Question 3298 – Reading-Comprehension

In terms of labour, for decades the relatively low cost and high quality of Japanese workers conferred considerable competitive advantage across numerous durable goods and consumer electronics industries (eg. Machinery, automobiles, televisions, radios), then labour- based advantages shifted to South Korea, then to Malaysia, Mexico and other nations. Today, China appears to be capitalizing best on the basic of labour, Japanese firms still remain competitive in markets for such durable goods, electronics and other products, but the labour force is no longer sufficient for competitive advantage over manufacturers in other industrializing nations. Such shifting of labour-based advantage is clearly not limited to manufacturing industries. Today a huge number of IT and service jobs are moving from Europe and North America to India, Singapore and like countries with relatively well-educated, low-cost workforces possessing technical skills. However, as educational level and technical skills continue to rise in other countries, India, Singapore and like nations enjoying labour-based competitive advantage today are likely to find such advantage cannot be sustained through emergence of new competitions.
In terms of capital, for centuries the days of gold coin and later even paper money restricted financial flows. Subsequently regional concentrations were formed where large banks, industries and markets coalesced. But today capital flows internationally at rapid speed. Global commerce no longer requires regional interactions among business players. Regional capital concentrations in places such as New York, London and Tokyo still persist of course, but the capital concentrated there is no longer sufficient for competitive advantage over other capitalists distributed worldwide, Only if an organization is able to combine, integrate and apply its resources (eg. Land, labour, capital, IT) in an effective manner that is not readily imitable by competitors can such as organization enjoy competitive advantage sustainable overtime.
In a knowledge-based theory of the firm, this idea is extended to view organizational knowledge as recourse with at least the same level of power and importance as the traditional economic inputs. An organization with superior knowledge can achieve competitive advantage in markets that appreciate the application of such knowledge. Semiconductors, genetic engineering, pharmaceuticals, software, military warfare, and like knowledge-intensive competitive arenas provide both time-proven and current examples. Consider semiconductors (e. g. computer chips), which are made principles of sand and common metals, these ubiquitous and powerful electronics devices are designed within common office building, using commercially available tools, and fabricated within factories in many industrialized nations. Hence land is not the key competitive recourse in the semiconductor industry.

Why labour-based competitive advantages of India and Singapore cannot be sustained in IT and service sectors?

Correct Answer: C