Assignment on Porters Diamond Model and Competitive Advantage

Running head: PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE: AN ANALYSIS
OF APPLE
Name of the Student:
Module Name and Number:
Word Count:
Name of the Company: Apple

1PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
Introduction
As stated by Liang (2016), the adequate usage of the process of internationalization or
globalization and also the different new innovative technologies had substantially changed the
landscape of the contemporary business. Kotabe and Kothari (2016) are of the viewpoint that the
effective usage of these entities had not only enhanced the scope of the business activities of the
business corporations but also substantially increased their profitability as well. More
importantly, majority of the business corporations are merely focusing on the value proposition
of the services or the products offered by them, the business strategies used by them, the
effective usage of recent emerging business trends or the technologies and others for the
attainment of competitive edge (Gürkaynak et al. 2014). However, at the same time it needs to be
said that the geographical conditions or for that matter the local cluster of the nation of a
particular corporation’s business operation is an important factor which substantially contributes
towards the success attained by the concerned business corporation in the international business
arena (Munjal, Budhwar and Pereira 2018). As a matter of fact, Porter’s Diamond Model or more
commonly called by the name of “The Theory of National Competitive Advantage of Industries”
clearly indicates the geographical factors or the local cluster of a business corporation’s home
nation directly affects the ability of the concerned corporation to attain competitive advantage.
The purpose of this paper is to undertake an analysis of the manner in which Porter’s Diamond
Model can be used to explain the competitive advantage attained by Apple in the consumer
electronics industry, consumer hardware, consumer software and other related industries in
which Apple operates. Thus, the research question on which this paper would focus upon is
given below-
 How the local cluster or the geographical factors of the home nation of the business
corporation Apple had contributed towards the competitive advantage attained by it?
Overview of the Business Activities of Apple
Apple Inc, founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne, is an
American multinational corporation which specializes in the manufacture as well as the sale of
the different kinds of consumer electronics, software, hardware and others (Apple.com 2020). In
addition to these, it had been seen that over the years the concerned corporation had been a
global leader in the development as well as the supply of different innovative or disruptive
technologies like artificial intelligence, virtual reality, voice recognition interface and others
(Bbc.com 2020). More importantly, the wide range of services which are being offered by the
concerned corporation like Apple Store, Genius Bar, AppleCare, Apple Pay, Apple Pay Cash,
Apple Card and others had been greatly instrumental in helping the corporation to acquire the
required amount of success (Money.cnn.com 2020). As a matter of fact, it is one of the “Big
Four” major technological corporations of the world and in the 2018 became the first private
corporation of the world to reach a valuation of more than $1 trillion (Bbc.com 2020).
Furthermore, the revenue generated by it in the year 2018 was more than US$265.595 billion
while it offered employment to over 123,000 individuals from the 181 diverse nations of the
world in which it operates (Apple.com 2020). In this relation, it needs to be said that the
immense success attained by Apple in USA and its overseas business locations is not only the
result of the high quality of services or products offered by the concerned corporation along with

2PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
its sound business strategies but also the resultant effect of the congenial conditions or the local
cluster conditions that it enjoys within the nation of USA as well.
Porter’s Diamond Model and Competitive Advantage
Skripak et al. (2018) are of the viewpoint that Porter’s Diamond Model is a framework
which offers an insight into why some industries or companies operational within a particular
local cluster or geographical condition are being able to attain significant success in comparison
to others. Adding to this, Ricken and Malcotsis (2016) have noted that this particular model
clearly indicates that the local cluster of a particular corporation’s home nation influences or for
that matter forces it to undertake different measures which are intended to improve its product or
service quality through the usage of technology, innovation and others. This in turn accounts
why some of the business corporations are being able to attain unprecedented success while
conducting international business in comparison to the other corporations (Hanafi et al. 2017). In
this relation, it needs to be said that this model clearly outlines six important local cluster
elements present in the home nation of the business corporations, firm strategy, structure and
rivalry, chance, factor conditions, demand conditions, related and supporting industries and
government (Michael 1990). It is the effective conglomeration of these six factors which either
helps or for that matter hinders a particular business corporation from acquiring the required
success in the international business arena.
Figure 1: Global Competitiveness Index
Source: Weforum.org (2020)
Figure 1 clearly indicates the fact that the “Global Competitive Index” of the nation of
USA is the highest among the different nations of the world. This is an indicative of the fact that
the business corporations operational within the concerned nation enjoy the kind of local cluster

3PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
or for that matter the geographical factors which in turn enables them to attain success in the
international business arena. More importantly, along with the opportunity to enhance the scope
of their business or profitability, these factors also help the business corporations to attain
competitive advantage in the business markets of their operation (Farinha et al. 2018). An
analysis of the corporation Apple through the usage of this particular model would reveal the
role played by the local cluster or the geographical factors of USA that had contributed towards
the success attained by it in the international business arena.
Analysis of Apple through Porter’s Diamond Model
Firm Strategy, Structure and Rivalry
The consumer electronics industry of the nation of USA is dominated by different
corporations like Microsoft, IBM, HP, Dell and others and the majority of these corporations
offer almost similar kind of electronic products to their consumers (Money.cnn.com 2020). This
in turn had not only intensified the business competition or for that matter the rivalry within the
consumer electronics industry of USA but had also slowed down the growth rate of the
corporations as well. Thus, Apple in order to overcome this particular aspect takes the help of the
strategy of product differentiation. As a matter of fact, it had been seen that through the usage of
this particular strategy the concerned corporation had been able to create its own unique product
line which are not only different from the ones offered by its competitors or rivals like Microsoft,
Dell, HP and others but also superior in quality as well. Furthermore, Steve Jobs, the co-founder
of Apple, believed in the idea that it is much better to use the strategy of product differentiation
rather than comprise on quality and use the cost leadership strategy which the majority of the
competitors of the concerned corporation are using even in the present times (Bbc.com 2020). In
addition to these, presently the concerned corporation is also using the diversification strategy
and this finds evidence from the large variety of products as well as services which are presently
being offered by Apple (Money.cnn.com 2020).
Apple takes the help of hierarchical organizational structure which to a certain extent
even shows some of the features of the matrix and the divisional organizational structures as well
(Foros, Kind and Shaffer 2017). In this relation, it needs to be said that the divisional nature of
Apple’s organizational structure becomes apparent from its product-based grouping. Apple’s
organizational structure shows that there are various levels of hierarchy within the concerned
corporation and Tim Cook, the CEO of the corporation is at the top of the organizational chart of
Apple. The numerous divisions as well as hierarchies within the organizational structure of
Apple have been created to facilitate the effective completion of the different works of the
concerned corporation (Bbc.com 2020). An overview of the organizational structure of Apple is
being outlined by the below given figure-

4PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
Figure 2: Apple’s Organizational Structure
Source: Apple.com (2020)
The consumer electronics industry of USA is one of the fastest growing ones of the world
with some of the largest corporations of the world like Microsoft, Apple, Dell, HP and others
operational within the same. As a matter of fact, the growth rate of the concerned industry in
USA is more than 14.9% and for the year 2019 it generated over US$94,855 million as revenue
(Money.cnn.com 2020). However, at the same time it needs to be said that an important issue
that the different corporations like Apple and others are presently facing in the concerned
industry can be attributed to the high business competitor or the industry rivalry. This as a matter
of fact had forced Apple to take the help of the diversification and differentiation strategies so as
to overcome the negative connotations of the high business competition that it presently faces
within the US consumer electronics industry.
Factor Conditions
The different factor conditions within the nation of USA had directly contributed towards
the unprecedented success attained by Apple not only in the concerned nation but also in the
international business arena. For instance, the concerned corporation is not only being able to get
talented as well as professionally qualified workers from USA but also outsources them from the
other nations of the world (Foros, Kind and Shaffer 2017). This ensures that the corporation is
being able to get some of the most qualified workers and thereby is being able to offer high
quality products or services to its customers. In addition to these, the large profitability or the
revenue generated by the concerned corporation along with the governmental support as well as
the support from the different investors that it gets ensures the fact that the corporation has
adequate capital resources for its diverse projects (Bbc.com 2020). These in turn had enabled
Apple to focus effectively on the quality of products as well as services offered by it which in

5PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
turn had helped it to acquire competitive advantage in USA and also in its overseas business
centers as well.
Demand Conditions
Apple holds more than 42% of the market share within the nation of USA in terms of the
computers, laptops, smart phones and other electronic products offered by it (Money.cnn.com
2020). More importantly, with each of the new products or services launched by the corporation
the demand for its products and thereby its market share had kept on increasing. Furthermore, the
customer-centric approach which is being used by it for product designing and also the
integration of the customer needs or demands within the same had contributed towards the high
demand for the products and services offered by Apple which in turn had also helped it to
acquire competitive advantage (Bbc.com 2020).
Related and Supporting Industries
There are various suppliers who ensure the fact that the raw materials needed by Apple
are being delivered it to on a timely basis and also its products are being delivered to the market
as well. Furthermore, the concerned corporation had also formed collaboration with the major
international corporations for the manufacture of the parts of its products to speed-up its
manufacturing process (Foros, Kind and Shaffer 2017). This in turn had helped the corporation
to improve the quality of its products and thereby earn the satisfaction of its customers which in
turn had helped it to acquire competitive advantage.
Chance and Government
Steve Jobs, the co-founder of Apple, was a shrewd businessman himself and the majority
of the business strategies which are being presently followed by Apple were formulated by him
(Bbc.com 2020). More importantly, the clear as well as realistic vision and mission formulated
by him had greatly contributed towards the success attained by the corporation (Foros, Kind and
Shaffer 2017). In addition to these, active governmental support is also being offered by the US
government to Apple to facilitate its growth and development because of the economic
contribution that it makes towards the US economy.
Conclusion
To conclude, the effective usage of the different geographical factors or the local cluster
of a home nation greatly helps the business corporations to acquire success in the international
business arena. In this regard, it needs to be said that the adequate usage of the different
geographical factors or the local cluster of the nation of USA by Apple had not only helped the
concerned corporation to acquire success as well as competitive advantage within USA but also
in the international business arena as well. This becomes apparent from the above analysis of
Apple through the usage of Porter’s Diamond model.

6PORTER’S DIAMOND MODEL AND COMPETITIVE ADVANTAGE
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