Porter's Diamond model

Topics: Strategic management, International trade, Porter five forces analysis Pages: 2 (388 words) Published: February 24, 2014
Porter's analysis[edit]

The approach looks at clusters, a number of small industries, where the competitiveness of one company is related to the performance of other companies and other factors tied together in the value-added chain, in customer-client relation, or in a local or regional contexts.[2] The Porter analysis was made in two steps.[2] First, clusters of successful industries have been mapped in 10 important trading nations.[2] In the second, the history of competition in particular industries is examined to clarify the dynamic process by which competitive advantage was created.[2] The second step in Porter's analysis deals with the dynamic process by which competitive advantage is created.[2] The basic method in these studies is historical analysis.[2] The phenomena that are analysed are classified into six broad factors incorporated into the Porter diamond, which has become a key tool for the analysis of competitiveness: Factor conditions are human resources, physical resources, knowledge resources, capital resources and infrastructure.[2] Specialized resources are often specific for an industry and important for its competitiveness.[2] Specific resources can be created to compensate for factor disadvantages. Demand conditions in the home market can help companies create a competitive advantage, when sophisticated home market buyers pressure firms to innovate faster and to create more advanced products than those of competitors.[2] Related and supporting industries can produce inputs that are important for innovation and internationalization.[2] These industries provide cost-effective inputs, but they also participate in the upgrading process, thus stimulating other companies in the chain to innovate.[2] Firm strategy, structure and rivalry constitute the fourth determinant of competitiveness.[2] The way in which companies are created, set goals and are managed is important for success.[2] But the presence of intense rivalry in the home base is...
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