Porter Diamond

AAA

DEFINITION of 'Porter Diamond '

A model that attempts to explain the competitive advantage some nations or groups have due to certain factors available to them. The Porter Diamond is a model that helps analyze and improve a nation's role in a globally competitive field. The model was developed by Michael Porter, who is recognized as an authority on company strategy and competition; it is a more proactive version of economic theories that quantify comparative advantages for countries or regions.


Also known as "Porter's Diamond" or just the "Diamond Model".

INVESTOPEDIA EXPLAINS 'Porter Diamond '

Traditional economic theories cite land, location, natural resources, labor and population as determinants in competitive advantage. The Diamond Model uses a more proactive approach in considering factors such as:


-The firm strategy, structure and rivalry
-Demand conditions for products
-Related supporting industries
-Factor conditions


The Diamond Model demonstrates that countries can become competitive regardless of whether they possess natural factor endowments such as land and natural resources. In the Diamond Model, the role of government is to encourage and push organizations and companies to a more competitive level, thereby increasing performance and ultimately the total combined benefit.

RELATED TERMS
  1. Six Forces Model

    A strategic business tool that helps businesses evaluate the ...
  2. Barriers To Exit

    Obstacles or impediments that prevent a company from exiting ...
  3. Business Model

    The plan implemented by a company to generate revenue and make ...
  4. Business Logic

    Custom rules or algorithms that handle the exchange of information ...
  5. Porter's 5 Forces

    Named after Michael E. Porter, this model identifies and analyzes ...
  6. Revenue

    The amount of money that a company actually receives during a ...
Related Articles
  1. Entrepreneurship

    Getting To Know Business Models

    Learning how to assess business models helps investors identify companies that are the best investments.
  2. Professionals

    Which of these is not one of Porter's 5 competitive forces?

    Which of these is not one of Porter's 5 competitive forces? a) Threat if new entrantsb) Threat of subsitute goodsc) Rivalry from existing competitiond) Threat of government policy Correct answer: ...
  3. Personal Finance

    4 New Business Models That Are Here To Stay

    When it comes to thriving in business, it's out with the old and in with the new.
  4. Economics

    How does marginal cost of production relate to economies of scale?

    See how marginal cost of production relates to economies of scale, and why every company should be concerned with reducing its marginal costs.
  5. Economics

    How does a high discount rate affect the economy?

    Find out what would happen if the Federal Reserve decided to set a very high discount rate, the rate at which banks can borrow money from the Federal Reserve.
  6. Professionals

    How do companies measure labor supply in human resources planning?

    Find out how and why a company's human resources department would measure labor supply, and what policies would address a shortage or surplus.
  7. Investing

    Ex Works (EXW)

    Ex Works, or EXW, is an international legal trade term specifying that the seller is responsible to make his goods ready for pick-up at his place of business.
  8. Economics

    No Exit: What Could Happen If the Eurozone Breaks Up?

    There is no exit strategy for nations in the eurozone or the EU because most members acknowledge that they are far better off together than apart.
  9. Fundamental Analysis

    Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger market exchanges.
  10. Entrepreneurship

    How can I become a venture capitalist?

    Find out what it takes to become a venture capitalist, and read about some of the primary attributes private equity firms look for in a potential hire.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center