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Four factors lead to shaping the competitive advantage

Porter and a team of researchers In 1990, attempted to determine why some nations succeed and others fail in international competition. The task was to explain why a nation achieves international success in a particular industry, such as Japan in the automobile industry and Germany in the chemical industry. Porter theorizes that four factors of a nation lead to shaping the competitive advantage:

Porter's Diamond

In 1990, Michael Porter and a team of researchers attempted to determine why some nations succeed and others fail in international competition. The task was to explain why a nation achieves international success in a particular industry, such as Japan in the automobile industry and Germany in the chemical industry.

Porter theorizes that four factors of a nation lead to shaping the competitive advantage:

? Factor Endowments: Clearly identify the basic factors and advanced factors of the chosen industry and country: Clearly identify the demand conditions for the industry's product in the chosen country.
? Demand Conditions: Relate to the chosen industry and country
? Relating and Supporting Industries: Identify the related industries and supported industries that lends support to the chosen industry having national advantages and are internationally competitive.
? Firm Strategy, Structure, and Rivalry: Clearly identify the strategy or strategies that make the chosen industry competitive. Gives an explanation of structure of firms in creating competitive advantages. Identify the domestic rivalry aspects that are competitive advantages for the chosen industry in the chosen country.

Give an example of an industry (I have 2 choices (1) the Textiles and Clothing industry or (2) IT industry) and a country (I have 2 choices (1) India or (2) Japan) and relate each of the four factors of the Diamond to this example, giving special attention to the highlighted and underline sections of the diamond above. Answer the following question in your analysis:

How has that industry succeeded or failed according to the Diamond strategy?

Please provide a conclusion section to your analysis.

Solution Preview

Porter's Diamond Model:

The competitive nature of an organization is tied to the economic entities that dictate the direction that will be adopted by a corporation. As the model suggests, there are in place varied reasons that make industry type to succeed above the rest. The factors that are present in the country provide the industry with the needed resources that propel in the functions of the industry in the market economy. The presence of certain factors in the market economy gives an industry the competitive advantage which will lead to the attaining of sustained industrial growth. Porter's diamond has four determinants that are known to give an industry the advantage of leading the market economy of a certain industry.

The factor Conditions:

These are those factors in the nation economy that can be exploited. It creates factors of advantage that enables the company to have a strong upper hand in the industry economy. The selected Industry is the Textiles and the clothing industry and the country is India. The textile industry in India has really grown due to the factor conditions that enable the functions of the industry to be well maintained. The human resource that is available in the nation of India has lead to innovative creation of new designs in the textile industry. The present physical resources and the infrastructure in the state have made the textile ...

Solution Summary

The four factors which lead to shaping the competitive advantages are examined.

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