Porters diamond model was developed to explain the competitive Essay

Porters diamond model was developed to explain the matched advantage of globally leading industries in different countries. To what extent do you believe that the model is effective in achieving this - Essay Example saturation of global competition is very high today mainly due to the fast growth of uphill economies like China, India, and Brazil. Alliances of emerging economies like BRICS play a signifi targett role in influencing the competitiveness of theme economies. This paper will analyse to what extent the Porters diamond model is effective in achieving its stated objectives giving particular focus to concepts of labor clusters, diamond model, and emerging nations.According to traditional frugal theories, the major factors affecting the competitive advantage of regions or nations were land, location, natural resources, labour, and the population size. As none of these factors can be influenced by external forces, people had believed that national prosperity was passive or in herited and thus nothing could be done to improve the situation. However, Porter argued that sustained industrial growth is not depended on these basic inherited factors. In order to replace this traditional misconception, Porter introduced a concept called industry cluster, which represents a group of interconnected firms, suppliers, and related industries in a particular location. He stated that competitive advantage of nations is determined by four interlinked economic factors existing in such industry clusters. The idealogue also suggested that these economic factors can be significantly influenced by strong technological and knowledge base, presidency support, skilled workforce, and culture. According to a report by the Economist Intelligence Unit (2011), at that place atomic number 18 few economic development policies as popular as clusters. Recognising the importance of clusters, today countries, regions, and even cities get hold of to develop a network of complementary and competitive firms. The recent global financial crisis substantially change magnitude the significance of clusters. The report also says that locating firms in the same place does not constitute clusters unless there