Michael Porter Diamond Theory Essay

Paper Type:  Essay
Pages:  2
Wordcount:  536 Words
Date:  2022-06-20

The development of multinational organization across the globe projects different comparative advantages in the market segments. In the contemporary world, business and trade have been evolving through various strategies that lead to its success (Porter's Diamond Theory of National Advantage, 2018). Therefore, getting into new markets is always a challenge in attracting the consumers of a particular product. It means that multinational companies experience different market outcomes on their market segment investments. Precisely, the parent country of an organization contributes significantly towards the success of its going concerns rather than in the foreign nations. Several factors such as land, culture, labor, and resources contribute towards their stability. Michael Porter has been a significant strategist in developing the comparative advantages of organizations. Subsequently, porter presented the Diamond Theory of National comparative advantage to suit the multi-national agencies concerning understanding the markets before investment (Porter's Diamond Theory of National Advantage, 2018). This theory is designed for organizations to explicitly provide the competitive advantages regarding factors available in a country. It means that the government plays a significant role in boosting the competitive economic environment for their organizations.

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Furthermore, Michael Porter Diamond Theory consists of four key determinants namely; firm's structure and rivalry, factor conditions, demand conditions, related supporting industries. These determinants are influenced by the resources and skills, opportunities, goals, and pressure of companies to strive at innovation and investment. The initial factor, factor conditions consist of the inputs necessary in the production of goods and services (Porter's Diamond of National Advantage, 2018). If a country supports these factors essential for active production, organizations can thrive and gain sustainable competitiveness.

The second determinant, demand condition defies the nature and the population of the esteem customer projection for a particular product in domestic market. In this case, the resilient local demand aid in product improvement (Porter's Diamond of National Advantage, 2018). This improvement thus means the product can do well in the foreign market as well. Thirdly, involved industries in a nation of a particular products aid in cost efficiency of a product. Thus this implies that several sectors influence other growing industries in product development (Porter's Diamond of National Advantage, 2018). For instance, the growth of automobile industry also gives a chance to the steel industry among other related products. Finally, the organizational structure, strategy, and rivalry vary from one nation to another. Policies and structures of organizations are essential to achieving success (Porter's Diamond of National Advantage, 2018). In this case, strategies aid in the process of setting goals, structure aid in the operational management process, and rivalry aid in generating new ideas for an organization to compete in the market. These determinants thus project the necessary analysis of entry before investing in the foreign markets. The local market is a foundation of product development in the market


The Michael Porter Diamond Theory plays an enormous role in identifying a factor that is significant for an organization in generating better market outcomes. Furthermore, this theory provides specific elements that are essential in determining the market segment of a company in the parent country.


Porter's Diamond of National Advantage. (2018). Retrieved from http://www.quickmba.com/strategy/global/diamond/

Porter's Diamond Theory of National Advantage. (2018). Retrieved from http://www.economicsdiscussion.net/international-economics/porters-diamond-theory-of-national-advantage/4223

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Michael Porter Diamond Theory Essay. (2022, Jun 20). Retrieved from https://proessays.net/essays/michael-porter-diamond-theory-essay

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