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Faculty of Business and Management

International Business Management


Year 2016

Lecturer: Allan Tan Ee Ming

Name Student ID Batch

Saw Bee Kee B140088C BMK-14C1

Lee Hao Yan B140119C BMK-14C1

Ngo Yen Han B140133C BMK-14C1

T Company will now have to rely on other sources of competitive advantage.Scenario Q1 T Company manufactures ceramic tiles for floors. its international competitive advantage depended partially on favorable government policies in IY- the country where its manufacturing plants are located. Required: With reference to Porter’s diamond model. explained that there are four sources that can affect the global competitiveness of companies located in particular countries like IY. He also argues that the sources in the diamond form a mutually reinforcing system in which the effect of one determinant or source is dependent on the state of the others. The national debt caused by excessive government borrowing and spending in the years leading up to 2010 however. Until recently. structure and rivalry  Related and supporting industries Porter created a model linking these four sources in a diamond and argued that firms are most likely to succeed in industries or industry segments in which the four sources are favorable. describe the key determinants of international competitive advantage that T Company may need to depend on to sustain its competitive position in international markets. It includes four key elements:  Factor conditions  Demand conditions  Firm strategy. has caused IY’s government to reign back on its spending and so the energy subsidy and help with R&D that the tile industry used to enjoy have been removed. . Answer The Diamond model of Michael Porter. kitchens and bathrooms.

more sustainable market segments. which resulted in slower upgrading. For example. process innovations in the kiln firing process and the development of sophisticated marketing campaigns to attract overseas buyers have been important ingredients in the success of some tile manufacturers. To innovate. is a case in point. they must send companies proper signals about circumstances that will spread to other nations. Many of the advanced factors of production are acquired by firms over a period of time.The four sources that T Company may need to depend on can be characterized as follows: Factor conditions There are two kinds of factor conditions . companies must have access to people with appropriate skills and have home-demand conditions that send the right signals. and advanced factors such as technological. First. Disadvantages can become advantages only under certain conditions. They must also have active domestic rivals who create pressure to innovate. in the tile industry. labor. where there were still enough workers. For .the basic factors of production such as land. thereby equipping them to innovate in advance of foreign rivals. The second condition for transforming disadvantages into advantages is favorable circumstances elsewhere in the diamond-a consideration that applies to almost all determinants. Companies in most other parts of the world. capital and materials. Switzerland. managerial skills and physical infrastructure. focused their attention on other issues. Swiss companies responded to the disadvantage by upgrading labor productivity and seeking higher value. the nation that experienced the first labor shortages after World War 2.

Porter claims that the more sophisticated and demanding domestic customers are. Powerful and knowledgeable retailers with large showrooms can add to the pressure to innovate. A good example is hydraulic excavators. Therefore. it can quickly to exchange its ideas and innovations with them. If T Company locate nearby its suppliers. Demand conditions This conditions can create pressure for innovation and quality. chose to leave the product and production process largely unchanged and move labor-intensive activities to Tai Wan and other Asian counties. U. companies according smaller or less desirable segments a lower priority. This includes suppliers and related industries. Therefore. such as upgrading the material-handling machine to accelerate the manufacturing process. faced with high relative labor costs. The most important is these suppliers can easily to understand the needs of T Company when it need special machine and technology used in the manufacturing . Domestic demand pressures in countries like IY may have been especially relevant in forcing companies like T to improve their competitiveness. T Company can also gain lower cost inputs and energy costs from its suppliers as the location is very close each other. which represent the most widely used type of construction equipment in the Japanese domestic market-but which comprise a far smaller proportion of the market in other advanced nation. the more competitive the domestic firms are likely to be. Instead of upgrading their sources of advantage. T Company has the opportunity to influence its suppliers’ technical efforts. Moreover. Related and supporting industries Related and supporting industries is important to the competitiveness of T Company.S consumer-electronics companies.example. The larger market segments in a nation receive the most attention from the nation’s companies. they settled for labor-cost parity. They help T Company’s international competitiveness become powerful. T Company can lead the IY country in the tile industry in part when other suppliers in IY country deliver the most cost-effective inputs in an efficient such as supply high-tech and stainless machinery to T Company. Home-demand conditions help build competitive advantage when a particular industry segment is larger or move visible in the domestic market than in foreign markets.

Swedish management is decentralized and democratic. In this country. The enhanced awareness strengthened the quality image of IY country and T Company’s tiles. T Company can begin advertising in IY country and foreign home-design and architectural magazines. However. their objectives and the nature of rivalry in the home market. improve quality and services. set goals and are managed is critical to success on international markets. especially cultural aspects play an important role in this. Local rivals push each other to lower costs. which is suit to its strategy and structure. Therefore. This triggers companies to innovate in order to maintain and upgrade competitiveness. and create new products and processes. The strategy and structure of a company is influenced by managerial system. publications with wide global circulation among architects. Regions. T Company just competing with the strongest competitors at IY country is the preparing stage to compete successfully at the international market. Therefore. The rationale is that better informed employees are more motivated and perform better. The way in which companies are established.process. structure and rivalry This element in the Porter Diamond model includes how companies are organized and managed. provinces and countries may differ greatly from one another and factors like management. these suppliers help to facilitate the efficiency and competitiveness of T Company in international markets. and consumers. T Company under constant pressure from competition at IY country is the best way to sustain its competitive position by developing news of product and process innovations such as rapid manufacturing process. upper/middle managers make individual decisions. T Company should according to culture of IY country and people’s management styles to operate its business. Therefore. in USA companies tend to be structured individualism in organization and management practices. However. also the presence of intense rivalry makes companies competitive: it creates pressure. working morale and interactions between companies are shaped differently in different cultures. Thus. Toyota and Honda in Japan would not be such successful brands if they did not have to compete against each other. Firm strategy. For example. The presence of related and supporting IY industries can help in the export drive. designers. Then. For instance. .

floods or the sudden discovery of a major energy saving process which can also play a role. Porter also contends that government can influence each of the four components in the diamond either positively or negatively by pursuing appropriate policies and that chance factors such as oil price shocks. If T Company wants to success. it must depend on a pool of skilled workers and technicians.Moreover. including design personnel and production specialists. Conclusion In the conclusion. Porter's argument is that countries like IY can achieve international success in the tile industry as a function of the combined effects of these four sources. If the company use the correct strategy. As part of the tile industry in IY country it follows that T Company may benefit from the positive interaction of the four sources of national competitive advantage noted above or suffer from their absence. To prevent that happening. earthquakes. Michael Porter’s diamond model are very useful in helping T Company to sustain advantage and use the advantage to help the company to against international competition. . Individual motivation to work and expand skill is important to T Company to sustain its competitive advantage in international markets. it will help the company maintain the advantage to survive in international business environment. outstanding talent is a scarce resource in any nation. If T Company didn’t use the correct strategy. T Company have to study well in Michael Porter’s diamond model to against the international competition in the world wide. it will cause the company make a huge loss.

eu/porter- diamond-model/ Michael Porter.).businessmate.php?ArtikelId=49 Porter's Diamond of National Advantage. Retrieved from businessmate. Retrieved from business insider: http://www. June 4).). M. E.businessinsider.d. Nitisha. Retrieved from Economics Discussion: http://www.References 24 Charts Of Leadership Styles Around The World. (2016.economicsdiscussion. Harvard Business Review Press. ( r=US&IR=T#4Rm2jEm2TWibfwHH.97 Claessens. M. J.d. ( (2014). M. April 1). (2014. Porter’s Diamond Theory of National Advantage. 11 9). Strategy and Competition: The Porter Collection (3 Items).org: http://www.quickmba. The Porter Diamond Model – Analysis of National Competitiveness. Diamond diamond-theory-of-national-advantage/4223 . Retrieved from QuickMBA: http://www. (n. Retrieved from marketing-insider: https://marketing-insider.