Porters Diamond Model

This essay paper evaluates the diamond of national advantage by Michel Porters and relates it to the operative circumstances surrounding the emitted areas. It discusses the factors that influence competitive advantage, such as factor conditions, home demand conditions, government and strategy, structure and rivalry. It also explores the role of government intervention in promoting business survival and suggests strategies for government support.

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Porters Diamond Model

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PORTERS DIAMOND MODEL
Businesses exist in markets if they can face the stiff competition exhibited in the market
set up. The ability of companies to survive in markets is determined by their competitive
advantage. Both external and internal factors influence the level of business competitiveness in
the economy. Determinants of economic growth are laid within the macroeconomic factors and
microeconomic factors which affects the operation of the business. Competitive advantage is the
ability of business to conducts its activities with fewer efforts and fewer inputs compared to the
other company in the economy. It gives a business upper hand in revising its prices and
economic variances. An American strategic professor Michael Porter developed a model for
small-sized companies to help them evaluate and understand the concept of their competitive
advantage in global perspectives. According to the strategist, he assumes that the
competitiveness of the business is closely related to the performance of other business is related
to the performance of the other company across the globe. This essay paper will evaluate the
diamond of national advantage by Michel Porters and relate it to the operative circumstances
surrounding the emitted areas.
Different organizations can use the porter’s model to establish their abilities to transform
the national advantages into international advantages. The national home base of a country plays
a more significant role in the creation of global competition (porter, 2012). The necessary
supports which ranges from the government support and good infrastructures help a country
achieve the global perception. It's only through clear and right setup conditions a country or
company can experience an excellent competitive advantage. Regarding our case, our
companies, business, and shops are experiencing low activity, and some have been put unto

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receiverships. These cases can affect the competitive advantage of the country. Some of the
factors which influence this scenario are the factor condition, Home demand condition,
Government and strategy, structure and Rivalry.
Home factor conditions
This is a situation whereby the country is related to the production of factors like
knowledge and infrastructure business is liked with innovation, and excellent support is likely to
progress better than any other company in the world. Innovations and inventions of new business
ideas are completely intrigued in the ability to produce knowledgeable employees (Kenneth,
2002). These factors are very applicable for the affordability in any specific industry. These
influences can be further clustered into material possessions and personal incomes. The primary
ability of the company to achieve a competitive advantage is human resources. Without investing
in Quality human resource, the level of output is likely to be negatively affected. In this scenario,
we can relate our cases into the poor factor conditions, in which our companies, shops, and
industries are closing down. The best strategy to approach in this case is to invest further in
knowledge and human resources.
Home demand condition
To create international competitiveness, the existence of home demand is essential.
Companies, shops, and businesses thrive under the assumption of continued buying and selling.
Competitive advantage arises when a business can engage in selling without much competition
from its rivals (Killing, 2008). Their nature of markets is exhibited by the size of the market.
There is permanently the existence of connections between the home market and parsimonies of
scale, transference, and scope of the home market. The reasons behind the closure of home
businesses are due to lack of demand in the community.

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Government
Government plays a crucial role in promoting and encouraging the development of
industries besides its ability to influence business in the boundaries of the state. If the
government fails to enhance and help private companies, those businesses cannot achieve
international recognition. Government finances .and constructs roads and airports and further
encourages investment in education and healthcare. It may also instruct companies to use
alternative resources which are environmentally friendly and economical. Granting subsidies and
other financial aids may help resurrected business and operate beyond national standards.
Despite government involvement in business by targeting revenues, encouraging busi9ness
operations is the key factors towards growth. National concepts can create a domestic
environment in which industry is born and learn how to compete. In our scenario, there is a
failure on the government side (Klug, 2008). The government can evaluate the causes of business
failure and the reasons behind the closure of the business. The strategic opinion in this scenario
is to engage government in mitigating business pressures.
Strategy, structure, and rivalry
This influence is related to the way the group is managed and organized. Its company
goals and measures of competitiveness exhibited within the administrative setup. If further
illustrates the conditions in which the country can determine where the business will be situated.
Cultural aspects of the company play a more significant role in this situation. Business prosperity
is also determined by the location, working moral and interaction with other businesses within
the same operating environment. Companies internal factors like morale and business relation
can evaluate the success of companies operating in different countries. In our scenario businesses
are closing down. The cause can be a restriction of companies by their parents’ companies,

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persistence rivalry within the operating environment or poor strategies. Remolding of business
policies and procedures to achieve advantages on an international scale.
For businesses to survive, government intervention is very critical. The government
encourages and ensure business survival through the following strategies.
I am creating a friendly trade policy. Elimination of foreign trade terrifies and quotas allows
business to realize substantial cost convertible enabling them to increase their bottommost
operating lines. The aptitude of business to outsource labor and trade inputs allows business to
producer cheaper products thus improving profit margins and further encouraging business
expansion.
Granting incentives and free access to government loans without restrictions. Many
businesses fail due to a lack of financial security. If the government operates with a desire to
improve the countries business, incentives and loans promote manufacturers to produce products
with economic freedom. The government has access to its revenue and business tax money. The
higher incentives will encourage more businesses to erupt and compete in a healthy manner.
They are lowering interest rates. Government intervention on the lending activities by a
financial institution will lender interest rate at an affordable price. Which ultimately encourages
business to borrow more and be able to repay with lower affordable interest cost. The closure of
business may be associated with the high cost of operation which can be managed through
government intervention.
Infrastructure upgrading funding. The commercial does better when it can move raw
materials from the factors and efficiently transport final products to the market. The government
can help in improving the infrastructure needed for business to operate. Good support will

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encourage creating industries and enhance the level of companies in a country. Without proper
infrastructure and communication systems, business operations become difficult.
.

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References
Kenneth, 2002. The Princeton Encyclopedia of the World Economy.. 1st ed. s.l.:Princeton
University Press.
Killing, P., 2008. Cooperative Strategies: North American Perspectives. s.l.:Lexington Books.
Klug, M., 2008. Market Entry Strategies in Eastern Europe in the Context of the European
Union: An Empirical Research into German Firms Entering the Polish Market. s.l.:Springer
Science & Business Media.
porter, M. E., 2012. Competitive Advantage of Nations. 1st ed. s.l.:Free Press.