Porter Diamond

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.



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