Porter's Diamond

Question 1

what is porter’s diamond used for?

Answer 1

to explain why some nations have a competitive advantage in certain industries

Question 2

what are the 4 key determinants of national competitive advantage?

Answer 2

• demand conditions
• factor conditions
• strategy, structure & rivalry
• related/supporting industry

Question 3

competitive advantage?

Answer 3

the capacity a country has to outperform another in a certain aspect

e.g., china in manufacturing technology, germany manufacturing cars

Question 4

factor conditions?

Answer 4

• supply side
• availability of resources

e.g., human resources, physical resources, knowledge, capital

e.g., country has education system tailored towards a certain industry specialisation

Question 5

demand conditions?

Answer 5

• demand side
• demand in a jurisdiction which urges businesses to become more innovative
• trend setting consumers help give local businesses the edge

Question 6

related & supporting industries?

Answer 6

proximity of related/supporting industries leads to…

• easy access to components
• easy sharing of knowledge

Question 7

strategy, structure & rivalry?

Answer 7

strong domestic rivalry forces local firms to become more efficient to survive

Question 8

when would you use porter’s diamond?

Answer 8

when assessing a company and the advantages/disadvantages of the jurisdiction in which they are incorporated