The Diamond Model of National Advantage for India

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
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Topic 1:
The Diamond Model of National Advantage for India
Michael Porter proposed the ‘theory of National Advantage’ to state that the factors
affecting the growth of an organisation in the home country as well as globally. It is also known
as ‘Diamond Model’ because its framework is shaped in the form of a diamond structure
(Harding, 2017). It explains the reason why some organisations can compete internationally
while some are not. The diamond model includes the four vital factors affecting the success of
any organisations in a particular industry worldwide (Kharub & Sharma, 2016). They are
Demand Conditions, Factor Conditions, Related and Supporting Industries, and Structure,
strategy and Rivalry. The framework below explains the competitive national advantage of India
over other countries.
1. Demand Conditions: The increasing demand of the customers puts pressure on the
nation to compete in the market by constant innovation and quality improvement. There
must be a local demand created by a particular industry before exporting the products to a
foreign country (Gonzalez, Meliciani & Savona, 2015). This will help in analysing the
demand of the product based on its size, growth pattern and number of buyers. India’s
position is sixth among the most significant world economy in 2018 and is likely to
surpass the UK in 2019. The increased number of multinationals have been set to attract
the development of the country. The GDP has risen from 6.68 per cent in 2017 to 7 per
cent in 2018 (Tradingeconomics.com, 2019). The increase in literacy rate increases the
income as well as the living standards of the people. This will lead to a rise in demand
and consumption, resulting in increasing innovation for better quality products.

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2. Factor Conditions: The factor conditions are basically, the raw materials such as land,
labour, capital and infrastructure required for the production in the retail business. In
India, more than 50 per cent of the population comprises of youth. Some of the IT
Industries of India are globalised including TCS, Wipro, Infosys and HCL. Within 25
years, India's IT industry became giant leaders and generated a large export business. The
cost of providing IT services by these companies are relatively two-three cheaper than in
the US markets. It also creates job opportunities for millions of people worldwide.
3. Related Supporting Industries: This dimension explains the need for supporting
industries whose presence is necessary to prosper and compete globally. The retail sector
in India is associated with the analytics industry. The analytics industry gets a
competitive advantage over the retail industry in the global markets (Li & Zhang, 2018).
The retail sectors can use the analytics strategically to increase the stock according to the
demand. The availability of IT services provides excellent support to most of the
industries in India. The USP of IT sectors is the cost competitiveness, which helps in
positioning these sectors and competing in the global market. IT availability as a
supporting industry helps in boosting the competitiveness of the analytics industry at a
cheaper rate.
4. Structure, Strategy and Rivalry: This dimension helps in describing the
competitiveness of the firm, its management practices and organisational models play an
essential role in making strategy innovation to remain in the market (Sultan & Qaimary,
2017). The core competency of leading IT industries in India has attracted many
investors. Indian IT services are delivered both offshore and on-shore by the major IT
firms, TCS, Wipro, Infosys and Tech Mahindra. According to Accenture’s Platform