International Business: Porter’s Diamond Model Analysis and Market Entry Strategy for Indonesian Retail Market

Running head: INTERNATIONAL BUSINESS
International Business
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Executive Summary
The report has helped in the entire analysis of the different factors which are required to be
considered by while implementing and starting a new business in a new country. With the
help of Porter’s Diamond model, the proper analysis has been done which has helped in
analyzing and identifying the different factors which are advantageous and non-advantageous
in nature for the success of the retail firm in Indonesian market. Furthermore, the market
entry strategy has been analyzed which has helped in understanding the disadvantages and
advantages for the same effectively and appropriately. Lastly, the different management
issues have been identified from the two sections which have been analyzed as to gain more
knowledge on the internationalization.

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Table of Contents
Introduction................................................................................................................................3
Part 1: Porter’s National Diamond Analysis..............................................................................3
Factors Conditions.................................................................................................................4
Related and supporting Industries..........................................................................................6
Home Demand Conditions.....................................................................................................7
Rivalry....................................................................................................................................8
Government..........................................................................................................................10
Chance events.......................................................................................................................11
Part 2: Market Entry Strategy..................................................................................................12
Foreign Direct Investment....................................................................................................12
Advantages of Using Foreign Direct Investment in Indonesian Market..............................12
Disadvantages of Using Foreign Direct Investment in Indonesian Market.........................13
Recommendations................................................................................................................14
Advantages of Joint Venture in Indonesian Market.............................................................14
Disadvantages of Joint Venture in Indonesian Market........................................................15
Advantages of Acquisition in Indonesian Market................................................................15
Disadvantages of Acquisition in Indonesian Market...........................................................15
Proposition of Choice of Entry............................................................................................15
Recommendation of Appropriate Partners for Joint Acquisition.........................................16
Part 3: Contemporary Management Issues..............................................................................16
References................................................................................................................................18

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Introduction
The report helps in analysis of the different new business opportunities for the retail
industry for the expansion of the same in Indonesian retail industry. Proper and effective kind
of research is required to be taken into consideration which will help in analysis of the overall
competitiveness along with the investment attractiveness as well. The entire analysis is
required to be conducted with the help of the Porter’s National Diamond Analysis of the
entire Indonesian Retail Store.
On the other hand, the market entry strategy of the retail market in the Indonesian
Retail Store is required to be analysed effectively which will help in analysis and
identification of institutional environment of Indonesia market. Lastly, the contemporary
management issues is required to be analysed as well which has to be taken into account
before starting the operations in the Indonesian Retail market.
Part 1: Porter’s National Diamond Analysis
Michael Porter has developed economic diamond model for the different businesses
as this will help them in understanding their competitive position in the market in the entire
global market (West, Ford & Ibrahim, 2015). The Porters Diamond model is also known as
Porter Diamond Theory of National Advantage which plays an essential role in global
business competition and the competitiveness of the business is related to the performance of
the business.

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Figure 1: Porter’s Diamond Model
(Source: Pavicevic, Haleblian & Keil, 2018)
From the diagram, this can be analysed that the retail sector can take advantage of the
Porter’s Diamond Model to establish the processes through which they can translate the
national kind of advantages into international advantages. In order to create advantage in the
global scale, this is essential in nature to analyse the different factors of the Indonesian Retail
Market which will help in managing the competitiveness in an efficient and appropriate
manner.
The different kinds of determinants of the Porter’s Diamond Model includes the following:
Factors Conditions
This is the entire situation in the Indonesian market in which there are different
factors related to production of the retail sector which includes the knowledge and
infrastructure. The infrastructure of the Indonesian Retail market is effective in nature which
will help the retail market to achieve success and gain competitive advantage in such

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infrastructure (Haleblian, Pfarrer & Kiley, 2017). The population is large and the operational
infrastructure is effective in the respective market which will assist them in selling products
effectively. Furthermore, the labour costs, knowledge resources and infrastructure are the
other essential factors which is required to be analysed and identified as this plays a major
role in the market.
Figure 1: Number of Household and population in Indonesia
(Source: Haleblian, Pfarrer & Kiley, 2017)
The climate of the Indonesian market is effective and appropriate for starting and
expanding the retail store business and this is the international competitive position
which can be gained by the company in an effective manner.
Furthermore, in case of Indonesian Retail market, Indonesia is the best option which
can be chosen by the marketers as the climate and the natural resources are easily
available.