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Porter's Diamond Model
ASSESSING THE POWER OF PORTER'S DIAMOND MODEL IN THE AUTOMOBILE INDUSTRY IN MEXICO AFTER TEN YEARS OF NAFTA

SALVADOR BARRAGAN
Master in Business Administration, IPADE Business School, 1996 BSc in Industrial Engineering, Universidad Panamericana, 1994

A Research Project Submitted to the School of Graduate Studies of the University of Lethbridge in Partial Fulfilment of the Requirements for the Degree

MASTER OF SCIENCE IN MANAGEMENT

Faculty of Management University of Lethbridge LETHBRIDGE, ALBERTA, CANADA

© Salvador Barragán, 2005

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Abstract

It has been ten years since the signature of the NAFTA agreement among Canada, U.S., and Mexico. For Mexico, this was a decisive step away from a protectionism model toward a free trade market. One of the main purposes for Mexico in joining NAFTA was to increase the competitiveness of its manufacturing sector, especially the automotive industry.

In this paper, Porter’s Diamond Model of national competitiveness and some critiques that attempt to extend the usefulness of the model are analyzed. The Doubled Diamond and the role of MNEs in a host country are both examined through a case study research of the foreign-owned automobile industry in Mexico. The findings of this study show evidence of a broader role of MNEs than in the original framework, as well as the usefulness of the doubled diamond extension to explain alternative sources of competitiveness in early stages of development.

iii

Acknowledgments The culmination of this thesis can be seen as a successful project. An analogy with Porter’s Model, one of the premises to have a successful industry is to have supporting and related industries. In the case of this thesis is not the exception. There has been supporting and related people that offered me extraordinary support.

My wife Adriana has provided me a great amount of support in different ways. She has been patient in the whole process as a source of inspiration, motivation, and


References: 82 Comunicación Corporativa VW (2001) 84 Oz, Ozlem (1999) 86 United States-Mexico Chamber of Commerce (1998, May) Type Author/year C C C C C C Comunicación Corporativa VW (February, 2001) Comunicación Corporativa VW (March, 2004) ITESM Noticias (2005) Volkswagen de México (2005) Volkswagen de México, S.A G G G G G Bancomext (2004) Centro de Capital Intelectual y Competitividad(CECIC) (2002)
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