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International Business - the Porters diamond - Assignment Example

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This paper is to advise a US firm to enter EU. In this course of analysis we must take into account the strengths and weaknesses of Porter's Diamond. The environments of Industry in US and EU are taken into consideration and the firm has to take decision about it…
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International Business - the Porters diamond

Download file to see previous pages... The strategic conditions, demand conditions, strategic structure and competition, supporting industries of both countries needed to be weighed to enter into a new market. Some propositions in Diamond are double edged. For instance when competition is taken into consideration, the firm thrives and will be competent when it wins over the competitors in the rivalry. But the looser is also was in the same environment and the rivalry did not help the company as it does to the winning company. This tells us that the utilisation and reinforcing of the forces and circumstances mentioned in the diamond is the crux of the situation concerned. So the firm has to decide what type of rivalry it can face and win over it. When coming to supporting industries, the presence of them really make company competitive and reduction of expenditure on transportation can be made possible. But this is the common advantage for all identical industries in that area or zone. Another point of concern is that Porter's views are for developed economies and firms only. (Because he did not mention about the areas having no sophisticated customers and about MNC s dealing with different atmospheres or environments of Industry.) When the firm is facing a different type of market (also containing sophisticated customers) it should have a strategy to cope up with the different type of marketing environment.
Strengths and Weaknesses of Porter's Diamond

The Porter's Diamond consists of conditions which demand competence, conditions which drive the management to move forward, supporting and related industries and structure, planning and competition. In case of factor conditions consists of labour, land, natural resources, capital and infrastructure. Here the argument of Porter is that the conditions must be created according to the need of the company. The labour must be transformed into skilled labour. The capital must be substantial and in the case of natural resources the firm must have access to the fore most quality resources. If the firm is not successful reforming labour into skilled one, did not utilise the capital properly or did not garner it from the public in a time bound manner, then the strength of the factor conditions turns into weakness. The company's strength lies in making the general factors specialised. This involves investing more money and managing it well. So here the strength of the factor conditions lies in managing capital, labour and natural resources in a productive way.
When there is any labour shortage, the company should manage to work with less labour and more technology. Here technological advancement which needs more capital comes to the fore. The managing of technology needs some good technicians and managers, though less in number to make it strength. If not it turns to be a weakness. When considering about lack of land and resources, the industry of Japan is making utmost use of technology to overcome the crisis of lack of natural resources. Here the weakness is transformed into strength.
On the other hand in the present the US based firm has existence in the area of having more resources and is moving to the area of substantial resources. So it should have a strategy to make use of them to enhance productivity. When it decides not to move out of US it can think of exporting its goods to that country. But ...Download file to see next pagesRead More
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