Managing Business Environment: An analysis of the Porter's Diamond Model



Managing Business Environment: An analysis of the Porter's Diamond Model

Introduction

One of the famous professors at Harvard University is Michael Eugene Porter. He did a lot of work on the company strategies and considers the competitive advantage of businesses performing in different countries and regions. The recognition of his work is evidence by a number of governmental and academic groups. The help he renders to the corporations with the help of different strategic models is of worth mentioning. Porter's model helps in an analysis of a number of industries. His five forces model helps in assessing the Turkish brick industry. (Oral & Mistikoglu, 2007, pp.416-423)

Discussion

Porter's Diamond model

An economical model by Michael Porter is famous with the name of “The Diamond Model”. He incorporated the model in his book The Competitive Advantage of Nations in which he discussed the factors that lead to the competitive locations advantage of starting a business. This model becomes a basis of the work of other scholars, thus serving as of great concern for all interested in the field of analysis of performing a business in diversified locations.

Critical Analysis of the Model

The model assesses the group of industries, where a company gains competitive advantage over the others with the help of the performance capabilities, and other elements that ensure a value added chain of customer relationship in a location or region.

The analyzed phenomenon comprises of six broad elements that are a part of Portal diamond model and serves as a key method for the evaluation of competitiveness.

Below is a brief introduction of these six key elements:

Factor Conditions: It comprises of all type of tangible and intangible resources. The competitiveness of any industry depends upon the employment of its resources. Companies create resources according to the requirements so as to minimize the disadvantages of the factors involved in the activities.

Demand Conditions: The demand for a company's products helps the company to gain a competitive edge over other companies. The buyers in a market pressurize the companies to come up with innovative and quality products.

Supporting Industries: Each of the organization has some supporting companies that help in making a final product. These industries work as partners and provide cost implicit inputs, and also help in the continuous improvement process by helping in upgraded processes. This helps the company to achieve the innovation in the processes.

Firm strategy, structure and rivalry: It is the fourth element of competitiveness and an important key tool in the Porter's diamond model. The strategies made by the top management level reflect the objectives, and if the implementation of these goals in a meaningful manner will provide success to the organizations.

Government: It acts as a partner that has an influential impact on the functioning of all the industries. It is the element that has a substantial impact on the preceding four elements. Government can affect the supply and demand conditions prevailing in a given market and ...