International business - Assignment PDF

Running head: INTERNATIONAL BUSINESS
International business
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1INTERNATIONAL BUSINESS
Porter diamond model of national advantage
Porter diamond model of national advantage is one of the most popular and widely used
theories for determining the factors in gaining national advantages by the countries. In the recent
time, it is gaining more importance due to the reason that all the major economies around the
world are initiating different initiatives in gaining competitiveness to attract foreign direct
advantages in the country (Contractor 2013). It is also reported that Kuwait is gaining good
amount of global visibility for attracting the multinational organizations for investments.
However, there are still number of gap areas evident if compared to some other major countries
and porter diamond theory of national advantage will be beneficial in determining the ways
about Kuwait will be able to attract and retain foreign direct investments.
According to this theory, there are majorly four factors that should be considered by the
countries in gaining national advantages over others. The first factor is the factors of production.
This defines the availability of the different inputs required for production process. According to
Huggins and Izushi (2015), wide availability of factors of production will help the countries in
reducing the cost of operation for the business organizations and attract new foreign firms. The
authors have also stated that factors of production include both the natural and secondary
resources. Natural resources include the energy sources and other natural minerals that would be
critical for gaining organizational excellence. On the other hand, secondary resources include the
access to technology and human resources in the country. Thus, the effective and proper
coordination among the natural and secondary resources will help the countries in gaining
competitive advantages.

2INTERNATIONAL BUSINESS
Kordalska and Olczyk (2016) stated that Kuwait in the recent time is growing rapidly
mainly due to their huge access to the natural resources including oil reserves. They are having
access to huge amount of amount reserves, which is further attracting the oil and gas companies
to invest in the country. In addition, having access to huge oil reserves is also benefitting the
investing oil and gas companies to have lower cost of production. However, on the other hand,
the authors have also stated that Kuwait is lacking behind the other countries in terms of the
secondary resources. This is due to the reason that Kuwait is mainly depended on the skilled
immigrant labors in their oil and gas industries and overall access to latest technology is also at
par to other oil major countries. This is restricting the foreign investors in other business sectors
to invest in the country. Alzayed and Alraggas (2014) stated that Kuwait should focus more on
developing their secondary resources by means of enhancing the skill sets of the employees and
gaining access to latest technologies. This will enable the investing countries in Kuwait to have
the access to skilled human resources and technologies for their competitiveness. The authors
have also stated that proper coordination of the skilled employees and technologies with that of
the available natural resources of Kuwait will help them to gain competiveness and retain the
foreign direct investments.
The second factor of the diamond theory of national advantage is demand conditions,
which denotes market size and forces in the country. This is also important in gaining the foreign
investment due to the reason that the extent of profitability for the foreign companies will be
determined the demand in the home country. According to Solvell (2015), strong demand
conditions in the home country will convince the foreign investors in gaining up their operations
and initiate further development process. In the case of Kuwait, the major challenge that they are
facing is low level of population in the country. Thus, the demand is also on the lower side for