This is the second of a two-case series (300-094-1 and 300-095-1). This case study focuses on the international competitiveness of the Belgian tufted carpet industry. The case study is an illustration of the theory developed by Porter in his book 'The Competitive Advantage of Nations'. Belgian manufacturers became the most competitive carpet producers in the EU during the 1980s due to their production flexibility, which was supported by flat organisational structures. Due to the relatively small domestic market, companies were forced early on to export in different neighbouring countries. The small domestic market was an initial selective disadvantage that has been changed into a competitive advantage, as Belgian manufacturers were very flexible in serving export markets with different tastes. The large throughput allowed them, in turn, to invest heavily in state-of-the-art technology bringing down unit production costs. At the end of the 80s, the industry observers fear stagnation and price wars as customers discover substituting floor coverings. New export markets should offer relief. The (B) case updates the Belgian carpet industry for 1999, reviewing the changes in the competitive environment in the last seven years. A technical note 'Competitive Advantage of Nations: The Belgian Case' (300-094-6) is available to accompany the case series.