Porter Diamond
CGE25101 Globalization and Business
Tutorial 12 Discussion Question: The Porter’s Diamond
Michael Porter put forth a theory in 1990 to explain why some countries are leaders in the production of certain products. His work incorporates certain elements of previous international trade theories but also makes some important new discoveries. He identifies four elements present to varying degrees in every nation that form the basis of national competitiveness.
Analyze the current situation of Japan using the four elements of Porter’s national competitive advantage theory.
Suggested Answers:
1. Factor conditions
Japan possesses relatively weak basic factors but good advanced factors, e.g. availability of high quality scientist and engineers; and advanced rail road and telecommunication infrastructure. 2. Demand conditions
High degree of buyer sophistication
Strong preference for new product and high demand for quality products and services
3. Related and supporting industries
Clusters in manufacturing sector are sustained by abundant and high quality supporting industries. For example, the automobile parts cluster in Ota City and the industrial supply base for construction machinery in Komatsu City.
4. Firm strategy and rivalry
Good cooperation in labor-employer relations. Japan has traditionally lifetime employment, which helps to build good relationship between management and employees
High intensity of local competition. There are large number of companies in both manufacturing and service sectors, e.g. car manufacturers and IT software companies
CGE25101 Globalization and Business
Tutorial 12 Discussion Question: The Porter’s Diamond
Michael Porter put forth a theory in 1990 to explain why some countries are leaders in the production of certain products. His work incorporates certain elements of previous international trade theories but also makes some important new discoveries. He identifies four elements
Tutorial 12 Discussion Question: The Porter’s Diamond
Michael Porter put forth a theory in 1990 to explain why some countries are leaders in the production of certain products. His work incorporates certain elements of previous international trade theories but also makes some important new discoveries. He identifies four elements present to varying degrees in every nation that form the basis of national competitiveness.
Analyze the current situation of Japan using the four elements of Porter’s national competitive advantage theory.
Suggested Answers:
1. Factor conditions
Japan possesses relatively weak basic factors but good advanced factors, e.g. availability of high quality scientist and engineers; and advanced rail road and telecommunication infrastructure. 2. Demand conditions
High degree of buyer sophistication
Strong preference for new product and high demand for quality products and services
3. Related and supporting industries
Clusters in manufacturing sector are sustained by abundant and high quality supporting industries. For example, the automobile parts cluster in Ota City and the industrial supply base for construction machinery in Komatsu City.
4. Firm strategy and rivalry
Good cooperation in labor-employer relations. Japan has traditionally lifetime employment, which helps to build good relationship between management and employees
High intensity of local competition. There are large number of companies in both manufacturing and service sectors, e.g. car manufacturers and IT software companies
CGE25101 Globalization and Business
Tutorial 12 Discussion Question: The Porter’s Diamond
Michael Porter put forth a theory in 1990 to explain why some countries are leaders in the production of certain products. His work incorporates certain elements of previous international trade theories but also makes some important new discoveries. He identifies four elements