There are impacts of relying only on a singletype of industry for a nation’s competitive advantage, some of them arediscussed below:There will always be unpleasant surprises.A development is not as promising asexpected. A mining company with fixed revenues suddenly faces failure at one ofits locations. Even leaders like Steve Jobs can create uncertainty when medicalissues affect their performance. The bottom line is that any industry orinvestment can be hit by an unpleasant surprise.
When using a single type ofindustry, the above cannot be avoided and the damage will be huge.It provides measure away from activities that may go down.Sometimes the industry will decline for a while due to economicaspects. Then there are times while the industry will be completely rejected orremoved. After all, when was the last time you went to buy a yoke and plow foryour cattle? When you focus on a single type of industry and the market isgoing through the above situation, the industry may collapses and there is nobackup plan for it.
It is influenced by the cyclical nature of the econometrics.Economies are growing and economies are slowing. When thathappens, people change their spending behaviors. When money is very tight,there will be fewer new cars bought and fewer new debts and loans going to homebuyers.
When the money is more presented and available, then the luxury itemsare more likely to be bought. Focusing on a single type of industry doesn’t allows the portfolio to face these cyclesbecause little is owned in many businesses so some of things are always up(active) while others are always down (not active). Stakeholder perceptionsCompanies are subject to analysis by many different groups ofstakeholders, including, suppliers, customers, employees, analysts andinvestors.
Focusing on a single type of industry strategy can generate negativeperceptions by demonstrating that the company is not innovative nor ambitious.Which will not help to attract new investors or retain employees, or to buildrelationships with industry analysts.