Porter Diamond

A A A

DEFINITION

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

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 competitiveness ...
  2. Barriers To Exit

    Obstacles or impediments that prevent a company from exiting a market. Typical ...
  3. Porter's 5 Forces

    Named after Michael E. Porter, this model identifies and analyzes 5 competitive ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, ...
  5. Business Logic

    Custom rules or algorithms that handle the exchange of information between a ...
  6. Business Model

    The plan implemented by a company to generate revenue and make a profit from ...
  7. Revenue Per Employee

    An important ratio that looks at a company's sales in relation to the number ...
  8. Back Of The Napkin Business Model

    A slang term that refers to the representation of the basic components of a ...
  9. Jim Walton

    Jim Walton is the third and youngest son of Walmart founder Sam Walton.
  10. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate that some of the ...
Related Articles
  1. Getting To Know Business Models
    Entrepreneurship

    Getting To Know Business Models

  2. Which of these is not one of Porter's ...
    Professionals

    Which of these is not one of Porter's ...

    By Free
  3. 4 New Business Models That Are Here ...
    Personal Finance

    4 New Business Models That Are Here ...

  4. Herding Tendencies Among Analysts
    Investing Basics

    Herding Tendencies Among Analysts

  5. Improve Your Karma With Microlending
    Entrepreneurship

    Improve Your Karma With Microlending

  6. Understanding Leveraged Buyouts
    Fundamental Analysis

    Understanding Leveraged Buyouts

  7. Georges Doriot And The Birth Of Venture ...
    Investing

    Georges Doriot And The Birth Of Venture ...

  8. How The Sarbanes-Oxley Era Affected ...
    Fundamental Analysis

    How The Sarbanes-Oxley Era Affected ...

  9. Where's The Market Headed Now?
    Fundamental Analysis

    Where's The Market Headed Now?

  10. Does Higher Risk Really Lead To Higher ...
    Active Trading

    Does Higher Risk Really Lead To Higher ...

comments powered by Disqus
Hot Definitions
  1. XW

    A symbol used to signify that a security is trading ex-warrant. XW is one of many alphabetic qualifiers that act as a shorthand to tell investors key information about a specific security in a stock quote. These qualifiers should not be confused with ticker symbols, some of which, like qualifiers, are just one or two letters.
  2. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  3. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  4. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  5. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  6. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
Trading Center