NAVNEET GERA1The Porter DiamondAcompetitivefirmcanchoosefroma numberoftrade,contractual,and investment modes of foreign market entryhycanaparticularfirminaparticular homecountrydevelopandmaintainits competitivenessasitmovesthroughthe trade, contractual, and investment modes of globali!ation"NAVNEET GERA#The Porter Diamond$orterintroducedadiagram%the$orterdiamond%that has become very &ell kno&nFocusesonfourcentralaspectsofthehomebase, whichPorterviewsasthedeterminantsof competitive advantageFactor conditionsDemand conditionsRelated and supporting industriesFirm strategy, structure, and rivalryMain argument:ations are most li!ely to succeed in industries or industry segments where the national "diamond# is most favorable$NAVNEET GERA'Porter ModelNAVNEET GERA($orter )iamond*actor conditionsPorter considers labor, land, natural resources, and physical capital to be basic factors that are largely inherited%More important from Porter#s point of view are advanced factors that are created which include&ophisticated infrastructure'abor educated and trained in very specific waysFocused research institutionsPorter also ma!es a distinction between (enerali)ed factors*can be used in a number of different industries&peciali)ed factors*tailored for use in specific industriesNAVNEET GERA+)emand conditions&tresses three aspects in the home baseDemand composition&ophisticated, demanding, and anticipatory +anticipates trends in global demand, home demand contributes to firms# successDemand si)e and pattern of growth'arge, rapidly-growing, and early home demand are positive aspects of the home baseDegree of internationali)ationThe more home demand is synchroni)ed with international demand trends, the more it contributes to firms# competitivenessNAVNEET GERA,Related and supporting industries-upplyingindustriesinthehomebasehas several advantages in do&nstream industriesEfficient,early,rapid,andsometimes preferential access to the most cost.effective inputs/ngoing coordination0nnovation and upgradingAcompetitivedomesticsupplierindustryis betterthanrelyingon&ell.1ualifiedforeign suppliersNAVNEET GERA2*irm strategy, structure, and rivalry/necountrydiffersfromanother&ithregardto managerialsystemsandphilosophiesand&ith regard to capital markets 0nstitutional environments that allo& firms to take along.termvie&contributepositivelyto competitiveness$resence of a large number of competing firms or rivals in the domestic industry3ompetitionamongfirmsisnecessaryfor allocativeefficiencyinamarketsystem,but domesticrivalrycontributestodynamic, technological efficiencyNAVNEET GERA45ost important 0nteractions%all related to rivalry)omestic rivals%particularly &hen clustered in a geographic region%contribute to the creation of factorsEspecially speciali!ed, advanced factorsA group of domestic rivals contribute to the presence of speciali!ed and sophisticated suppliersRivalry among domestic firms producing differentiated products enlarges home demand and makes it more sophisticatedNAVNEET GERA6.nteraction in the Porter Model17$/RTER8- )0A5/N) /* NAT0/NA9 A)VANTAGEP/RT0R#& M/D0' 1& 1PP'.0D . .D.1Copyright 2005 by The McGraw-Hill Companies, Inc.ll rights reser!e".)R NAVNEET