0
 
 
<ul><li>To explain on the basis on “Porter’s Diamond”, why some nations succeed and others fail in International Competiti...
<ul><li>INTRODUCTION – Qno.# 1 </li></ul><ul><li>PORTER’S DIAMOND MODEL </li></ul><ul><li>PORTER’S DIAMOND EXPLANATION </l...
<ul><li>Acc to  Heckscher-Ohlin theory and Comparative Advantage  theory  </li></ul><ul><li>E.g.  A nation uses its resour...
Why do some fail?  The diamond is mutually reinforcing GOVERNMENT CHANCE COMBINED  IMPACT COMBINED  IMPACT
<ul><li>Home country Demand plays an important role </li></ul><ul><li>Enables better understand the needs and desires of t...
<ul><li>E.g. 2 </li></ul><ul><li>Japan’s knowledgeable buyers of cameras made that industry to innovate and grow tremendou...
<ul><li>BASIC FACTORS – Natural resources, climate, location and demographics </li></ul><ul><li>ADVANCE FACTORS – Communic...
<ul><li>E.g. 2 </li></ul><ul><li>Japan a country which lacks arable land and mineral deposits. </li></ul><ul><li>Large poo...
<ul><li>Benefits of investment in advanced factors by Suppliers and related industries can spill over </li></ul><ul><li>Cr...
<ul><li>E.g. 2 </li></ul><ul><li>Switzerlands success in pharmaceutical industry is closely related to its international s...
<ul><li>Long term corporate vision (Strategy) is a determinant of success </li></ul><ul><li>Ability of  the companies to d...
<ul><li>E.g. 2 </li></ul><ul><li>Germany tends to have hierarchical management structures composed of managers with strong...
<ul><li>Chance Events such as major innovations, can reshape industry structure </li></ul><ul><li>Government – Policies – ...
<ul><li>Countries should be exporting products from those industries where all four components of the diamond are favorabl...
<ul><li>Government can influence on any four components of the diamond. </li></ul><ul><li>Porter developed this paper base...
<ul><li>Analysis of Korea’s Competitive Advantage with  Michael E. Porter's Diamond  Framework </li></ul><ul><li>Korea  - ...
<ul><li>High computing and Internet  penetration rate since 1998 .  </li></ul><ul><li>Large user  base of Internet - sophi...
<ul><li>Korean  government’s effort  to develop IT industry -  </li></ul><ul><li>Privatization and Market Deregulation  in...
<ul><li>Korean Government- continuous effort - Korean IT policies  </li></ul><ul><li>- Improvement in IT infrastructure, <...
<ul><li>DaeDeok Valley-  an important IT cluster - Attracts foreign  </li></ul><ul><li>investment </li></ul><ul><li>Severa...
<ul><li>Korea has secured leading position in semiconductor market  </li></ul><ul><li>especially for  DRAM (Dynamic Random...
<ul><li>Korea - the  leading position in all IT related production </li></ul><ul><li>The proactive effort  - R&D and marke...
<ul><li>Korea - favorable business environments  - for venture firm through </li></ul><ul><li>-  Quick registration proces...
 
<ul><li>&quot;Competitive Advantage of Nations&quot; Michael E.  </li></ul><ul><li>Porter,  March~April, 1990 HBR Download...
(1) Charles W. L. Hill  &  Arun K. Jain,  International Business,   Fifth Edition, 2006, TATA McGraw-Hill (2)  John D. Dan...
 
 
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Porters Diamond

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People looking out for International Trade theories, This Porters Diamond will be a useful presentation for you!... If requested on mail i will send you any particular Topic in International Business.
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  1. 3. <ul><li>To explain on the basis on “Porter’s Diamond”, why some nations succeed and others fail in International Competition! </li></ul><ul><li>A case of the Korean Economy based on Porters Diamond… </li></ul>
  2. 4. <ul><li>INTRODUCTION – Qno.# 1 </li></ul><ul><li>PORTER’S DIAMOND MODEL </li></ul><ul><li>PORTER’S DIAMOND EXPLANATION </li></ul><ul><ul><ul><ul><li>DEMAND CONDITIONS </li></ul></ul></ul></ul><ul><ul><ul><ul><li>FACTOR ENDOWMENTS </li></ul></ul></ul></ul><ul><ul><ul><ul><li>SUPPORT INDUSTRIES </li></ul></ul></ul></ul><ul><ul><ul><ul><li>FIRM STRATEGY,RIVELRY </li></ul></ul></ul></ul><ul><ul><ul><ul><li>GOVERNMENT </li></ul></ul></ul></ul><ul><ul><ul><ul><li>CHANCE </li></ul></ul></ul></ul><ul><li>PORTER’s PREDICTIONS </li></ul><ul><li>PORTER’s CRITICISM </li></ul><ul><li>Qno.# 2 CASE – Information and Telecommunication - Korea's Competitive Advantages </li></ul>
  3. 5. <ul><li>Acc to Heckscher-Ohlin theory and Comparative Advantage theory </li></ul><ul><li>E.g. A nation uses its resources very productively… BUT HOW ? </li></ul><ul><li>Above theories give only Partial Explanation to the Question. </li></ul><ul><li>Porter’s Diamond Model is used to solve this puzzle </li></ul><ul><li>Developed in 1990, by Michael Porter of the Harvard Business School. </li></ul><ul><li>Porter theorizes 4 Broad attributes – Factor Endowment, Demand </li></ul><ul><li>conditions, Related/Support industry, Firm Strategy and rivalry. </li></ul><ul><li>Additional Variables that influence are Government and Chance </li></ul>Source: http://www.quickmba.com/strategy/global/diamond/ Source : Charles W. L. Hill & Arun K. Jain, International Business, Fifth Edition, 2006, TATA McGraw-Hill
  4. 6. Why do some fail? The diamond is mutually reinforcing GOVERNMENT CHANCE COMBINED IMPACT COMBINED IMPACT
  5. 7. <ul><li>Home country Demand plays an important role </li></ul><ul><li>Enables better understand the needs and desires of the customers </li></ul><ul><li>It shapes the attributes of domestic ally made products and creates pressure for innovation and quality </li></ul><ul><li>E.g. 1 </li></ul><ul><li>Italian ceramic Industry after the world war II </li></ul><ul><li>There was a postwar housing BOOM !! </li></ul><ul><li>Consumers wanted cool floors because of Hot climatic conditions </li></ul>Source : Charles W. L. Hill & Arun K. Jain, International Business, Fifth Edition, 2006, TATA McGraw-Hill Source: John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
  6. 8. <ul><li>E.g. 2 </li></ul><ul><li>Japan’s knowledgeable buyers of cameras made that industry to innovate and grow tremendously </li></ul><ul><li>E.g. 3 </li></ul><ul><li>Local demand for cellular phones in scandinavia made nokia and ericson to invest in that in other developing nations. </li></ul><ul><li>E.g. 4 </li></ul><ul><li>The French wine industry. The French are sophisticated wine consumers. These consumers force and help French wineries to produce high quality wines. </li></ul>Source: http://www.quickmba.com/strategy/global/diamond/
  7. 9. <ul><li>BASIC FACTORS – Natural resources, climate, location and demographics </li></ul><ul><li>ADVANCE FACTORS – Communication Infrastructure, skilled labour, Research facilities and so on. </li></ul><ul><li>Basic factors can provide only an initial advantage </li></ul><ul><li>They must be supported by advanced factors to maintain success </li></ul><ul><li>E.g. </li></ul><ul><li>Choice of tile to meet customer Demand </li></ul><ul><li>Choice of italy as production location </li></ul><ul><li>Wood is less available and expensive than tiles </li></ul><ul><li>Most of the Advanced factors were available within Italy </li></ul>Source: John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
  8. 10. <ul><li>E.g. 2 </li></ul><ul><li>Japan a country which lacks arable land and mineral deposits. </li></ul><ul><li>Large pool of engineers - very vital for a manufacturing industry. </li></ul><ul><li>Japan has high priced land and so its factory space is at a premium. </li></ul>Source: http://www.quickmba.com/strategy/global/diamond/ Source : Charles W. L. Hill & Arun K. Jain, International Business, Fifth Edition, 2006, TATA McGraw-Hill
  9. 11. <ul><li>Benefits of investment in advanced factors by Suppliers and related industries can spill over </li></ul><ul><li>Creates clusters of supporting industries, thereby achieving a strong competitive position internationally. </li></ul><ul><li>E.g. </li></ul><ul><li>The enamel production unit was available. </li></ul><ul><li>The glazes production was also favourable. </li></ul><ul><li>These two were the main composition of producing tiles. </li></ul><ul><li>This reduces the Transportation cost. </li></ul>Source: http://www.quickmba.com/strategy/global/diamond/ Source : Charles W. L. Hill & Arun K. Jain, International Business, Fifth Edition, 2006, TATA McGraw-Hill
  10. 12. <ul><li>E.g. 2 </li></ul><ul><li>Switzerlands success in pharmaceutical industry is closely related to its international success in technical dye industry. </li></ul><ul><li>E.g. 3 </li></ul><ul><li>Swedish strength in fabricated steel industry is the reason for development in the Sweden's specialty steel industry </li></ul>Source: http://online.sfsu.edu/~yywong/Porter1990HBR.pdf
  11. 13. <ul><li>Long term corporate vision (Strategy) is a determinant of success </li></ul><ul><li>Ability of the companies to develop and sustain a competitive advantage requires the 4 th attribute. </li></ul><ul><li>Presence of domestic rivalry improves a company’s competitiveness </li></ul><ul><li>E.g. </li></ul><ul><li>Low entry barriers to market in the tile industry </li></ul><ul><li>Rivalry became very intense </li></ul><ul><li>Breakthroughs in both product and process technologies </li></ul>Source: John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
  12. 14. <ul><li>E.g. 2 </li></ul><ul><li>Germany tends to have hierarchical management structures composed of managers with strong technical backgrounds and </li></ul><ul><li>Italy has smaller, family-run firms. </li></ul><ul><li>E.g. 3 </li></ul><ul><li>Japan has high priced land and so its factory space is at a premium </li></ul><ul><li>This lead to just-in-time inventory techniques </li></ul><ul><li>(Japanese firms can’t have a lot of stock taking up space, so to cope with the potential of not have goods around when they need it </li></ul><ul><li>They innovated traditional inventory techniques). </li></ul>Source: http://online.sfsu.edu/~yywong/Porter1990HBR.pdf Source: John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
  13. 15. <ul><li>Chance Events such as major innovations, can reshape industry structure </li></ul><ul><li>Government – Policies – Can detract from or improve national advantage </li></ul><ul><li>Regulation can alter home demand conditions </li></ul><ul><li>Government investment in education can change factor endowment. </li></ul><ul><li>E.g. </li></ul><ul><li>1991 – US Govt – Tariff on Japanese imports of LCD screens </li></ul><ul><li>APPLE and IBM – Protested strongly </li></ul><ul><ul><li>Japan – The low cost LCD manufacturer </li></ul></ul><ul><ul><li>Increase the LCD screens as well as Laptops in the global market – Reduce the Market Share. </li></ul></ul>Source: www.nsf.gov/sbe/srs/s4495/conten3d.htm
  14. 16. <ul><li>Countries should be exporting products from those industries where all four components of the diamond are favorable. </li></ul><ul><li>while importing in those areas where the components are not favorable. </li></ul>Source: John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
  15. 17. <ul><li>Government can influence on any four components of the diamond. </li></ul><ul><li>Porter developed this paper based on case studies and these tend to only apply to developed economies. </li></ul>Source: John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
  16. 18. <ul><li>Analysis of Korea’s Competitive Advantage with Michael E. Porter's Diamond Framework </li></ul><ul><li>Korea - New developed countries - Information and Telecommunication . </li></ul>Information and Telecommunication Korea's Competitive Advantages (2002)
  17. 19. <ul><li>High computing and Internet penetration rate since 1998 . </li></ul><ul><li>Large user base of Internet - sophisticated internet usage </li></ul><ul><li>IT effectively used - individual level, Business & government sectors </li></ul><ul><li>The competitive market situation in online shopping malls and rapid, </li></ul><ul><li>expansive development in wireless internet service </li></ul><ul><li>Forcing market players - higher quality service at cheaper to users. </li></ul><ul><li>Hence Strategic use of IT is demanded due to the intensified market </li></ul><ul><li>environment </li></ul>Source: www.weforum.org/site/homepublic.nsf/Content/Global+Information+Technology+Report+2001-2002
  18. 20. <ul><li>Korean government’s effort to develop IT industry - </li></ul><ul><li>Privatization and Market Deregulation in Telecommunication market </li></ul><ul><li>Encouraged fair market competition in Telecommunication market </li></ul><ul><li>Resulting in lower price ,better quality, better service and </li></ul><ul><li>created favorable business environments for business. </li></ul><ul><li>E-commerce exceeded 45 billion USD and </li></ul><ul><li>Projected a growth rate of 9% per year.) </li></ul>Source: www.weforum.org/site/homepublic.nsf/Content/Global+Information+Technology+Report+2001-2002
  19. 21. <ul><li>Korean Government- continuous effort - Korean IT policies </li></ul><ul><li>- Improvement in IT infrastructure, </li></ul><ul><li>- Facilitating the usage of information technology, </li></ul><ul><li>- Favorable environment for development of IT industry </li></ul><ul><li>Over 90% of nation area is wired with broadband internet network </li></ul><ul><li>IT workforce in Korea accounted for 447,000 ( 2.1% of total workforce ). </li></ul><ul><li>Overall level of education in Korea is relatively high </li></ul><ul><li>Korean government support educational institutions related to IT skills </li></ul><ul><li>Supply of quality of IT workforce is expected to increased. </li></ul>Source: http://www.ips.or.kr/ncr/index.asp Source: www.outsourcing-service-india.com
  20. 22. <ul><li>DaeDeok Valley- an important IT cluster - Attracts foreign </li></ul><ul><li>investment </li></ul><ul><li>Several joint research and development projects with well-known </li></ul><ul><li>foreign companies and universities. </li></ul><ul><li>The geographical location of Korea - Close to Central China can be </li></ul><ul><li>regarded another factor for IT advantages. </li></ul><ul><li>Through export of CDMA technology - solid network among the </li></ul><ul><li>south Asian nations is established. </li></ul><ul><li>These factors will enhance the national IT competitiveness for sure. </li></ul>Conti.. Source: http://www.ips.or.kr/ncr/index.asp Source: www.outsourcing-service-india.com
  21. 23. <ul><li>Korea has secured leading position in semiconductor market </li></ul><ul><li>especially for DRAM (Dynamic Random Access Memory) - DDR RAM </li></ul><ul><li>and SD RAM </li></ul><ul><li>Korea is United States most significant trading partner </li></ul><ul><li>Cheap and Quality Hardware production units available. </li></ul><ul><li>IT Enabled Services like BPOs and KPOs – Yantram Solutions </li></ul><ul><li>Korea ranks itself in top manufacture in LCD and Mobile phone, </li></ul><ul><li>example – LG group, Samsung group, Doosan Group, DiaBell . </li></ul><ul><li>Korea - the leading position in IT related production </li></ul>Source: http://www.bsau.org/ Source: http://corsairmemory.com/products/twinx10255.htm
  22. 24. <ul><li>Korea - the leading position in all IT related production </li></ul><ul><li>The proactive effort - R&D and market expansion , as well as </li></ul><ul><li>government support are expected. </li></ul><ul><li>Korean government plans to extend its financial support for R&D </li></ul><ul><li>especially in 10 core technologies </li></ul><ul><li>Initiated several huge project with private sectors </li></ul>Source: http://www.bsau.org/ Source: http://corsairmemory.com/products/twinx10255.htm
  23. 25. <ul><li>Korea - favorable business environments - for venture firm through </li></ul><ul><li>- Quick registration process, </li></ul><ul><li>- Lower entry barriers in IT industry, </li></ul><ul><li>- Lower cost using telecommunication infrastructure, </li></ul><ul><li>- Diverse capital resources </li></ul><ul><li>- Government supports </li></ul><ul><li>These activities result in huge number of small, medium-sized </li></ul><ul><li>venture company in IT industry </li></ul><ul><li>And Hence it leads to severe domestic rivalry because of market </li></ul><ul><li>competition. </li></ul><ul><li>Encourages the continuous development of Innovative technology </li></ul><ul><li>and improvement of business models in business sectors. </li></ul>Source: www.technology.gov/reports/korea/korea.pdf
  24. 27. <ul><li>&quot;Competitive Advantage of Nations&quot; Michael E. </li></ul><ul><li>Porter,  March~April, 1990 HBR Download available at </li></ul><ul><li>http://online.sfsu.edu/~yywong/Porter1990HBR.pdf </li></ul><ul><li>  (2) &quot;Global Information Technology Report 2001~2002&quot; from World </li></ul><ul><li>Economic Forum at  </li></ul><ul><li>    www.weforum.org/site/homepublic.nsf/Content/Global+Informat </li></ul><ul><li>ion+Technology+Report+2001-2002 </li></ul><ul><li>  (3) &quot;Asia's New Tech Competitors&quot; at www.nsf.gov/sbe/srs/s4495/conten3d.htm </li></ul><ul><li>  (4) &quot;National Competitiveness Analysis &quot; from the Institute of </li></ul><ul><li>Industrial Policy Studies - http://www.ips.or.kr/ncr/index.asp </li></ul><ul><li>(5) www.outsourcing-service-india.com </li></ul><ul><li>(6) http://www.bsau.org/ </li></ul><ul><li>(7) http://corsairmemory.com/products/twinx10255.htm </li></ul><ul><li>(8) www.technology.gov/reports/korea/korea.pdf </li></ul><ul><li>(9) http://www.quickmba.com/strategy/global/diamond/ </li></ul>
  25. 28. (1) Charles W. L. Hill & Arun K. Jain, International Business, Fifth Edition, 2006, TATA McGraw-Hill (2) John D. Daniels & LeeH. Radebaugh, International Business, Ninth Edition, 2003, Pearson Education
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