Define Diamond Of National Advantage 1

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The trade war between China and United States continues up to date with both countries

implementing trade tariff that is aimed at boosting the competitive advantage across different

sectors. Despite meetings between trump and china prime minister to calm the situation and

lifting of restrictions for china made products, some of the tariffs remain in place. Interests if

dominance in the international economy through trade has caused stiff competition between

American made products and china made products across the world markets. The potters

diamond of national advantage analyses the competitive advantages of these two superpower

countries.

The porter diamond theory of political advantage refers to an approach that explains why

a nation can have a competitive advantage in the global markets over another competing country

as well as different strategies that governments use to rise in a globally competitive economic

environment. Michael Porter was the developer of this model. Both China and the USA are

fighting to gain a competitive advantage over each in the global markets. This model will analyse

the different strategies that are used by each country to gain a competitive advantage over the

other. According to this model, for a country to gain a competitive advantage, it must perfectly

infuse the following factors into their system: related supporting industries; demand conditions;

firm structure, strategy and rivalry; factor conditions and demand conditions. If the nation well

evaluates these conditions, it will be able to manipulate both domestic and international markets.

The diagram below demonstrates the interrelationship between these different factors.
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Source: https://i0.wp.com/www.business-to-you.com/wp-content/uploads/2018/06/Porters-

Diamond-Model.png?resize=768%2C642&ssl=1 [ CITATION Bus18 \l 1033 ]

Firm Structure, Strategy and Rivalry

In the war trade between China and US, reflects context whereby companies operate

across the globe hugely affected by how the companies are managed, organized and created

therefore influencing the strategies and the structure of the companies themselves. These factors

form an essential part that determines the success of an organization. The cultural backgrounds at

which an organization is significantly established affect its success in the international markets

and competition with other local rivals (Liu & Zhang 2017). The organizational structure should

create an environment whereby firms are able to find their way into global markets and serve

customer needs. Ascertaining the ability and the different approaches used by rivalry firms in
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terms of marketing strategies and branding. The business environments established by the

governments of China and America have a significant influence on the potential of their business

firms succeeding. This strategy determines which countries gain a competitive advantage in the

global markets.

Related and Supporting Industries

Presence of other associated industries that provides an excellent background for the

young companies to rely on dictates which industries a company can excel. Success and progress

of many companies in the market depend on the partnership with other related companies in the

industry. The competitiveness of a company can be hindered by the lack of associated companies

which can partner in the achieving of the common goal. Short supply chains and the presence of

reliable suppliers determine the potential of young firms to progress in the market (Liu & Zhang

2017). This approach, the idea that for a firm to adapt effectively in the global market is

supposed to partner with companies who are global suppliers.

Moreover, the companies' economies of scale help companies to produce a higher

quantity of products at lower costs. Small companies may benefit from the innovations of more

prominent relate companies to improve their productions. They may gain an advantage by

adopting technologies and production policies used by the larger companies for their

development. A country may, therefore, have more than one firm venturing into the international

markets producing related products. For instance, China has several industries which produce

cell phones like Huawei and Samsung brands. Moreover, the growth of some industries has a

significant impact on the growth of other sectors which are related. For instance, grown of the

steel industry in the US promoted the growth of automobile industries in the US.
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Factor Conditions

This approach is concerned with the factors that are needed by the firms to be

competitive in the market. The competitiveness of American and Chinese firms is influenced by

the availability of human resource; capital and natural resources. Availability of these factors

varies from one country to another depending on the skills of the population and the government

investments (Liu & Zhang 2017). Taking an example of the competition in the automobile

industry between china and US, availability of production inputs differs from one country to

another.

According to Liu and Zhang (2017), the cost of labour in the American automobile industry is

thirty times compared to the labour cost experienced by the firms in china. China has a large

population and availability of work is assured. However, America has a low population but

skilled, which makes it expensive to hire. A knowledgeable economy is the drivers of

development. Both China and America have substantially invested in technology to boost the

levels of innovation and profiting of the different projects within the firms. Both countries also

have a well-established infrastructure which enables smooth coordination of the production

processes.

Demand conditions

Demand conditions refer to the needs of the home market and the strategies that should

be adopted to gain a competitive advantage in that particular industry. The demands of the

market influence the routes of production that are used by the company.

For instance, considering the automobile industry, the demand conditions vary from one area to

another. Imbalanced regional economic development in china affects the demand condition for
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cars. The target market for the automobile industry in China is small, causing low levels of

production. The demand for cars in America is high due to balanced economy automobile

industries in America will, therefore, produce more care to fill the demand void.

The government occupies a vital role in the development of business firms within its

economy. This is by providing an appropriate work environment and protecting developing firms

from exploitation by developing and external firms. Trump's government has intimated tariffs

that discourage products from foreign firms like Huawei intending to promote internal products

market (Handley & Limão 2017, p.60). The government can also offer financial support of its

firms through loans and grants.

The chance factor focusses on the taking advantage of different circumstances to push the

company's level of sales on a higher level. This can be done through manipulating of events or

weaknesses of a competitive firm. For instances, during the war, an arms selling company will

take advantage of the situation to maximize its volume sales.

Question 2

Entering of global markets involves producing, placing and promoting of affirms

products at an international market. Attaining of the worldwide market is among the most

common stet goal by many companies. However, there is an excellent probability of a company

collapsing or failing to retain its position in the global market due to high levels of competition

from many rivalry firms across the world. After a company reaches the global market, it should

new strategies to be able to compete with the dominant firms in the products.

Marketing is an essential tool in every business opportunity and the key strategy to gain

competitive advantage. Creating awareness of the products in new global markets fantasizes
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potential customers to try the new products. The marketing strategy requires an analysis of the

best marketing strategies to reach more potential clients. Various approaches to marketing can be

used to make the customers chose the new products compared to the existing brands in the

market — the use of mass and medial social platforms used in marketing today. The adverts

should explain to the customers why the new brand is better compared to the existing products

(Grant, 2016).The company may also choose to market their products using the strategies used in

the local market. The approach used to create awareness should be based on the findings of the

market research.

Economies of scale have a significant impact on the levels of profits earned by the

company. After moving to the global market, a company should adopt supply channels that are

effective enough to avail the goods to the customers without distorting them. The supply channel

used should also be cost-effective and efficient sufficient to supply excellent to the customers

anywhere. An inefficient supply chain may affect the price of the products. Differences in price

quotation among different substitute products is a way of creating a competitive advantage

against the dominant firms in the industry.

Innovation is a strategy that helps new firms in the global market to survive stiff

competition from an existing form. This approach requires firms to come up with new strategies

which make their brand unique and come up with new ways of handling customers in a better

way compared to the competitors. Innovation also involves the ability of a business firm to be

able to predict future trends within the concerned industry and exploit available opportunities

(Efrat & Yonatany 2017, p.385). It also includes advancements in technology, which improves

customers shopping experiences.

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With the aggressive levels of competition across different industries in the international

market, convenience in the methods of payment should cover all the global markets that the

company is a part of. Worldwide banking allows a foreign firm to coordinate its operations

efficiently without experiencing destructors. This enables a company to build a network between

its branches and other companies which can partner.

In conclusion, before entering into global markets, the company should establish proper

supply chain channels, carry out market research and marketing of a brand to build its reputation

internationally. A company should carry out market research due to differences in market

policies from one state to other

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References

Bussiness-to-you, 2018. Porter’s Diamond Model: Why Some Nations Are Competitive And

Others Are Not. [Online] Available at: https://i0.wp.com/www.business-to-you.com/wp-

content/uploads/2018/06/Porters-Diamond-Model.png?resize=768%2C642&ssl=1

Liu, X., Zhang, S. and Feng, X., 2017, January. Comparative Analysis of International

Competitiveness of Chinese-American Automobile Industry. In 2016 2nd International

Conference on Economics, Management Engineering and Education Technology

(ICEMEET 2016). Atlantis Press.

Kharub, M. and Sharma, R., 2017. Comparative analyses of competitive advantage using Porter

diamond model (the case of MSMEs in Himachal Pradesh). Competitiveness Review: An

International Business Journal, 27(2), pp.132-160.

Efrat, K., Gilboa, S. and Yonatany, M., 2017. When marketing and innovation interact: The case

of born-global firms. International Business Review, 26(2), pp.380-390.

Handley, K. and Limão, N., 2017. Policy uncertainty, trade, and welfare: Theory and evidence

for china and the united states. American Economic Review, 107(9), pp 31-83.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
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