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Flashcards in Porter's diamond Deck (6)
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1
Q

What is Porter’s diamond?

A

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

2
Q

What are the 4 determinants of national competitive advantage?

A
  • Demand conditions
  • Related and supporting industry
  • Factor conditions
  • Strategy, structure and rivalry
3
Q

Explain demand conditions

A
  • demanding local consumers force firms to become more innovative
  • Trend setting local consumers help local producers to anticipate future global trends.
  • e.g. German drivers demanded powerful cars from German car manufacturers
4
Q

Explain related and supporting industries

A

Proximity of related and supporting industries leads to:

  • Easy access to components, with reduced lead times and carriage costs.
  • Encourages knowledge sharing which increases innovation.
  • e.g. The finance sector in the UK is aided by large accountancy and legal firms
5
Q

Explain factor conditions

A
  • The availability of the factors or production (the resources needed to operate).
  • These include human resources, physical resources, knowledge, capital, infrastructure.
  • e.g. French wine industry benefits from being able to grow good quality grapes
6
Q

Explain strategy, structure and rivalry

A

Two key possible advantages:

  • Strong domestic rivalry forces local firms to become more efficient to survive.
  • The strategies or structures that have become prevalent in a particular nation may give advantages in particular industries.
  • e.g. flat, decentralised organisation structures are popular in Japan and are believed to encourage innovation