Porter's Diamond Model of National Competitive Advantage

Porter's Diamond Model

• The Porter Diamond Theory of National Advantage explains a nation's or group's competitive advantage based on easily accessible factors.
• The model consists of four elements:
  • Firm Strategy, Structure, and Rivalry
  • Demand Conditions
  • Factor Conditions
  • Related and Supporting Industries

Firm Strategy, Structure, and Rivalry

• Competition leads to increased production and technological innovations.
• The concentration of market power, degree of competition, and ability of rival firms to enter a nation's market influence a nation's competitive advantage.

Demand Conditions

• The size and nature of the customer base for products drive innovation and product improvement.
• Larger consumer markets demand and stimulate a need to differentiate and innovate, increasing market scale for businesses.

Factor Conditions

• Elements that a country's economy can create for itself, such as:
  • Large pool of skilled labor
  • Technological innovation
  • Infrastructure
  • Capital
• Government can stimulate competition between domestic companies by establishing and enforcing anti-trust laws.

How the Porter Diamond Model Helps Businesses

• The theory helps businesses understand why certain industries are widespread in some nations.
• Companies can analyze and compare their position in the market and implement strategies to compete.

Strategies for Competing in International Markets

• Exporting
• Creating a wholly owned subsidiary
• Franchising
• Licensing
• Creating a joint venture or strategic alliance

Mission, Vision, Goals, and Objectives

• Mission: The reason why the organization exists and what it does to help others.
• Vision: The dream that the organization wants to achieve in the future.
• Goals: The things that the organization aims to accomplish.
• Objectives: Specific steps to reach those goals.

Importance of Vision, Mission, Goals, and Objectives

• Provide indications of the attitude, outlook, and orientation of the business.
• Help to keep direction and maintain related actions of lower-level managers on the right path.
• Convey an organizational purpose and identify what motivates employees to do their best.
• Help an organization prepare for the future and filter into the customer base.

Types of Goals and Objectives

• Quantitative and qualitative terms
• Short-term and long-term strategies
• Primary objective: to make a profit or increase shareholder wealth (ROI)
• Backup goals in various areas, such as:
  • Profitability
  • Customer orientation
  • Productivity
  • Internal structuring
  • Competitive position
  • Physical and financial resources
  • Employee development
  • Employee relations
  • Technology and innovation
  • Public responsibility

Formulating Goals and Objectives

• Step 1: List all possible goals based on needs and beliefs.
• Step 2: Identify priorities and consider what you want to achieve in the next 3-5 years.
• Step 3: Organize your list into a plan.
• Step 4: Use the SMART analysis to ensure your objectives are attainable in a certain time frame.

Setting SMART Goals

• Specific: The goal is concrete and tangible.
• Measurable: The goal has an objective measure of success.
• Attainable: The goal is challenging, but achievable with available resources.
• Relevant: The goal meaningfully contributes to larger objectives.
• Timely: The goal has a deadline or timeline of milestones.