This document discusses Porter's Diamond Theory of national competitive advantage. It explains that Porter's theory analyzes how factors like factor conditions, demand conditions, related and supporting industries, and firm strategy/rivalry interact to create competitive advantage for nations in specific industries. It provides detailed explanations of each of Porter's four determinants of competitive advantage and how they influence industry success. Overall, the document analyzes Porter's Diamond Theory and its key factors for understanding what gives nations competitive advantages in certain industries on the global stage.
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.
All the Best!
International economics deals with the economic relations among nations. The resulting interdependence is very important to the economic well-being of most nations of the world and is on the increase. The economic relations among nations differ from the economic relations among the various part of a nation. This gives rise to different problems, requiring somewhat different tools of analysis, and justifies International Economics as a distinct and separate branch of “Applied” Economics.
International economics deals with
1) The Pure Theory of Trade. This examines the basis for trade and the gains from trade.
2) The Theory of Commercial Policy. This studies the reasons for and the results of obstructions to the free flow of trade.
3) The Balance of Payments. This examines a nation’s total payments to and total receipts from the rest of the world. These involve the exchange of one currency with others.
4) Adjustment in the Balance of Payments. This deals with the mechanism of adjustment to balance of payments disequilibria under different international monetary systems.
The world may continue to shrink in light of advanced technology, higher demands from markets and faster turnaround times, globalization has become a staple for world commerce and international business.
international trade theory
,
why is free trade beneficial
,
what role does government have in trade
,
what is mercantilism
,
what is the heckscher-ohlin theory
,
how does the theory of absolute advantage work
,
is a current account deficit bad
,
what is smith’s theory of absolute advantage
,
what is the balance of payments
,
what is new trade theory
,
what is ricardo’s theory of comparative advantage
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.
All the Best!
International economics deals with the economic relations among nations. The resulting interdependence is very important to the economic well-being of most nations of the world and is on the increase. The economic relations among nations differ from the economic relations among the various part of a nation. This gives rise to different problems, requiring somewhat different tools of analysis, and justifies International Economics as a distinct and separate branch of “Applied” Economics.
International economics deals with
1) The Pure Theory of Trade. This examines the basis for trade and the gains from trade.
2) The Theory of Commercial Policy. This studies the reasons for and the results of obstructions to the free flow of trade.
3) The Balance of Payments. This examines a nation’s total payments to and total receipts from the rest of the world. These involve the exchange of one currency with others.
4) Adjustment in the Balance of Payments. This deals with the mechanism of adjustment to balance of payments disequilibria under different international monetary systems.
The world may continue to shrink in light of advanced technology, higher demands from markets and faster turnaround times, globalization has become a staple for world commerce and international business.
international trade theory
,
why is free trade beneficial
,
what role does government have in trade
,
what is mercantilism
,
what is the heckscher-ohlin theory
,
how does the theory of absolute advantage work
,
is a current account deficit bad
,
what is smith’s theory of absolute advantage
,
what is the balance of payments
,
what is new trade theory
,
what is ricardo’s theory of comparative advantage
International business can be defined as business carried out of the geographical boundaries of a country.
International business environment can be defined as environment of global market where the whole world trade.
https://efinancemanagement.com/international-financial-management/international-business-environment
Companies with long term and substantial interest in the foreign market normally establish wholly owned manufacturing facilities there. A number of factors like trade barriers, difference in the production and other costs encourage the establishment of production facilities in the foreign markets.
The given PPT consist of the details about Globalisation,international business and international marketing along with the difference between TNC's & MNC's
Factor Endowments12,13LO7.2The sources of national advantage; .docxssuser454af01
Factor Endowments12,13
LO7.2
The sources of national advantage; that is, why an industry in a given country is more (or less) successful than the same industry in another country.
Classical economics suggests that factors of production such as land, labor, and capital are the building blocks that create usable consumer goods and services. 14 However, companies in advanced nations seeking competitive advantage over firms in other nations create many of the factors of production. For example, a country or industry dependent on scientific innovation must have a skilled human resource pool to draw upon. This resource pool is not inherited; it is created through investment in industry-specific knowledge and talent. The supporting infrastructure of a country—that is, its transportation and communication systems as well as its banking system—are also critical.
Factors of production must be developed that are industry and firm specific. In addition, the pool of resources is less important than the speed and efficiency with which these resources are deployed. Thus, firm-specific knowledge and skills created within a country that are rare, valuable, difficult to imitate, and rapidly and efficiently deployed are the factors of production that ultimately lead to a nation’s competitive advantage.
For example, the island nation of Japan has little land mass, making the warehouse space needed to store inventory prohibitively expensive. But by pioneering just-in-time inventory management, Japanese companies managed to create a resource from which they gained advantage over companies in other nations that spent large sums to warehouse inventory.
Demand Conditions
Demand conditions refer to the demands that consumers place on an industry for goods and services. Consumers who demand highly specific, sophisticated products and services force firms to create innovative, advanced products and services to meet the demand. This consumer pressure presents challenges to a country’s industries. But in response to these challenges, improvements to existing goods and services often result, creating conditions necessary for competitive advantage over firms in other countries.
Countries with demanding consumers drive firms in that country to meet high standards, upgrade existing products and services, and create innovative products and services. The conditions of consumer demand influence how firms view a market. This, in turn, helps a nation’s industries to better anticipate future global demand conditions and proactively respond to product and service requirements.
Denmark, for instance, is known for its environmental awareness. Demand from consumers for environmentally safe products has spurred Danish manufacturers to become leaders in water pollution control equipment—products it successfully exported.
Related and Supporting Industries
related and supporting industries (national advantage)
the presence, absence, and quality in the nation of supplier industries and othe ...
International business can be defined as business carried out of the geographical boundaries of a country.
International business environment can be defined as environment of global market where the whole world trade.
https://efinancemanagement.com/international-financial-management/international-business-environment
Companies with long term and substantial interest in the foreign market normally establish wholly owned manufacturing facilities there. A number of factors like trade barriers, difference in the production and other costs encourage the establishment of production facilities in the foreign markets.
The given PPT consist of the details about Globalisation,international business and international marketing along with the difference between TNC's & MNC's
Factor Endowments12,13LO7.2The sources of national advantage; .docxssuser454af01
Factor Endowments12,13
LO7.2
The sources of national advantage; that is, why an industry in a given country is more (or less) successful than the same industry in another country.
Classical economics suggests that factors of production such as land, labor, and capital are the building blocks that create usable consumer goods and services. 14 However, companies in advanced nations seeking competitive advantage over firms in other nations create many of the factors of production. For example, a country or industry dependent on scientific innovation must have a skilled human resource pool to draw upon. This resource pool is not inherited; it is created through investment in industry-specific knowledge and talent. The supporting infrastructure of a country—that is, its transportation and communication systems as well as its banking system—are also critical.
Factors of production must be developed that are industry and firm specific. In addition, the pool of resources is less important than the speed and efficiency with which these resources are deployed. Thus, firm-specific knowledge and skills created within a country that are rare, valuable, difficult to imitate, and rapidly and efficiently deployed are the factors of production that ultimately lead to a nation’s competitive advantage.
For example, the island nation of Japan has little land mass, making the warehouse space needed to store inventory prohibitively expensive. But by pioneering just-in-time inventory management, Japanese companies managed to create a resource from which they gained advantage over companies in other nations that spent large sums to warehouse inventory.
Demand Conditions
Demand conditions refer to the demands that consumers place on an industry for goods and services. Consumers who demand highly specific, sophisticated products and services force firms to create innovative, advanced products and services to meet the demand. This consumer pressure presents challenges to a country’s industries. But in response to these challenges, improvements to existing goods and services often result, creating conditions necessary for competitive advantage over firms in other countries.
Countries with demanding consumers drive firms in that country to meet high standards, upgrade existing products and services, and create innovative products and services. The conditions of consumer demand influence how firms view a market. This, in turn, helps a nation’s industries to better anticipate future global demand conditions and proactively respond to product and service requirements.
Denmark, for instance, is known for its environmental awareness. Demand from consumers for environmentally safe products has spurred Danish manufacturers to become leaders in water pollution control equipment—products it successfully exported.
Related and Supporting Industries
related and supporting industries (national advantage)
the presence, absence, and quality in the nation of supplier industries and othe ...
INDUSTRY ANALYSIS One of the major competences that str.docxcarliotwaycave
INDUSTRY ANALYSIS
One of the major competences that strategic managers need is the ability to define their business, conduct an effective industry analysis,
and identify the "key success factors" for firms competing in their industry. This brief note discusses the steps most often found in a
solid analysis of an industry.
A.DEFINE THE INDUSTRY.
The boundaries for an industry analysis are determined by the markets and products that best describe the domain of the industry. Once
you fully understand the business segment that is to be analyzed, you are in a position to identify the capabilities required to participate
successfully in that industry, and the competitors that are likewise able to effectively target the same business segments. These
elements set the parameters for understanding and analyzing the industry. As industries converge and shift, business definitions become
more difficult. In virtually all industries, consumers are becoming more demanding for customized products and services. These
demands encourage the development of innovations, products, and competitors.
B. DESCRIBE THE INDUSTRY STRUCTURE.
For each product-market segment, an industry analysis will describe the "five-forces" of competition. The five forces discussed briefly
below predict the long run profitability of an industry and are an important first step in analyzing the industry once it has been identified.
1. Bargaining Power of Buyers: This primary force comes from the customer segments that make up the markets in which firms
compete. The size and importance of customers influences their power to negotiate prices and terms that reduce the overall
profitability of the industry. The sizes and types of buyers present in an industry determine their potential influence on product
development and influence the level of competition to be found in the industry.
2. Intensity of Rivalry: A second force comes from the competitors and the ways they compete. Each competitor offers a set of
products and services that attempts to provide higher value to the product-market segments they address. Strategies can be
designed to provide combinations of higher performance, more fashion and features, higher quality, or lower price. Increased
rivalry always leads to price or service competition that reduces the profitability of the industry.
3. Bargaining Power of Suppliers: A third influence on the profitability of an industry comes from its suppliers. In some industries,
suppliers might control critical inputs that can affect all firms’ ability to compete. Analogous to Bargaining power of Buyers,
whenever suppliers are large or few, their leverage tends to be high. Limited access to critical factors of production, equipment,
materials, or components can increase prices and accordingly limit profit potential.
4. Threat of New Entrants; a fourth force represents the ease with which a new competitor can compete for exi ...
Jonathan ParsonsProf. Andrew Raleigh09102016External Env.docxchristiandean12115
Jonathan Parsons
Prof. Andrew Raleigh
09/10/2016
External Environment Analysis of Riverbed Technology Corporation
1
Introduction
External analysis entails evaluating the external environment under which an organization operates.
An external analysis enables the organizational management to determine its competiveness strength and weakness in the external environment.
Similarly, investors are able to determine if the organization is able to sustain the evolving trends in the market.
Thus, an external analysis of the Riverbed Technology Corporation has been demonstrated in the presentation.
The extent of the external environment in enabling the management of an organization to determine its ability to prevail in the environment it operates is due to its ability to reflect on the chances and threats it faces in the external environment (Hill & Jones, 2014). Consequently, the management is able to determine the strategies to undertake to capitalize on the opportunities and minimize the threats. Similarly, the investors gauge the ability of the organization to penetrate the market competition in enhancing their wealth through the external analysis (Hill & Jones, 2014). Consequently, an external analysis is a critical management tool.
2
Company Overview
Riverbed Technology Incorporation is an IT company that is located in America.
The company is involved in the development of WANs improvement products.
This means the firm produces products that are used in enhancing the performance of WANs called WAN optimization.
Thus, the firm operates under the information technology services industry.
Founded in 2002 May 23.
The current CEO is Jelly M. Kennelly since 2002
Its headquarter is located at San Francisco , California, United States.
Even though Riverbed Technology Corporation was initially publicly traded under sticker RVBD at NASDAQ, it was acquired in 2014 as a private equity. The firm is currently a private entity of the Thomas Bravo firm and the Ontario Teacher’s Pension Plan.
3
Industry Analysis
The information technology services industry is currently facing intense demand due to rapid technology advancement currently.
Similarly the need for efficient data processing is pushing the demand of the industry’s services significantly.
However, the profitability and competitiveness of industry players depend on innovativeness and technical efficiency.
The innovativeness prowess of a firm in the industry determines its competitiveness due to the need by different clients to customize their service application depending on their need.
Similarly, technical ability is essential since it determines the ability to meet the complex needs of the technology the client is demanding.
Thus a firm intending to enter the industry should focus on the two capability dimensions to penetrate the market.
The industry analysis involves evaluating the key factors determining the ability of the players to attract the customers. Accordingly, the.
GraphRAG is All You need? LLM & Knowledge GraphGuy Korland
Guy Korland, CEO and Co-founder of FalkorDB, will review two articles on the integration of language models with knowledge graphs.
1. Unifying Large Language Models and Knowledge Graphs: A Roadmap.
https://arxiv.org/abs/2306.08302
2. Microsoft Research's GraphRAG paper and a review paper on various uses of knowledge graphs:
https://www.microsoft.com/en-us/research/blog/graphrag-unlocking-llm-discovery-on-narrative-private-data/
UiPath Test Automation using UiPath Test Suite series, part 4DianaGray10
Welcome to UiPath Test Automation using UiPath Test Suite series part 4. In this session, we will cover Test Manager overview along with SAP heatmap.
The UiPath Test Manager overview with SAP heatmap webinar offers a concise yet comprehensive exploration of the role of a Test Manager within SAP environments, coupled with the utilization of heatmaps for effective testing strategies.
Participants will gain insights into the responsibilities, challenges, and best practices associated with test management in SAP projects. Additionally, the webinar delves into the significance of heatmaps as a visual aid for identifying testing priorities, areas of risk, and resource allocation within SAP landscapes. Through this session, attendees can expect to enhance their understanding of test management principles while learning practical approaches to optimize testing processes in SAP environments using heatmap visualization techniques
What will you get from this session?
1. Insights into SAP testing best practices
2. Heatmap utilization for testing
3. Optimization of testing processes
4. Demo
Topics covered:
Execution from the test manager
Orchestrator execution result
Defect reporting
SAP heatmap example with demo
Speaker:
Deepak Rai, Automation Practice Lead, Boundaryless Group and UiPath MVP
PHP Frameworks: I want to break free (IPC Berlin 2024)Ralf Eggert
In this presentation, we examine the challenges and limitations of relying too heavily on PHP frameworks in web development. We discuss the history of PHP and its frameworks to understand how this dependence has evolved. The focus will be on providing concrete tips and strategies to reduce reliance on these frameworks, based on real-world examples and practical considerations. The goal is to equip developers with the skills and knowledge to create more flexible and future-proof web applications. We'll explore the importance of maintaining autonomy in a rapidly changing tech landscape and how to make informed decisions in PHP development.
This talk is aimed at encouraging a more independent approach to using PHP frameworks, moving towards a more flexible and future-proof approach to PHP development.
Smart TV Buyer Insights Survey 2024 by 91mobiles.pdf91mobiles
91mobiles recently conducted a Smart TV Buyer Insights Survey in which we asked over 3,000 respondents about the TV they own, aspects they look at on a new TV, and their TV buying preferences.
Dev Dives: Train smarter, not harder – active learning and UiPath LLMs for do...UiPathCommunity
💥 Speed, accuracy, and scaling – discover the superpowers of GenAI in action with UiPath Document Understanding and Communications Mining™:
See how to accelerate model training and optimize model performance with active learning
Learn about the latest enhancements to out-of-the-box document processing – with little to no training required
Get an exclusive demo of the new family of UiPath LLMs – GenAI models specialized for processing different types of documents and messages
This is a hands-on session specifically designed for automation developers and AI enthusiasts seeking to enhance their knowledge in leveraging the latest intelligent document processing capabilities offered by UiPath.
Speakers:
👨🏫 Andras Palfi, Senior Product Manager, UiPath
👩🏫 Lenka Dulovicova, Product Program Manager, UiPath
State of ICS and IoT Cyber Threat Landscape Report 2024 previewPrayukth K V
The IoT and OT threat landscape report has been prepared by the Threat Research Team at Sectrio using data from Sectrio, cyber threat intelligence farming facilities spread across over 85 cities around the world. In addition, Sectrio also runs AI-based advanced threat and payload engagement facilities that serve as sinks to attract and engage sophisticated threat actors, and newer malware including new variants and latent threats that are at an earlier stage of development.
The latest edition of the OT/ICS and IoT security Threat Landscape Report 2024 also covers:
State of global ICS asset and network exposure
Sectoral targets and attacks as well as the cost of ransom
Global APT activity, AI usage, actor and tactic profiles, and implications
Rise in volumes of AI-powered cyberattacks
Major cyber events in 2024
Malware and malicious payload trends
Cyberattack types and targets
Vulnerability exploit attempts on CVEs
Attacks on counties – USA
Expansion of bot farms – how, where, and why
In-depth analysis of the cyber threat landscape across North America, South America, Europe, APAC, and the Middle East
Why are attacks on smart factories rising?
Cyber risk predictions
Axis of attacks – Europe
Systemic attacks in the Middle East
Download the full report from here:
https://sectrio.com/resources/ot-threat-landscape-reports/sectrio-releases-ot-ics-and-iot-security-threat-landscape-report-2024/
Slack (or Teams) Automation for Bonterra Impact Management (fka Social Soluti...Jeffrey Haguewood
Sidekick Solutions uses Bonterra Impact Management (fka Social Solutions Apricot) and automation solutions to integrate data for business workflows.
We believe integration and automation are essential to user experience and the promise of efficient work through technology. Automation is the critical ingredient to realizing that full vision. We develop integration products and services for Bonterra Case Management software to support the deployment of automations for a variety of use cases.
This video focuses on the notifications, alerts, and approval requests using Slack for Bonterra Impact Management. The solutions covered in this webinar can also be deployed for Microsoft Teams.
Interested in deploying notification automations for Bonterra Impact Management? Contact us at sales@sidekicksolutionsllc.com to discuss next steps.
Software Delivery At the Speed of AI: Inflectra Invests In AI-Powered QualityInflectra
In this insightful webinar, Inflectra explores how artificial intelligence (AI) is transforming software development and testing. Discover how AI-powered tools are revolutionizing every stage of the software development lifecycle (SDLC), from design and prototyping to testing, deployment, and monitoring.
Learn about:
• The Future of Testing: How AI is shifting testing towards verification, analysis, and higher-level skills, while reducing repetitive tasks.
• Test Automation: How AI-powered test case generation, optimization, and self-healing tests are making testing more efficient and effective.
• Visual Testing: Explore the emerging capabilities of AI in visual testing and how it's set to revolutionize UI verification.
• Inflectra's AI Solutions: See demonstrations of Inflectra's cutting-edge AI tools like the ChatGPT plugin and Azure Open AI platform, designed to streamline your testing process.
Whether you're a developer, tester, or QA professional, this webinar will give you valuable insights into how AI is shaping the future of software delivery.
LF Energy Webinar: Electrical Grid Modelling and Simulation Through PowSyBl -...DanBrown980551
Do you want to learn how to model and simulate an electrical network from scratch in under an hour?
Then welcome to this PowSyBl workshop, hosted by Rte, the French Transmission System Operator (TSO)!
During the webinar, you will discover the PowSyBl ecosystem as well as handle and study an electrical network through an interactive Python notebook.
PowSyBl is an open source project hosted by LF Energy, which offers a comprehensive set of features for electrical grid modelling and simulation. Among other advanced features, PowSyBl provides:
- A fully editable and extendable library for grid component modelling;
- Visualization tools to display your network;
- Grid simulation tools, such as power flows, security analyses (with or without remedial actions) and sensitivity analyses;
The framework is mostly written in Java, with a Python binding so that Python developers can access PowSyBl functionalities as well.
What you will learn during the webinar:
- For beginners: discover PowSyBl's functionalities through a quick general presentation and the notebook, without needing any expert coding skills;
- For advanced developers: master the skills to efficiently apply PowSyBl functionalities to your real-world scenarios.
Accelerate your Kubernetes clusters with Varnish CachingThijs Feryn
A presentation about the usage and availability of Varnish on Kubernetes. This talk explores the capabilities of Varnish caching and shows how to use the Varnish Helm chart to deploy it to Kubernetes.
This presentation was delivered at K8SUG Singapore. See https://feryn.eu/presentations/accelerate-your-kubernetes-clusters-with-varnish-caching-k8sug-singapore-28-2024 for more details.
Key Trends Shaping the Future of Infrastructure.pdfCheryl Hung
Keynote at DIGIT West Expo, Glasgow on 29 May 2024.
Cheryl Hung, ochery.com
Sr Director, Infrastructure Ecosystem, Arm.
The key trends across hardware, cloud and open-source; exploring how these areas are likely to mature and develop over the short and long-term, and then considering how organisations can position themselves to adapt and thrive.
JMeter webinar - integration with InfluxDB and GrafanaRTTS
Watch this recorded webinar about real-time monitoring of application performance. See how to integrate Apache JMeter, the open-source leader in performance testing, with InfluxDB, the open-source time-series database, and Grafana, the open-source analytics and visualization application.
In this webinar, we will review the benefits of leveraging InfluxDB and Grafana when executing load tests and demonstrate how these tools are used to visualize performance metrics.
Length: 30 minutes
Session Overview
-------------------------------------------
During this webinar, we will cover the following topics while demonstrating the integrations of JMeter, InfluxDB and Grafana:
- What out-of-the-box solutions are available for real-time monitoring JMeter tests?
- What are the benefits of integrating InfluxDB and Grafana into the load testing stack?
- Which features are provided by Grafana?
- Demonstration of InfluxDB and Grafana using a practice web application
To view the webinar recording, go to:
https://www.rttsweb.com/jmeter-integration-webinar
JMeter webinar - integration with InfluxDB and Grafana
Porter's Diamond theory
1. FACULTY OF MANAGEMENT
MASTER OF BUSINESS ADMINISTRATION
INTERNATIONAL BUSINESS MANAGEMENT
ASSIGNMENT ON
PORTER'S DIAMOND THEORY
SUBMITTED BY
RAJESH NARAYANAN
REG.NO. 3511210125
MERVIN JOSE A
REG.NO. 3511210126
SUBMITTED TO
Mr.P.B.GOVINDARAJAN
FACULTY IN-CHARGE
INTERNATIONAL BUSINESS MANAGEMENT
SRM SCHOOL OF MANAGEMENT
SRM UNIVERSITY
KATTANKULATHUR-603 203
2. Porter’s Theory of Competitive Advantage
Michael Porter’s theory of the competitive advantage of nations provides a sophisticated
tool for analyzing competitiveness with all its implications. Porter’s theory contributes to
understanding the competitive advantage of nations in international trade and production. Its
core, however, focuses upon individual industries, or clusters of industries, in which the
principles of competitive advantage are applied. His theory begins from individual industries and
builds up to the economy as a whole. Since firms, not nations compete in international markets,
understanding the way firms create and sustain competitive advantage is the key to explaining
what role the nation plays in the process. Therefore, the essence of his argument is that “the
home nation influences the ability of its firms to succeed in particular industries”. Given this
interdependence, it appears that in order to draw conclusions on the competitiveness of the
particular industry, consideration of the different facets of the competitive diamond of the whole
nation is needed.
Michael Porter considers the competitiveness of a country as a function of four major
determinants:
Factor conditions;
Demand conditions;
Related and supporting industries; and,
Firm strategy, structure, and rivalry.
Even though these determinants influence the existence of competitive advantage of an
entire nation, their nature suggests that they are more specific of a particular industry rather than
typical of a country. The reason for this is that in Porter’s theory the basic unit of analysis for
understanding competition is the industry. “The industry is the arena in which the competitive
advantage is won or lost.” So, seeking to isolate the competitive advantage of a nation means to
explain the role played by national attributes such as a nation’s economic environment,
institutions, and policies for promoting firms’ ability to compete in a particular industry.
3. 1. Factor Conditions
Factor conditions being the inputs which affect competition in any industry comprise a
number of broad categories:
Human resources: the quantity, skills, and cost of personnel (including
management);
Physical resources: the abundance, quality, accessibility, and cost of the
nation’s land, water, mineral, or timber deposits, hydroelectric power sources,
fishing grounds, and other physical traits.
Knowledge resources: the accumulated scientific, technical, and market
knowledge in a nation in the sphere of goods and services
Capital resources: the stock of capital available in a country and the cost
of its deployment;
Infrastructure resources: the characteristics (including type, quality) and
the cost of using the infrastructure available.
While analyzing these factors as a prerequisite for building competitive advantage, it is
relatively unimportant to emphasize just their quantity or involvement in a particular industry.
What determines their influence on competitiveness is the degree of efficiency and effectiveness
of the way they are deployed within an industry.
This in turn affects directly their potential for influencing the establishment of
competitive advantage. Nevertheless, productivity in deployment does not automatically
translate into international success. This is achieved only under the condition that the other
determinants in the “diamond” are in a position to influence favorably the utilization of
production factors. With a view of isolating the factors which are most significant for the
creation of competitive advantage in the context of the whole “diamond”, a hierarchy among
factors has been established.
Depending on the degree of investment required for the possession of a particular factor, factors
of production are divided into two groups: basic and advanced. Basic factors are passively
inherited, that is, their creation requires relatively modest or unsophisticated private and social
investment. They can include natural resources, climate, location, unskilled or semi-skilled labor,
and debt capital. Unlike them, advanced factors which can comprise highly educated personnel,
modern digital data communications infrastructure, etc. require large and often sustained
investments for their development. Factor development which has been achieved through
substantial investment, in turn, provides for the creation of a higher-order competitive advantage
and, therefore, assumes greater significance for competitiveness.
Distinguishing among factors for he purpose of isolating those which account for the
establishment of competitive advantage most, yields another division: generalized and
specialized factors. Generalized factors derive their name from the feature that they could be
deployed in a wide range of industries. Specialized factors, on the other hand, are characterized
by a narrow field of application due to a high degree of customization to the needs of a particular
industry. Compared to the generalized factors, specialized factors require more focused, and
4. often riskier, private and social investment. This, together with their specifically tailored
characteristics to the nature of the particular industry, determines their superiority over
generalized factors in terms of influencing the creation of competitive advantage. With respect to
the relation between advanced and specialized factors, the latter do not necessarily comprise the
former, but at any rate the more constantly upgrading and developing advanced and specialized
factors of production exist in an industry, the better is the basis for a significant and sustainable
advantage in a given field.
2. Demand Conditions
The importance of demand conditions as a factor influencing competitive advantage
stems from the fact that in a market economy the direction of production, that is, the kinds of
goods which are produced, is determined by the needs of buyers. What this means is that,
regardless of the state of the other determinants in the “diamond”, competitiveness in an industry
is impossible to be achieved unless demand conditions allow for the successful realization of
firms’ products. Underlying this dependence is the dynamic influence of home demand which
shapes the rate and character of improvement and innovation by a nation’s firms. The sources of
this influence within the context of home demand are divided into three broad attributes: the
composition of home demand, the size and pattern of growth of home demand, and the
mechanisms by which a nation’s domestic preferences are transmitted to foreign markets.
Home Demand Composition: The composition of home demand
determines the way firms perceive, interpret, and respond to buyer needs.
Three characteristics of the composition of home demand play a particularly
significant role for the achievement of competitive advantage. One of them
refers to the segment structure of demand. It is quite favorable for enhancing
competitiveness provided that the relevant segment of the market represents a
highly visible share of home demand but accounts for a less significant share in
other nations. An even more important feature of home demand composition is
the level of buyers’ sophistication. Its significance stems from the fact that
sophisticated and demanding buyers exert pressure on firms to excel in quality
of the product, features, and service and thus help for sustaining the acquired
advantage. A final attribute of home demand composition which could spur the
establishment of competitive advantage relates to anticipatory buyer needs.
They give priority of firms over their international competitors by indicating
early what will become widespread later.
Demand Size and Pattern of Growth: In order for a clear relationship
between this attribute of home demand and competitive advantage to be
established, a number of its characteristics should be considered. One of them
is the size of home demand. Its importance is expressed in the fact that
depending on the magnitude of the home market a nation's firms could be
encouraged, with a view of reaping economies of scale and learning, to invest
aggressively in large-scale facilities, technology development, and productivity
improvement.. Another important factor which could spur activities intended to
5. create or upgrade competitive advantage is the rate growth of home demand.
The latter could lead firms to adopt new technologies faster and to make
changes for increased efficiency without fearing that there would be no
response on the part of consumers. The effect of these two factors is further
enhanced provided that home demand is characterized by early saturation as
well. The underlying logic is that early saturation, like early penetration,
directs a nation’s firms to products and product features that are desired
abroad.
Internalization of Domestic Demand: While the source for creating
national advantage is rooted in the composition of home demand, its
sustainability is accounted for by the size and pattern of growth of home
demand, the transfer of a nation’s products and services abroad relates to a
third attribute of home demand – its capacity of becoming internalized. This
attribute refers to the existence of mobile or multinational local buyers which
could create an advantage for a nation’s firms since domestic buyers are also
foreign buyers. It hints on the other aspect of this attribute: the influence
exerted on foreign needs. The latter presents another way through which
domestic demand conditions can pull through foreign sales and relates to the
cases when domestic needs and desires get transmitted to or inculcated in
foreign buyers.
3. Related and Supporting Industries
When trying to determine the sources of competitive advantage in an industry, the latter
should not be considered separately but rather in the context of the whole economy. Special
account should be taken of the industries which are directly related or support the one whose
competitiveness is a subject of investigation. The reason for this requirement is that, provided
supplier industries possess an international advantage, downstream industries could benefit from
it in several ways. One of them refers to the access that competitive supplier industries provide
access to cost-effective inputs. Given the increasingly significant globalization process, which
makes inputs available on global markets, emphasis should be put not on the availability of the
inputs but on their effective utilization. Therefore, a more important aspect in which the presence
of competitive advantage in supplier industries could influence the creation of one in the
downstream industries is the provision of coordination on the part of the former in terms of
linkages with the value chains of the latter. Perhaps the most important benefit of home-based
suppliers, however, is expressed in the process of innovation and upgrading. It refers to a mutual
influence between firms and their suppliers. On the one hand, suppliers help firms to perceive
new methods and opportunities to apply new technology. A spur to innovation could, on the
other hand, be given from firms to their suppliers by influencing suppliers’ technical efforts in a
direction of testing new developments and ideas. Other factors such as exchange of R&D, joint
problem solving or transmitting of information through suppliers to different firms contribute to
the establishment of a fast pace of innovation within the entire national industry.
6. In regard to related industries, they could also be a source of competitive advantage to the
industry in question. “Related industries are those in which firms can coordinate or share
activities in the value chain when competing, or those which involve products that are
complementary.” Technology development, manufacturing, distribution, marketing or service are
all areas in which sharing of activities could occur. This process is especially beneficial, given
that the related industry is internationally successful, which means that it stimulates the
establishment of competitive advantage in other industries through providing opportunities for
information flow and technical interchange. Another way through which related industries could
influence competitiveness is by means of pulling through demand for complementary products
and services. The greater the number of related industries which possess competitive advantage
in a nation, the greater is the possibility for this nation to achieve sustained success in an
industry. This, however, depends to a significant extent on the state of the factors forming the
rest of the “diamond” because it is only when the facets are working in a system that the
conditions for building a true competitive advantage are ensured.
4. Firm Strategy, Structure, and Rivalry
Closing the circle of factors which determine the existence of competitive advantage it is
necessary to consider the context in which firms are created, organized and managed as well as
the nature of domestic rivalry. The goals, strategies, and ways of organizing firms in industries
are widely influenced by national circumstances. The achievement of national advantage
depends on the degree to which these choices correspond to the sources of competitive advantage
in an industry. Firm strategy and structure are reflective of company goals and individual goals
as well as national prestige and national priority. Company goals are most strongly determined
by ownership structure, the motivation of owners and holders of debt, the nature of the corporate
governance, and the incentive processes that shape the motivation of senior managers. Provided
that the goals of owners and managers match the needs of the industry, the opportunities for
success are greatly enhanced. As far as the goals of individuals who work in firms are concerned,
they also have a significant role for creating and upgrading competitive advantage. The
achievement of the latter depends on the motivation of people to develop their skills as well as
to expend the necessary effort needed for the company’s success. Another source of powerful
influence on the way firms are organized is national prestige or national priorities. These factors
affect the process of attracting qualified human resources to particular industries as well as the
strength of individuals’ and shareholders’ motivation. Provided that the latter is quite
pronounced it also turns into an important conductor of corporate success. The reason for it is
that it assures sustained commitment of capital and human resources to an industry, to a firm,
and for employees, to a profession. This in turn enhances productivity and effectiveness.
The stimuli for increased productivity and effectiveness should also be traced at a higher
level which encompasses not only the manner of a firm’s organization but also its performance
as influenced by the behaviour of its competitors. In this respect, an important correlation based
on empirical findings has been established. It concerns the association between vigorous
domestic rivalry and the creation and persistence of competitive advantage in an industry. The
underlying logic is that competition at home pressures firms to improve and innovate. Having
7. once established the manner for constant upgrading of their competitive edge at home,
companies easily transfer their strategy for success on a worldwide scene. Vigorous local rivalry
can also stimulate competitiveness through bringing fourth the need for enlarging the firms’
markets and selling abroad in order to grow. This is particularly likely in the presence of
economies of scale when local competitors force each other to direct their activities abroad in the
pursuit of greater efficiency and higher profitability. Domestic rivalry not only creates pressures
to innovate but to innovate in ways that upgrade the competitive advantages of a nation’s firms.
The presence of rivals lowers the significance of advantages created through little effort and
investment (e. g. those which stem simply from being in a nation). It, therefore, forces a nation’s
firms to seek higher and ultimately more sustainable sources of competitive advantage. So,
contrary to the wrongly perceived notion of “national champions” reaping economies of scale in
the home market, the existence of strong domestic rivalry keeps from reliance on factor
advantages as well as conditions their more efficient deployment.
Apart from the major determinants Porter considers two additional variables which are
not as important as the determinants in influencing the creation of a competitive advantage but
are significant in shaping the direction of the influence. These are chance and government.
Chance events are developments beyond the control of firms, such as pure inventions,
breakthroughs in basic technologies, etc. They can play an important role in shifting competitive
advantage in many industries. Government, being the other variable, is important to the extent to
which its policies can influence the entire system of determinants either in the direction of
undermining or enhancing competitive advantage.
Important in understanding the determinants’ power to foster competitiveness in an
industry is the condition for their being interrelated. What this means is that the determinants
should form a mutually reinforcing system, referred to as a “diamond” and the effect of one of
them should be contingent on the state of others. This implies not only the inadequacy of one
favourable national attribute to induce competitive advantage itself but also the possibility that
an advantage in one determinant can create or upgrade advantages in others.