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Porter's Diamond Model

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Porter’s Diamond for Volkswagen
A Porter’s Diamond is a global tool which analyses why some nations are really good at certain industries. The diamond was proposed by Michael Porter in the mid 1980’s which proposes that countries are able to generate factor advantages for themselves. Porter’s diamond is shown below which represents four elements that Porter suggests as the determining aspects of national comparative economic advantage.

One of the concepts of the model is factor conditions which refers to the resources available in the country. This would include resources such as; human, physical, capital, infrastructure and knowledge. Simple natural resources include climate, minerals and oil as the flexibility of the factor is …show more content…

303). In the diamond model, the advanced factors are most noteworthy for competitive advantage. These are usually the result of investment made by businesses and government as they aim to provide research, training and innovation. In order to maintain and improve the competitive advantage, the company or government should invest in its factor conditions on a regular basis.
Another concept of the model would be demand conditions which refers to aspects such as the home demand and the size, growth and complexity of the market. This suggests the higher the demand for the company, the easier it is for them to use that demand to grow the business and invest in new and innovative products. Also, if there is high demand in the home country of the company, then it is able to work at an advantage especially when it competes …show more content…

This is because supporting industries are able to produce ideas or materials that are necessary for a new method and personalisation to the company. The surrounding industries are able to deliver cost effective ideas or products and aid the other companies involved in the chain to innovate.
In the German automotive industry, there are a high number of suppliers and related industries therefore there is a high amount of international competitiveness. Industries that are related or are supporting benefit firms as it creates innovation that helps organizations to produce in a cost-efficient manner. Also, if one industry is successful, it can influence the growth of other industries. This is because the progress of the car industry would improve opportunities of the steel

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