Automobile Industry of Japan
Firstly, I would like to explain the Porter’s Diamond model. Porter’s Diamond model is to explain why a nation achieves international success in a particular industry. Porter theorizes indentified four broad attributes as constituting the diamond which are Factor endowments, Demand conditions, Relating and supporting industries, Firm strategy, Structure, and rivalry. These attributes can promote or impede the creation of competitive advantage. Hill, Charles W.L.(2011) ; Porter M.E. (1990)
Factor endowments refers to a nation’s position in factors of production necessary to compete in a given industry. It can lead to competitive advantage. Factor endowments distinguishing between basic factors (natural resources, climate, location, and demographics) and advanced factors (communication infrastructure, sophisticated and skilled labour, research facilities, and technological know-how)
Demand conditions refers to nature of home demand for the industry’s product or service. The nature of home demand for the industry’s product or service influences the development of capabilities. Porter emphasizes the role home demand plays in upgrading competitive advantage. If the domestic consumers are sophisticated and demanding, it creates pressure to local firms to meet high standard of product quality and to produce innovation products.
Related and supporting Industries also a national advantage in an industry. The presence supplier industries or related industries that are internationally competitive can spill over and contribute to other industries. Successful industries tend to be groped in clusters of related industries. This was one of the most pervasive findings of Porter’s study.
Firm Strategy, Structure, and Rivalry explains the conditions governing how companies are created, organized, and managed, and the nature of domestic rivalry. Porter makes two important points, First is different nations are characterized by different management ideologies, which either help
Factor endowments refers to a nation’s position in factors of production necessary to compete in a given industry. It can lead to competitive advantage. Factor endowments distinguishing between basic factors (natural resources, climate, location, and demographics) and advanced factors (communication infrastructure, sophisticated and skilled labour, research facilities, and technological know-how)
Demand conditions refers to nature of home demand for the industry’s product or service. The nature of home demand for the industry’s product or service influences the development of capabilities. Porter emphasizes the role home demand plays in upgrading competitive advantage. If the domestic consumers are sophisticated and demanding, it creates pressure to local firms to meet high standard of product quality and to produce innovation products.
Related and supporting Industries also a national advantage in an industry. The presence supplier industries or related industries that are internationally competitive can spill over and contribute to other industries. Successful industries tend to be groped in clusters of related industries. This was one of the most pervasive findings of Porter’s study.
Firm Strategy, Structure, and Rivalry explains the conditions governing how companies are created, organized, and managed, and the nature of domestic rivalry. Porter makes two important points, First is different nations are characterized by different management ideologies, which either help