain a competitive advantage if they offerproducts and services embracing low cost differentiation and high quality, which aresignificant to competition in a particular industry.To understand the role of the above factors in securing a competitive advantage,Porter (1990:77) discriminates among the types of factors, two important distinctionsbeing between basic and advanced factors.2.2.1.1 Basic factors of productionPorter (1990:73) is of the opinion that each country possesses or inherits basicfactors of production, which are inputs necessary to compete in an industry.Examples of basic factors of production are natural resources, capital, climate,location, unskilled and semi-skilled labour and demographics.The creation of basic factors of production requires relatively low private and socialinvestment. Basic factors of production may provide an initial advantage for acountry’s firms, but are unsustainable, and hence unimportant to national competitiveadvantage. The lesser importance of basic factors is due to their diminishednecessity, their widening availability, and the ready access to them by global firms,through foreign activities or sourcing on international markets.The same considerations make the returns available to basic factors of productionlow, irrespective of their location (Porter, 1990:71).2.2.1.2 Advanced factors of productionAccording to Porter (1990:74), advanced factors of production are created within anation. Examples of advanced factors are communications infrastructure, skilled30