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Critical Analysis of Porters Diamond Model - Literature review Example

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The paper "Critical Analysis of Porters Diamond Model" highlights that Porter’s Diamond model does not consider government roles as well as cultural factors. This implies that the framework should be used with other models during the internationalizing process…
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Critical Analysis of Porters Diamond Model
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Download file to see previous pages As a model that explains why particular industries are competitive in particular locations, Diamond model looks at clusters, as well as a number of small businesses and other factors where the competitiveness of one firm is related to the performance of other entities locally or regionally. As a major tool that provides analysis for competitiveness, Diamond model incorporates four broad factors. This paper aims at determining the advantages and disadvantages of the Diamond Model as a tool for explaining home and host location strategies of international business. The paper will focus on Marks & Spencer (M&S) and Carrefour, UK and France based organisations.
Porter’s Diamond model indicates that the competitive nature of nations is determined by the ability of the industry to upgrade its position and innovation. It indicates that the nation’s ability is also an influencing factor in providing a home base for firms to improve their services in terms of features, technology, and quality (Cavusgil et al, 2014). One of the advantages of the model is that it identifies 4 interrelated factors that create an important national environment where firms are initiated, develop and acquire sustainable competitive advantages. Through the use of a Diamond framework, firms are able to undertake necessary research that is useful for the internationalisation process.
The first factor includes factors of productions that entail land, capital, raw materials and infrastructure among others. In addition, it covers other infrastructures that are not inherited but are developed by a nation, for instance, skilled labor. Shiue et al (2006) argue that an organisation can achieve competitive advantage due to its ability to create the factors. For example, Carrefour Company, which was initially owned by the family decided to internalise in order to become competitive. This meant that Carrefour needed a high amount of capital an aspect that made the company go public in 1970. In this way, the company generated adequate finance to support its activities. ...Download file to see next pagesRead More
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