Competitive Advantage in the German Automotive Industry - Desklib

This article discusses the Volkswagen Group's competitive advantage in the German automotive industry using Porter's Diamond theory. It explains how the four diamonds - related and supporting industries, demand conditions, firm strategy structure, and rivalry - contribute to the company's success. The article also highlights the importance of continuous research and development and the role of the government in enhancing overall competitive performance. The article concludes by emphasizing the significance of Porter's model as a benchmark for corporate policies and measures.

Running head: COMPETITIVE ADVANTAGE 0
Competitive Advantage

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Table of Contents
Discussion.............................................................................................................................................2
References.............................................................................................................................................4

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Discussion
The German industry chosen is the Volkswagen group which is involved in the
manufacturing of the cars, trucks. Germany’s most valuable and exported products are
vehicles whose worth is 257.2 billion and which forms 17.8% of the total exports. The
porter’s diamond theory commonly known as the porter diamond theory of national
advantage, is a model which is created to have an understanding of competitive advantage
nations or groups and to describe how governments acts as a middleman to improve the
position of the country’s position in a globally competitive environment (Toolshero, 2018).
Michael Porter identified four competitive “Diamonds” which acts as a catalyst in
establishing the prosperity of the company. The four diamonds are namely related and
supporting industries, demand conditions, firm strategy structure and rivalry.
(Source: Toolshero, 2018)
Cumulatively these four factors set the competitive environment of the industries. It
has been observed that the Volkswagen had adopted the structure and diamond policy and the
company seeks to attain the creation and persistence of the competitive advantage in the
respective industry (Anton, 2015).
The Volkswagen group now follows a very flexible policy that defines the success of
the company in the entire world market. It has also been observed that both the research and
the development armlet are working on defining the customers on an annual basis. This will
enhance the competitive advantage over the similar companies in the same industry (Castro-

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Gonzáles, Peña-Vinces & Guillen, 2016). Therefore, the Volkswagen Group can follow the
policy of the firm, structure and rivalry management. Products distributed by the company
are catering to the needs of variety of the customers. Also the discussion supports that the
competitive advantage can be achieved through continuous research and the record of the
domestic rivalry a nation can help the organizations achieve there advantages on the national
as well as the international level. The competitors of the Volkswagen group in America like
BMW, Ford and Chevrolet are extremely beloved to the customers in the northern region. At
times the role of the government is to act as a catalyst and challenger to make the industries
push themselves to move at a higher level and to enhance the overall competitive
performance (Nitisha, 2018). Due to implementation of this model the Volkswagen Group
will be able to simulate the demands of the products and also the local rivalry by limiting the
direct cooperation.
In August 2014 the market share of the Volkswagen group was around 5.4% by
following the concept of the car ideology. The group came into play, making competitive
advantage of the American brands more suitable and sustainable (Nitisha, 2018). Due to
following a bit lenient policy Volkswagen AG lost the competition against its Asia based
competitors and also some of the US based brands. Considering the company structure,
Volkswagen shall develop its corporate policies and measures accordingly. Porter’s model is
a significant benchmark and the use of the diamonds driven by the porter’s theory.

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References
Anton, R. (2015). An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces,
Diamond, PESTEL, and SWOT Analysis. New york: Springer.
Castro-Gonzáles, S., Peña-Vinces, J. C., & Guillen, J. (2016). The competitiveness of Latin-
American economies: Consolidation of the double diamond theory. Economic
Systems, 40(3), 373-386.
Nitisha, (2018). Porter’s Diamond theory of national Advantage. Retrieved from
Toolshero, (2018). Porter Diamond model. Retrieved from