STRATEGIC MANAGEMENT ASSIGNMENT
ANALYSIS OF THE SECTOR
PORTERS DOUBLE DIAMOND MODEL
INDIAN AUTOMOBILE INDUSTRY
Prof. A. K. Kher
Rameez Bagban 03
Shahanawaz Mujawar 11
For the academic year
The Indian automobile industry is one of the key drivers of industrial growth and employment, which will gain rapid importance. In order to accelerate and sustain growth in the automotive sector, a roadmap is needed to steer, coordinate and synergize the efforts of all stakeholders. Exogenous and endogenous factors affecting industry also affects the competitiveness of the firms. Competitiveness ...view middle of the document...
Competitiveness is a special challenge, because there is no single policy or grand step that can create competitiveness. Improving competitiveness is a marathon, not a sprint. How to sustain momentum in improving competitiveness over time is one of the greatest challenges countries are facing.
3. PORTER'S DIAMOND MODEL:
Porter (1990) contributed the diamond model on competitiveness, which analyses national (or industry) competitiveness through four major dimensions: factor conditions, demand conditions, firm strategy structure and rivalry, and related and supporting industries. Porter (1990) concluded that due to various national characteristics, nations cannot succeed in all industries, and thus it is important to identify and develop their internationally competitive industries. Therefore, he proposed the diamond model with four major (and two additional) determinants of competitive advantage in a particular industry.
Porter’s diamond model provides an analytical framework with multi- measurements favorable for national or industry competitiveness. According to Porter (1990) nations are most likely to succeed in industries or industry segments where the diamond factors are mostly favorable.
For production are the inputs and infrastructure necessary for competition, which include:
• Human resources: Quality and quantity of skilled labour, cost of personnel, and labour skill variety;
• Physical resources: “The abundance, quality, accessibility, and cost of the nation’s land, water, mineral, or timber deposits, hydroelectric power sources, fishing grounds, and other physical traits.”
• Knowledge resources: Market, scientific, technical knowledge residing in a nation’s research institutions;
• Capital resources: Capital availability and cost to finance industries. Capital resources can be affected by the rate of savings and national capital market structure;
• Infrastructure: Availability and quality of infrastructure, including communication system, transportation system, payment or funds transfer, health care, and so forth
3.2. Demand Conditions:
The nature of buyer needs, the size and growth rate of home demand, and the transferability of domestic demand into foreign markets. Porter has also described in his location competitiveness study, about the advantages arising by having sophisticated and demanding local customers or customers with unusual need for specialised varieties that are in demand.
3.3. Related and Supporting Industries:
Include parts and service suppliers and distributors in the supply chain. As Porter stated, competitive supplier industries can provide “efficient,
early, rapid, and preferential access to inputs”, which are basic production needs. Moreover, the geographic proximity with internationally competitive suppliers in the home nation helps build coordination and a communication network, which in turn...