The presence of strong local rivals is a final, and powerful, stimulus to the creation and persistence
of competitive advantage. This is true of small countries, like Switzerland, where the rivalry among its
pharmaceutical companies, Hoffmann-La Roche, Ciba-Geigy, and Sandoz, contributes to a leading
worldwide position. It is true in the United States in the computer and software industries. Nowhere
is the role of fierce rivalry more apparent than in Japan, where there are 112 companies competing in machine tools, 34 in semiconductors, 25 in audio equipment, 15 in cameras— in fact, there are usually double figures in the industries in which Japan boasts global dominance. (See the table “ Estimated Number of Japanese Rivals in Selected Industries.” ) Among all the points on the diamond, domestic rivalry is