Global Business Management

Corporate Strategy and Competitiveness

BBA - IV

Dr. M. Imran Malik

Lecture – 32
Date: May 22, 2020
Department of Management Sciences
COMSATS University Islamabad – Attock Campus
Porters Diamond
 Porter’s Diamond
• It was published in 1990
• Book – Competitive advantage of nations
• Theory of national competitive advantage
– The theory attempts to analyse the reasons for a
nation’s success in particular industry.
 Factor endowment
• This shows a nation’s position in factors of
production such as skilled labor or
infrastructure necessary to aompete in a
particular industry
– Basic Factors
– Advanced Factors
 Factors endowment
• Basic factors
– Natural resources
– Climate
– Geographic location
– Demographics

The basic factors can provide an initial advantage

they must be supported by the advanaced factors to
maintain success.
 Factors endowment
• Advanced factors
– The result of investment by people, companies
and government are more likely to lead to
competitive advantage
– Supported by the basic factors a company must
invest in the advanced factors
 Factors endowment
• Advanced factors
– Communication
– Skilled Labor
– Technology
– Education
 Demand Conditions
• Demand creates capabilities
• Demand impact quality and innovation
 Related supporting industries
• Creates cluster of supporting industries that
are internationally competitive
• These generally meet requirements of the
other parts of the diamond
Firm Strategy, Structure and Rivalry
• Long term corporate vision is a determinant of
success
• Keeping in view the vision the MNE’s generally
adopt structure
• Presence of domestic rivalry improves a
company competitiveness
 What Porter’s Theory Says?
• Countries should be exporting products from
those industries where all four components of
the diamond are favorable, while importing in
those countries where the components are
not favorable
 The Role of Chance
• Chance events can nullify the advantages of some competitors
and bring about a shift in overall competitive position because
of developments such as;
• (1) new inventions,
• (2) political decisions by foreign governments,
• (3) wars,
• (4) significant shifts in world financial markets or exchange
rates,
• (5) discontinuities in input costs such as oil shocks,
• (6) Increase in world or regional demand, and
• (7) major technological breakthroughs.
 The Role of Government
• Government can influence all four of the major
determinants through such actions as
• (1) subsidies,
• (2) education policies,
• (3) the regulation or deregulation of capital markets,
• (4) the establishment of local product standards and
regulations,
• (5) the purchase of goods and services,
• (6) tax laws, and
• (7) antitrust regulation
 Globalization and Corporate Strategy

• The production and distribution of products

and services of a homogeneous type and
quality on a worldwide basis
 National Responsiveness
• The ability of MNEs to understand different
consumer tastes in segmented regional
markets and to respond to different national
standards and regulations imposed by
autonomous governments and agencies
Thank you