Question

Briefly explain Michael Porter’s Diamond of National Advantage, and then apply the theoretical model to two Latin American industries –explain the advantages derived from the corresponding quadrant of the Diamond.

Answer 1

Answer-

Michael Porter made an economic demand model for the organizations to make them understand how competitive they are in the global market; this model is known as the Porter Diamond theory of National Advantage or Porter double Diamond Model. The name is given to model because the factors which are important in the global business context resembles to that of points on diamond. According to Porter the competitiveness of business depends upon the performance of the other business in the same domain.

Explanation:

To better understand the Porter Diamond model, we will do the theoretical implementation of the same on the two Latin American multinational companies.The factors and points that are involved in the Diamond Model are defined as;

1)     Factor Conditions

2)     Firm Strategy, Structure and rivalry

3)     Demand condition

4)     Related and Support industries.

For that we will consider the two companies in Latin America

1)   Telemex

2)   Latin airline

Telemex is the Colombian mobile operator and to have the competitive advantage they needed to follow the Diamond model.

a)   Demand condition

What are the possibilities of the evolving mobile technologies in context of the data driven model as the population and customer are getting more data driven. To understand the growth rate of the mobile users in the country and internationally, considering the services are cheaper it is accessible to all.

b)   Factors

What are the IT policies in the different states to make the business run smooth, workforce should be able to learn the system and process quickly. Educating the people regarding the usage of mobile and internet to get high customer penetration

c)   Supporting Industries

Mobile manufacturers depend upon the spare parts supplier, so the supplier should understand the demand of the Telemex and what market they are targeting. They should be able to provide innovative solution to have the competitive advantage over other international companies in the same domain.

d)   Firm Strategy

Telemex should be having the detailed analysis of the competitors, to have the upper hand in the market. Internal team should be innovative, to bring up the first to the market kind of products, to support the long term organizational goals. Latin  Airlines

Latin  is one of the largest airline on the Latin America, based out in Chile, having its subsidiaries in Argentina, Brazil and Peru and other Latin American countries. a)   Demand Condition

Air travel, is becoming more frequent than it was ever before. Now companies are catering the customers which were kind of untouched, few years ago. This has happened because of the dip in the air fares and also because of the high availability of the airports. As the demand is increasing, Latin has to plan the strategy to understand the requirement of every customer segment.

b)   Factors

Governments are supporting for the cause of the Airlines companies, Latin can take the advantage of this support and reach to the destination which no other big player have done so far. That will help to increase their market presence and will also have the positive effect on their revenue.

c)   Supporting Industry

The main business of the Airlines industry depends upon the Aircraft manufacturers. By having the aircrafts as per the people and market segmentation will help Latin regularize the price segment of the air travel, which will give them the competitive advantage over other competitors in the market.

d)   Firm Strategy

Long term growth is always the agenda of every organization, and with the availability of resources and destination, firm can target and plan the long term target to extend themselves in the region which is still unexplored by most of the international airlines, by tapping the customer who are still looking for the quality sir travel. That will help work as the social marketing for the Latin airlines.