Porter’s National Diamond Model was proposed by Michael Porter, a famous strategic management scientist at Harvard Business School in the US Porter's diamond model is used to analyze why a certain country is more competitive internationally. There are four factors that determine a country's industrial competitiveness. Production factors including human resources, natural resources, knowledge resources, capital resources, and infrastructure. Demand conditions, mainly the needs of the domestic market related industries and supporting the industry's performance whether these industries and related upstream industries have international competitiveness. Enterprise strategy, structure, performance of competitors.
As mentioned earlier, these four …show more content…
The primary factors of production refer to the natural resources, climate, geographical location, unskilled workers, capital, etc. The advanced factors of production refer to modern communication, information, Transport and other infrastructure, highly educated manpower, research institutions. Porter argues that primary production is less and less important as its demand is diminishing and multinationals can access it through a global market network (of course primary-production factors are still very much for agriculture and natural-product-based industries important). The high-level factors of production have undoubtedly the importance of gaining a competitive advantage. Advanced factors of production require substantial and sustained investment in manpower and capital first, and as research institutes and educational programs that cultivate advanced factors of production, they themselves require highly qualified personnel. High-level production factors are difficult to obtain from the outside, we must create their own …show more content…
The availability and sophistication of these two factors of production also determine the quality of its competitive advantage. If a country bases its competitive advantage on primary and general factors of production, it is often unstable.
Porter also pointed out: In actual competition, abundant resources or cheap cost factors often result in inefficient allocation of resources. On the other hand, unfavorable factors such as shortage of manpower, insufficient resources and poor geographical and climatic conditions will form an incentive the pressure of industrial innovation, and promote the lasting escalation of the competitive advantage of enterprises. The competitive advantage of a country can in fact be formed from unfavorable factors of production.
It is hypothesized that countries with abundant resources and cheap labor should develop labor-intensive industries, but such industries will not make major breakthroughs in substantially raising their national income, and they will not be able to gain global competitiveness simply by relying on primary factors of
As mentioned earlier, these four …show more content…
The primary factors of production refer to the natural resources, climate, geographical location, unskilled workers, capital, etc. The advanced factors of production refer to modern communication, information, Transport and other infrastructure, highly educated manpower, research institutions. Porter argues that primary production is less and less important as its demand is diminishing and multinationals can access it through a global market network (of course primary-production factors are still very much for agriculture and natural-product-based industries important). The high-level factors of production have undoubtedly the importance of gaining a competitive advantage. Advanced factors of production require substantial and sustained investment in manpower and capital first, and as research institutes and educational programs that cultivate advanced factors of production, they themselves require highly qualified personnel. High-level production factors are difficult to obtain from the outside, we must create their own …show more content…
The availability and sophistication of these two factors of production also determine the quality of its competitive advantage. If a country bases its competitive advantage on primary and general factors of production, it is often unstable.
Porter also pointed out: In actual competition, abundant resources or cheap cost factors often result in inefficient allocation of resources. On the other hand, unfavorable factors such as shortage of manpower, insufficient resources and poor geographical and climatic conditions will form an incentive the pressure of industrial innovation, and promote the lasting escalation of the competitive advantage of enterprises. The competitive advantage of a country can in fact be formed from unfavorable factors of production.
It is hypothesized that countries with abundant resources and cheap labor should develop labor-intensive industries, but such industries will not make major breakthroughs in substantially raising their national income, and they will not be able to gain global competitiveness simply by relying on primary factors of