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The Diamond Model which has been penned down by Michael Porter - Essay Example

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The Diamond Model which has been penned down by Michael Porter is a very effective model when it comes to studying the topic of competitive advantage of nations. This world is fast becoming a global village, and thus the interdependency between nations is increasing day by day…
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The Diamond Model which has been penned down by Michael Porter
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Download file to see previous pages This advantage is gained by the nation by increasing demand for that commodity by other nations. Either the nation with the competitive advantage has gained this edge because of the cheap labor available in their region, or it is due to the amazingly high quality of resources that are available within their region. The reason can be any - but once the competitive advantage has been gained, it goes a long way in helping the nation to rule the international market for that commodity and it even gives the nation the power to dictate prices at times, especially if there is scarcity of that commodity or the raw materials needed to make that commodity in other parts of the world, or if the commodity is a staple good or a fast moving consumer good.
Thus, competition, in today's age, is not limited to domestic competitors. Rather, the competitors are now present worldwide for a single industry. Thus, Porter's model becomes the most comprehensive model available for this purpose only - to help nations make policies which will help them out beat their international competitors.
1. Firm strategy, structure and rivalry: Strategy is the way through which the nation aims to achieve its goals. If the nation aims to achieve strategic competitive advantage in four industries: wool, cotton, wheat and rice, then it need to work accordingly. Moreover, it also has to structure the domestic industry in a manner which instills competitiveness within the domestic players only, so that the overall industry can reach a higher level. Rivalry is the competition that is ignited within the local competitors, so that they work independently and also in groups to achieve the nation's policy of achieving global competitiveness in the international arena.
2. Demand conditions: A nation's policy on competitiveness around the globe will depend on the demand that exists for its products. The nation's industry can never stand out in a global sphere if the local demand does not match the international demand. If, for instance, the cotton produced in the local areas is of low quality and the local consumers are satisfied with that, then there is no scope for this industry to flourish internationally. This is because if the local demand is not demanding enough out of the industries, then they would never improve their level of quality, service or the elements that make a product from good to better to best. Thus, the more demanding the customers in an economy, the greater the pressure facing firms to constantly improve their competitiveness via different radical innovative product offerings etc.
3. Related and supporting industries: If an industry has to gain competitive advantage internationally, then it should also engage the support of the related and supporting industries. For instance, while making national policy, the related and supporting industries for the government would be the media industry, because of the amount of ...Download file to see next pagesRead More
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