SQ 2 - Porter's National Diamond

Seminar Question
Consider the application of the

2
Porter’s national diamond to the
allocated country. Does the
model explain competitiveness?
Country: USA
The Porter Diamond
Daniels, Radebaugh and Sullivan (2009:287) defines the
Porter Diamond as:
 Theorizes that national competitiveness advantage is
entrenched in four determinants:
1. -Demand Conditions
2. -Factor Conditions
3. -Related and Supporting Industries
4. -Firm Strategy, Structure, and Rivalry
Source: Industry
Canada (2010)
Demand Conditions
Nature and level of demand in the
home market  establishment of
production facilities to meet
demand (Daniels et al, 2009: 287)
Demand Conditions in the
USA:
CIA Fact Book (2010) highlights the
following data:
 Electricity Consumption:
-3.873 Billion kWh (2008 est.)

Country Comparison to world: 1
 Oil imports
-13.47 million bbl/day (2008 est.)

 Natural Gas
-112.7 Billion cu m (2008 est.)

Factor Conditions
Resource availability (inputs, labour,
capital, and technology) 
competitiveness of both firms in
countries and countries that
compete in particular industries
(Daniels et al, 2009: 287).
Factor Conditions of the
USA:
following data:
 INPUTS
Budget for the USA 2009 estimates:

Revenues: $1.914 trillion
Expenditure: $3.615 trillion
Stock of direct foreign investment (FDI)
abroad
$3.259 trillion (31 December 2009 est.)
Factor Conditions
Continued...
following data:
LABOUR
Labour Force by Occupation:
Farming, forestry, and fishing 0.6%
Manufacturing, extraction, transportation,
and crafts 22.6%
Managerial, professional, and technical
35%
Sales and office 24.8%
Factor Conditions –
Labour continued...
following data:
Labour Force – 154.5 million
(includes unemployed 2009 est.)
Country comparison to world: 4
 Unemployment Rate
9.4% (2009 est.)

5.8% (2008 est.)
Country comparison to world: 108
Factor Conditions
continued...
following data:
CAPITAL
-US per capita GDP of $46,900
-GDP (Purchasing Power Parity) is
$14.26 trillion (2009 est.)
-GDP official exchange rate
$14.27 trillion (2009 est.)
Related and Supporting
Industries
The local presence of internationally
competitive suppliers and other
related industries  cost
effectiveness + strategic
competitiveness of firms (Daniels
et al, 2009: 288).
Industries of the USA
 Import Partners
 China 16.4%
 Canada 15.7%
 Mexico 10.1%
 Japan 6.6%
 Germany 4.6%
Source: CIA Fact Book (2010)

Structures continued...
 Import commodities from import
partners
 Agricultural products 4.9%
 Industrial supplies 32.9%
 Capital goods 30.4%
 Consumer goods 31.8%
Source: CIA Fact Book (2010)

Firm Strategy, Structure
and Rivalry
 The creation and persistence of
national competitive advantage
requires leading-edge product and
process technologies and business
strategies (Daniels et al, 2009:
288).
Firm Strategy, Structure,
and Rivalry of USA
CIA Fact Book (2010) highlights the following:
Export commodities giving the US a competitive

advantage
-Capital Goods 49.0%
These include transistors, aircrafts, motor vehicle parts,
computers, and telecommunication equipment
Unique American
Competitive Advantages
According to MPRA (2008) the following
are unique American Competitive
Advantages:
 Environment for entrepreneurship
 Science
 Technology
 Innovation machines
 Institutions for higher learning
 Strong commitment to competition and

free markets
 Efficient capital market
So does the model explain
competitiveness?
Yes, it does. Daniels et al (2009: 287)
states that all the determinants need to
be interlinked and favourable. If the USA
were to attain global competitiveness
they too should ensure that all their
determinants are interlinked and
favourable. Daniels et al (2009: 287)
further states that the determinants are
affected by roles of chance and
governments.
Sources
Daniels, J.D., Radebaugh, L.H., Sullivan, D.P. (2009)
International Business: Environments and Operations.
Pearson Education Limited, Upper Saddle River, New
Jersey
CIA World Fact Book (2010) United States of America.
Retrieved on March, 23, 2010, from
https://www.cia.gov/library/publications/the-world-factb
ook/geos/us.html
Industry Canada (2010) The Diamond of Competitive
Advantage. Retrieved on March, 23, 2010, from
http://www.google.co.za/imgres?imgurl
MPRA (2010) America’s Secret Competitive Advantage is
a Dirty Secret. Retrieved on March, 26, 2010, from
http://mpra.ub.uni-muenchen.de/18988/2/MPRA_paper
_18988.pdf

SQ 2 - Porter's National Diamond

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Seminar Question

Consider the application of the

-3.873 Billion kWh (2008 est.)

-13.47 million bbl/day (2008 est.)

-112.7 Billion cu m (2008 est.)

Budget for the USA 2009 estimates:

9.4% (2009 est.)

Source: CIA Fact Book (2010)

Source: CIA Fact Book (2010)

Export commodities giving the US a competitive

 Institutions for higher learning

 Strong commitment to competition and

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