Porter's Diamond

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1. Explain Porter’s Diamond

Porter introduced group of interconnected firms, suppliers, related industries, institutions.
Competitive advantage of nations have been the outcome of four interlinked advanced factors and activities: these interrelated links Factors for Competitive Advantage for the countries or regions in Porter’s Diamond are as follows:

1 Factor conditions - such as skilled labor, land, natural resources, capital and infrastructure. Porter argues that the "key" factors of production (or specialized factors) are created, not inherited. Specialized factors of production are skilled labor, capital and infrastructure. Non-key" factors or general use factors, such as unskilled labor and raw materials, can be obtained by any company and, hence, do not generate sustained competitive advantage. However, specialized factors involve heavy, sustained investment. They are more difficult to duplicate. This leads to a competitive advantage, because if other firms cannot easily duplicate these factors, they are valuable 2 Demand conditions - Porter argues that a sophisticated domestic market is an important element to producing competitiveness. Firms that face a sophisticated domestic market are likely to sell superior products because the market demands high quality and a close proximity to such consumers enables the firm to better understand the needs and desires of the customers . 3 Related and supporting industries -Porter also argues that a set of strong related and supporting industries is important to the competitiveness of firms. This includes suppliers and related industries. This usually occurs at a regional level as opposed to a national level. 4 Firm strategy, structure and rivalry - conditions for organization of companies, and the nature of domestic rivalry. The structure and management systems of firms in different countries can potentially affect competitiveness. Likewise, if rivalry in the domestic market is very fierce,...
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