Strategic Analysis of Kuwait's Economy using Porter's Diamond Model

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Making Sense of Strategy

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Table of Contents
The Business Issue...........................................................................................................................3
Porter’s Diamond Model.................................................................................................................3
Application of Porter’s Diamond Model.........................................................................................5
Critical discussion of four main strategies.......................................................................................7
Export Control Policy..................................................................................................................7
Protectionism Policy....................................................................................................................7
Anti-trust and Competition Policy...............................................................................................8
Foreign Direct Investment (FDI) Policy......................................................................................8
References........................................................................................................................................9

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The Business Issue
A business tour carried out along Kuwait reflected a threatening situation for the economy of
Kuwait owing to the shutting down of large number of shopping establishments and trading
centres. Shops, showrooms, restaurants and even hotels were observed to reflect sign boards like
‘shop closed’, ‘shop on sale’, ‘factory closed’ while some others carrying out sale held sign
boards like ‘stock on sale’ and ‘clearance sale’.
The paper thus focuses on highlighting on strategic outlooks that need to be undertaken by the
Kuwaiti government for reviving the current economic situation. Incorporation of Porter’s
Diamond Model as a strategic model and other economic strategies would be undertaken for
carrying out needed analysis regarding the same.
Porter’s Diamond Model
Porter’s Diamond Model reflects on four different factor conditions that contribute in evaluating
the level of competitive advantage enjoyed by different economies. The Diamond Model
introduced by Michael Porter reflects that some industries along a specific economy are more
competitive in the international landscape than that of other industries operating in the same
industry. Moreover, the model reflects that factor considerations within the economy tend to
influence the level of competition of the firms and industries operating in it. Porter reflected that
the relative level of the opportunity costs tends to determine that whether current economic
activities can be undertaken in an economy or not in comparison to other economies (Jhamb,
2016). Michael Porter further argues that industries that tend to require considerable amount of
technological and skilled labour resources tend to be affected in a lesser fashion than those

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industries that require reduced amount of technological resources. The reduced dependency on
technological resources for the industries in turn tends to enhance the level of input costs for the
firm. The model is reflected as under.
(BPP Learning Media, 2014, pp.35-36)
The different factor conditions are essentially grouped under basic and advance factors. The
basic factors like suitable climatic conditions, abundance of natural resources and also the
existence of potential labour resources are unsustainable and uncontrollable in nature for
increasing and sustaining the level of competitive advantage (Kharub & Sharma, 2016). The
advance factors like technological and infrastructural competencies, existence of needed know-
how and also the presence of capital competencies helping in generation of needed investment in
potential sectors all contribute in the production of differentiated products and services that in
turn enhances the level of competitive advantage for the economy (Rao, 2018, ch.15). Regarding
demand conditions the ability to anticipate the demands and expectations of the consumers, rate
of market saturation and growth of markets and also the ability to render goods and services
based on identification of market segments all contribute in increasing the level of competitive
advantage for the nations (Riasi, 2015). Again, the existence of supporting industries in the
region ideally helps in the existence of quality suppliers in needed abundance. The same helps