Internationalization strategies can bring some strategic benefits to enterprises, but is it appropriate to follow the path of internationalization strategies in some of their operations? What countries are going to conduct international operations? What is the competitive power of the industry in the target countries? Analysis of the overall situation of targeted industries in different countries is therefore required in order to make sound decisions and to maximize the risks associated with strong competition while deriving benefits。
The porter diamond model, also known as the theory of diamonds and the theory of national competitive advantage, is proposed by michael potter in his book, national competitiveness, to analyse how a country can develop an overall advantage and thus become more competitive internationally. Porter wanted to determine why some countries had succeeded while others had failed in international economic and trade competition。
In his view, there were four main factors determining the competitiveness of an industry in a country, namely, corporate strategic structure and competition, factor endowment, demand profile, related industries and supporting industries. There are two other variables: government and opportunities. Structures are diamond-like and are known as diamond patterns。
Corporate strategic structure and competition. This element is a condition for the creation, organization and management of enterprises within a country and an essential element of domestic competition. Different countries have different regulatory ideologies, which help or prevent enterprises from developing competitive advantages. There is a close and mutually reinforcing link between strong domestic competition in an industry and the maintenance of a competitive advantage for firms in that sector. For example, intense domestic competition leads firms to seek ways to improve production and business efficiency, which in turn leads them to become better international competitive firms. Domestic competition imposes a series of pressures on enterprises to innovate, improve quality, reduce costs and increase investment in high-level factors of production, all of which help to build globally competitive enterprises。
2. Elemental endowment. The factor is the state of the factors of production in a country, including human resources, natural resources, knowledge resources, capital resources, infrastructure, etc. Element endowments can be divided into two categories of essential elements (primary elements), namely natural resources, climate, geographic location, demographic characteristics, and advanced elements, including communications infrastructure, complex and skilled labour, scientific research facilities and specialized technical knowledge. In general, high-level elements play a more important role in competitive advantage. As a country with a severe shortage of arable land and natural resources, japan has created a rich element of advanced talent through investment in national education. Japan has a large team of engineers at the forefront of the world, which is key to its success in many manufacturing fields。
3. Status of needs. This refers mainly to the market demand situation in the country. Domestic demand plays an important role in stimulating and enhancing national competitive advantages. A mature, complex and demanding consumer in a country can help the country's enterprises gain international competitive advantage, as mature, complex and demanding consumers force their firms to strive to meet product-quality standards and product innovation。
4. Industry and support industries. The benefits of investment in related industries and supporting industrial factors will gradually spill over (impacts and effects) into the industry, thus helping it gain a favourable position in international competition. Sweden's advantage in the area of manufacturing assembled metal products (e. G. Ball bearings, cutting tools) is to rely on the technical power of its own special steel industry. The leading united states semiconductor industrial technology in the mid-1980s was the basis for the global success of united states personal computers and other technologically advanced electronic products. For example, china's naval forces have increased their equipment, with the emergence of domestically produced aircraft carriers, whose production cannot be achieved without the development and progress of the associated packages, such as iron and steel manufacturing, electronics, the aviation industry and thousands of other basic packages, which have not been built up and advanced for nearly four decades。
There are two major variables beyond these four elements: government and opportunities. Opportunities are sometimes beyond control, the impact of government policies cannot be ignored, and both opportunities and governments affect the other four elements。
This is the classic approach, the diamond model, which is an analytical tool and method of analysing a country's competitive advantage. Many of our businesses are now increasingly going abroad, going into the world and making sea strategies. A systematic and comprehensive analysis of the target country could then be conducted using diamond analysis methods to determine, on the one hand, the suitability of their operations to sea, and, on the other hand, to determine with precision the overall situation and related advantages of the target country and avoid losses。
