A model that attempts to explain the competitive advantage some nations or groups have due to certain factors available to them. The Porter Diamond is a model that helps analyze and improve a nation's role in a globally competitive field. The model was developed by Michael Porter, who is recognized as an authority on company strategy and competition; it is a more proactive version of economic theories that quantify comparative advantages for countries or regions. It also known as “Porter’s Diamond” or “Diamond Model”. Figure 1 shows that the Porter’s Diamond is about:
Basically, Porter’s Diamond economic theory mentions a few factors for comparative advantage for regions or countries. Land, location, natural resurces (minerals, energy), labor and local population size are the factors of Porter’s Diamond comparative advantage. These factor endowments can hardly be influenced, this fits in a rather passive view towards national economic opportunity.
Universal financial hypotheses refer to land, area, regular assets, work and populace as determinants in focal point. The Diamond Model utilizes a more proactive approach as a part of recognizing elements, for example the firm method, structure and contention, demand conditions for items, related supporting businesses, and factor conditions. The Diamond Model shows that nations can get focused paying little respect to whether they have common variable gifts, for example, area and regular assets. In the Diamond Model, the part of government is to energize and push associations and organizations to a more intense level, subsequently expanding execution and eventually the aggregate joined together profit.
“Evaluate Porter’s concept of the ‘diamond’ as a tool for analysing the competitiv...
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...ain, Chandler in 1994 endeavoured to handle this issue by creating "late improvement hypothesis", which states that creating nations can skip through every one of the four stages depicted by Porter. This is on account of they can import or mimic the innovation and business frameworks which recently exist in other created countries. China, for instance, could expand their gainfulness by adapting new items in their home nation and hence, attaining an expense advantage technique. This was expected for the most part the low wages and good trade rates arrangement. Along these lines, China could expand its gainfulness without enhancing, without any danger of innovation improvement. Just USA, which has high capital for every specialist and is as of now in the innovative wilderness, must advance to succeed, heading Porter to over all inclusive statements different nations.
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
During the postclassical period, the expansion of trade had different interpretations around the world. Varying societies all reacted to trade in different ways due to how they viewed the situation. It had caused conflict in few areas around the world and also created peace as well as harm. Some communities had pros and cons to trade, like everything else. Some reasons for the positive or negative feedback on trade was due to religion, and or the philosophical system. Religion and the philosophical system was both pros or cons for trade in different civilizations. Religion helped with the spread of different ideas and religions across a mass area. Yet it had a negative input because then people fought, thinking their religion was more
In this case, it is a diamond cartel which has a role to play in the price of diamonds and the following essay is going to use demand and supply curves or diagrams and various other resources to explain how a cartel can affect the price of a good, but specifically a diamond. It will also illustrate how different the market for diamonds would be without the incorporation of a cartel. First and foremost, however, this essay with explain the history of both diamond market and diamond cartel creation from its proverbial “roots” here in...
Spar, D. L., 2006. Markets: Continuity and Change in the International Diamond Market. The Journal of Economic Perspectives, Vol. 20, No. 3 (Summer, 2006), pp. 195-208.
The German and Chinese business hierarchies don’t only affect the way businesses are run but also affects what kind of products each country is able to specialize in. The lack of empowerment and innovation within the Chinese business structure makes it very hard for them to come up with new products and processes. However, having an obedient workforce allows them to excel at creating low cost, less complex, mass market products. The Germans focus on efficiency and technical knowledge helps them to successfully produce more complex products, but are seldom the first to market due to their low innovation and empowerment.
Spar, D.L. 2006. Markets: Continuity and Change in the International Diamond Market. The Journal of Economic Perspectives. 20(3): 195-208
In the article “Conditions of Trade,” Michael Baxandall explains that fifteenth-century Italian art is a “deposit” resulting from the commercial interaction between the artist and the purchaser, who he refers to as a client. These works, as such, are “fossils of economic life,” and money, and they play an important role in the history of art. In our current perception of the relationship between the artist and art, “painters paint what they think is best, and then look around for a buyer” . However in the past, especially during the Renaissance period, the customers determined the content and form of paintings, as it was them who commissioned the work before it was created. He states that the artists and clients were interconnected and a legal agreement was drawn up specifying subject matter, payment scheme and the quality and quantity of colors, which would influence the artist’s painting style. Baxandall not only looks at the explanation of the style of painting that reflects a society, but also engages in the visual skills and habits that develop out of daily life. The author examines the situations between the painter and client within the commercial, religious, perceptual, and social institutions, centrally focusing on markets, materials, visual practices, and the concept of the Renaissance period, which saw art as an institution. Baxandall notes that Renaissance paintings also relate to the clients’ motives through such ways as possession, self-commemoration, civic consciousness, and self-advertisement. The author considers works of a wide variety of artistic painters, for instance, Filippo Lippi, Fra Angelico, Stefano di Giovanni, Sandro Botticelli, Luca Signorelli, and numerous others. He defines and exemplifies fiftee...
Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change.
Diamonds have been identified as being precious but expensive gems for many decades. Diamonds were extremely rare, only found in India and Brazil until the late nineteenth century (Vogelsang, 2005: 5). After the discovery of diamonds in South Africa, the diamond industry began to flourish. Diamonds then became very abundant and cheap to produce. In order for the value of diamonds to remain as high as they were during the phase in which they were still rare, a diamond cartel was introduced. A cartel is defined as a group of firms that gets together to make output and price decisions (Cartel Theory of Oligopoly, n.d.). Hence, the diamond cartel aimed to maintain high prices to maximise the profits of the suppliers by restricting the supply. This essay will analyse the history of the diamond cartel, including diagrams that illustrate what the price of diamonds would be with or without the use of a cartel. The notion that diamonds are the only suitable stone that can be used in engagement rings will also be commented on. Furthermore, specific attention will be placed on the role of the diamond cartel in determining the price of diamonds.
Does Porter’s ‘Diamond’ concept convincingly explain the achievements of major national business systems, or are their weaknesses, theoretically and empirically, in his arguments?
Porter’s five force model is a business strategy tool that helps to identify the five competitive forces that analyze the competitive power in a business industry. It acts as planning tool and helps in the business strategy development in the competitive market.
Theoretical model of modern economic growth shows that long-term economic growth and raise the level of per capita income depends on technological progress. This is because of without technological progress and with the increase of capital per capita, marginal returns of capital would diminish and output per capita growth would eventually stagnate (Solow, 1956; Swan, 1956). Studies have shown that “experience, skills and knowledge in the long-term economic growth is playing an increasingly important role” (World Bank, 1999). Despite how technological progress work on economic growth, and how there are different views on the role of in the end, but I am afraid no one would deny that technical progress in the important role of economic development. In this sense, for a country to achieve long-term economic growth, we must continue to promote technological progress. However, economic growth theory is analyzed in general, and usually under the assumption that in the closed economy, and technological progress in a country not normally have taken place in various departments at the same time, and now the economy are often increasingly open economy. In this way, the technological progress in different economic impact on a country may be quite different. In addition, we assume that technological progress is Hicks neutral, is to an industry in itself, but technological progress also reflects the establishment of new industries and development. The new industries and technology-intensive industries generally older than the high, the use of less labor. Even the old industries, the general trend of technological progress is labor-saving.
Moreover, China is the best example for how important is the government’s role in nations economy. Chinese government have created national team to focus on specific sectors such as electronics and automobile. (Sutherland,2003). As a result of this strategy, China became the biggest automobile manufacturer in the world by the end of 2012. Also, Chinese government is very successful to control financial markets and it owns 3 of top 10 banks in the world. On the other hand, in another growing state, India, government is applying different strategy rather than Chinese government that is based over encouraging foreign direct investments into the state by lowering tariffs. Eventually India has joined the top ten automobile manufacturers in the world and net profit of the companies has slightly increased by the end of this process (Sardy and Fetscherin, 2009)
International trade is an economic practice where countries can import and export goods with no concerns to government intervention which includes tariffs and import/export bans or limitations. International trade has several advantages on developing countries; who are nations with low levels of economic resources or low standard of living. Developing countries can advance their economy through strategic free trade agreements. Free trade generally improves the quality of life of poor nations. Nations can import goods that are not easily available within their borders; importing goods may be cheaper for than trying to produce consumer goods. Many developing nations do not have the production procedures available for translating raw materials into valuable goods.
...ndustrial capacity, technology, and infrastructure to compete with the industrialized countries, which have been honing their economic might for over a century.