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Porters diamond model was developed to explain the competitive advantage of globally leading industries in different countries. To what extent do you believe that the model is effective in achieving this - Essay Example

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The diamond model was proposed by Michael Porter in his book The Competitive Advantages of Nations to describe the competitive advantage of globally leading industries in different countries. This economic model is really effective to explain why particular industries are placed…
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Porters diamond model was developed to explain the competitive advantage of globally leading industries in different countries. To what extent do you believe that the model is effective in achieving this
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Extract of sample "Porters diamond model was developed to explain the competitive advantage of globally leading industries in different countries. To what extent do you believe that the model is effective in achieving this"

Download file to see previous pages Intensity of global competition is very high today mainly due to the fast growth of emerging economies like China, India, and Brazil. Alliances of emerging economies like BRICS play a significant role in influencing the competitiveness of national economies. This paper will analyse to what extent the Porter’s diamond model is effective in achieving its stated objectives giving particular focus to concepts of industry clusters, diamond model, and emerging nations.
According to traditional economic theories, the major factors affecting the competitive advantage of regions or nations were land, location, natural resources, labour, and the population size. As none of these factors can be influenced by external forces, people had believed that national prosperity was passive or inherited and hence nothing could be done to improve the situation. However, Porter argued that sustained industrial growth is not depended on these basic inherited factors. In order to replace this traditional misconception, Porter introduced a concept called industry cluster, which represents a group of interconnected firms, suppliers, and related industries in a particular location. He stated that competitive advantage of nations is determined by four interlinked economic factors existing in such industry clusters. The theorist also suggested that these economic factors can be significantly influenced by strong technological and knowledge base, government support, skilled workforce, and culture. According to a report by the Economist Intelligence Unit (2011), “there are few economic development policies as popular as clusters”. Recognising the importance of clusters, today countries, regions, and even cities strive to develop a network of complementary and competitive firms. The recent global financial crisis substantially increased the significance of clusters. The report also says that locating firms in the same place does not constitute clusters unless there ...Download file to see next pagesRead More
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