Porter’s Competitive Advantage of Nations “Diamond Model”

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Tran
 Le
  International
 business
 (2)
 
 

Assignment
 2:
 Porter’s
 Competitive
 Advantage
 of
 Nations
  “Diamond
 Model”
 
Industry:
 Dress
 Shoes
  Country:
 China
 and
 Italy
  China
 has
 been
 considered
 as
 the
 largest
 shoe
 producing
 country
 in
 the
 world
 over
  the
 recent
 past.
 Meanwhile,
 Italy
 has
 traditional
 footwear
 export
 powerhouse.
 Based
  on
 Porter’s
 diamond
 model,
 there
 are
 4
 reasons
 why
 China
 and
 Italy
 are
 more
  competitive
 than
 others
 on
 a
 global
 scale.
 
  • Factor
 conditions:
 According
 to
 RNCOS,
 the
 dress
 shoes
 industry
 is
 shifting
  towards
 Asian
 countries,
 especially
 China
 due
 to
 huge
 availability
 of
 raw
  material
 and
 low
 cost
 of
 production.
 With
 largest
 population
 in
 the
 world,
  China
 is
 obviously
 advantageous
 for
 the
 labor-­‐intensive
 industries
 like
  footwear
 manufacturing.
 Moreover,
 the
 country
 also
 has
 the
 largest
 trained
  human
 resources
 in
 leather
 across
 the
 world.
 Italian
 shoes
 industry
 has
  exquisite
 craftsmanship
 of
 skilled
 worker,
 raw
 materials,
 and
 accessories
  with
 high
 technical
 stylish
 and
 content.
 
  • Demand
 conditions:
 The
 demand
 for
 China’s
 footwear
 has
 continued
 to
  witness
 fast
 growth
 due
 to
 inherent
 cost
 advantage.
 With
 a
 population
 over
  1.3
 billions,
 China
 has
 a
 huge
 home-­‐market
 demand,
 more
 than
 0.2
 billion
  pairs
 of
 shoes
 per
 year.
 China
 not
 only
 has
 huge
 domestic
 market
 to
 serve,
 

but
 also
 various
 overseas
 countries
 to
 cater
 to.
 This
 will
 potentially
 increase
  the
 global
 competitiveness
 local
 exporting
 companies.
 As
 a
 leader
 of
 shoe
  manufacture
 in
 Europe,
 Italy
 also
 is
 the
 third
 largest
 exporter
 of
 footwear
 in
  the
 world.
 More
 than
 50%
 of
 all
 footwear
 and
 leather
 goods
 al
 over
 the
 world
  are
 made
 in
 Italy.
  • Firm
 strategy,
 structure,
 and
 rivalry:
 Built
 on
 shoe-­‐manufacturing
 countries,
  the
 firms
 have
 been
 facing
 constant
 rivalry
 arrived
 from
 competitors
 in
 the
  same
 industry.
 Therefore,
 innovation
 and
 improvement
 is
 a
 must
 for
 these
  companies
 in
 order
 to
 make
 profit.
 In
 china,
 just
 only
 a
 city
 in
 southern
  province
 that
 is
 home
 to
 about
 1000
 footwear
 companies.
 Italy
 has
 been
  famous
 for
 manufacturing
 shoes;
 shoes
 companies
 have
 to
 compete
 for
  stylish
 look,
 product
 quality
 to
 survive
 in
 this
 industry.
 This
 will
 lead
 to
  advanced
 technology,
 resources
 and
 factors
 of
 production.
 
  • Related
 and
 supporting
 industries:
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