Evaluate Porter’s concept of the ‘diamond’ as a tool for analyzing the competitive advantage of nations, assessing its theoretical coherence and empirical support. Table of Contents Evaluate Porter’s concept of the ‘diamond’ as a tool for analyzing the competitive advantage of nations, assessing its theoretical coherence and empirical support…
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Nations have competed for resources or to establish their supremacy over others. Historical evidence for this can be traced to the age old rivalry of England and Scotland to the present day rivalry between USA and the Soviet Union in the cold war. However in the present context nations are fighting over the aspect of economic power which is the backbone for success to a nation. An economic might implies a strong nation with enough resources to sustain its population or to maintain a strong military power. The case of United States of America is a classic example in this regard. The nation has the unique status of being the sole economic and military superpower of the world. There have been numerous theories to suggest as to what may be the possible reasons for such supremacy. It has been widely stated that the prosperity of a nation is built and generated over a period of time rather than being acquired. Michel Porter (1990) also stated that the prosperity and success of a nation is not created by virtue of its physical resources which are a far critique from the laws of economics. Alternatively it has been argued that the competitive advantage and prosperity of a nation in the modern world depends on the ability of the nation to constantly develop and create new ideas which are distinct from the others (Porter, 1990, p.73). The case of Japan is a classic example in this regard, as it has emerged as one of the world’s mort prosperous and successful nations without having access to key resources. A deeper analysis into the success story of Japan reveals the innovativeness of its business organizations to deliver more value to the products. This value results in creating economic value and goodwill. Numerous examples of innovation can be traced to the nation including success story of organizations like Honda, Toyota and Sony which have created a competitive advantage and have carved a niche for themselves as well as the nation of their origin. Innovativeness of the nation is also reflected from the fact that successful management techniques like Kaizen which have become the standards for present day business organizations (Ankli, n.d., p.233). The present study would analyse the competitive advantage of China in its pursuit of being and economic and military superpower. The choice of the nation assumes significance considering the fact that it is the fastest growing economy of the world. The growth of this nation has largely been attributed to the skill set of its large labour force which offers a supply of cheap labour. The nation has emerged as a hub for manufacturing with almost every major organization having its manufacturing facility in the nation. Another important aspect apart from the labour force is that of government policies. The liberalisation policy of the nation along with the unique application of the aspect of Special Economic Zones has transformed the nation into the fastest growing economy of the world having an annual GDP growth of approximately 8.7 percent as of 2009 which is being valued at approximately 4.814 trillion US dollars as of 2009 (US Department of State, 2010). The following sections would try to analyse the competitiveness of the nation on the basis of the Diamond model proposed by Porter as well as a comparative analysis with other
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Koen (2005) argues that Porter’s model brought in a generic value chain mould that comprises of a series of activities found to be similar to a wide variety of firms. Porter identified main and support activities. The core value chain activities are inbound movements, sales and marketing and services.
The Porter’s diamond provides a framework for the understanding of a nation’s position in the global competition. In his theory, he introduces a set of interconnected suppliers and industries in the concept of clusters. He explains the various factors for competitive advantage in his diamond framework.
A number of classical theories in international trade suggest that the element of comparative advantage dwells in the feature endowments that a nation may be lucky enough to come by. These factor endowments may include features such as land, labor, natural resources, as well as, the magnitude of the local populace.
The countries he mentioned as the global leaders in competitive advantage have been proven to be leading in exports across the entire global. These are the United States, Japan and Germany. These claims can be greatly supported by international business analysts.
For example, America is the strongest country on earth at present and they are using their military and economical power for increasing their competitive power on global issues. At the time of writing this paper, America and its allies succeeded in getting the permission from United Nations for establishing a no fly zone over Libya.
According to the research findings, it can, therefore, be said that Porter’s Diamond framework is an important tool for gaining a better understanding of national competitiveness in major economies. However, in today’s globalized world, its ability to assess business characteristics or predict business performance is limited at best.
In this paper, we find out that because of its present competitive advantage, of lower production cost, good network infrastructures, a good international port with access to different parts of the world, ample investment, and well thought out operations and information technology have given the country a greater leap forward.
tensity of competition but has had to dictate and shape organisations in terms of what consumers wants, how and when they want it and what they are prepared to pay for it (Hagan 1996:1).
Kanter (1995:71) on his work of “Mastering Change” argues that success in the present
nd viability owing to geographical and geological complications the country faces which continue to negatively affect the sector (Martha and Ulfa, 2004).
Factor conditions: The Netherlands has an extremely powerful and knowledge base for renewable energy technologies (Lafferty,
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