What is Porter’s Diamond, and what are best practices, tools and online templates for teams and organizations?
Definition of Porter’s Diamond
Porter’s Diamond explains the factors that influence how competitive an industry in one country would be internationally. This model specifically names firm strategy, structure & rivalry, factor conditions, demand conditions, and related and supporting industries that might be specific to one country as conditions that differentially exist in certain countries and not others. Organizations that have certain traits in common are competitors, which inspire them to innovate, improve productivity, and hopefully improve bottom-line performance. Additionally, for these reasons, organizations within the same cluster are able to compete in the international market.
Description of Porter’s Diamond
According to Porter’s Diamond, organizations that can establish a competitive advantage within their home country can create it on an international scale. However, when translating this advantage internationally, there are six additional factors that the organization must consider.
- Factor Conditions: This involves environmental conditions (e.g., climate, oils and minerals), social resources (e.g., labor costs, quality of labor pool) or declarative and procedural knowledge that might differ within different countries.
- Related and supporting industries: Success in an industry heavily depends on the strengths and weaknesses of the other companies within that industry. Specifically, getting a broad sense of the other organization in the market will help your organization determine which businesses would be useful partners and which businesses will be worth monitoring and keeping pace with in order to foster innovation.
- Home Demand Conditions: This factor concerns determining the characteristics of the market such as size and production cost. The more deeply the market is understood, the easier it will be for your organization to determine the cost for its products in a different location.
- Strategy, Structure and Rivalry: Certain types of structure and organization, as well as goals, might differ in another country. This is because broader societal and cultural values shape those of the organization, which subsequently influence how receptive employees will be to individual or collective management styles.
- Government: The government plays a large role in funding organizations, as well as influences the educational and healthcare systems in a company. This will consequently influence the quality of the labor pool as well as the amount of money the organization has to work with in a new country.
- Chance events: Sometimes organizations are founded during periods that are economically troubling in one area but not another. It is important to remember that the above list is non-exhaustive and some influence on a company will be left to chance.
Tools & Templates
A Competitive Analysis or Competitive Landscape Analysis can supplement the Porter’s Diamond because these strategies help to establish the competitive landscape of the organization in its home country and can be used to investigate the international market.
upBOARD's Online Porter’s Diamond Tools & Templates
Unlike most traditional Porter’s Diamond techniques, upBOARD’s online Porter’s Diamond tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.
Learn more about upBOARD’s portfolio of other business strategy best practice tools and templates, including:
ADL Matrix, Affinity Diagrams, Baker’s 4 Strategies of Influence, Balanced Scorecard, Benchmarking, Blue Ocean Strategy, Bowman Strategy Clock, Build-Measure-Learn Feedback Loop, CAGE Distance Framework, Competitive Analysis, Competitive Landscape Analysis, Contingency Planning, Core Competence Analysis, Critical Success Factors, Discovery Driven Planning, Five Forces Model, Force Field Analysis, Gap Analysis, GE McKinsey 9-Box Matrix, Go To Market Strategy, Hambrick & Frederickson’s Strategy Diamond, Hedgehog Model, Hook Model of Behavioral Design, Hoshin Planning System, Kay’s Distinctive Capabilities Framework, Kotler’s Five Product Levels Model, Kotler’s Pricing Strategies, Lafley & Martin’s Five Step Strategy Model, McKinsey’s Seven Degrees of Freedom for Growth, Mission Statements, Mullin’s Seven Domains Model, OGSM Framework, Ohmae’s 3-C’s Model, PEST Analysis, Porter’s Diamond, Portfolio Management, Purpose Statements, Pyramid of Purpose, Scenario Planning, Simonson & Rosen’s Influence Mix, SOAR, Strategic Goals, Strategic Roadmap, Strategy Map, Strategy Roadmap, Strategy Uncertainty Map, SWOT Analysis, TOWS Matrix, Triple Bottom Line, USP Analysis, Value Chain Analysis, Value Disciplines Model, Value Net Model, Values Statement, Vision Statements, VRIO Analysis, and Weisbord’s Six-Box Model.