Porter's diamond of national competitive advantage

Porter’s Diamond of National Competitive Advantage is the model that Michael Porter developed to explain how certain countries create a more favorable environment than other countries in order to give their domestic companies a competitive advantage in international markets. The diamond consists of four components: Factor Conditions, Demand Conditions, Related and Supporting Industries, and Firm Strategy, Structure, and Rivalry. Factor Conditions: This aspect of the diamond focuses on the availability of inputs that businesses need in order to produce goods and services. This includes the availability of natural resources, the size and skill level of the domestic workforce, capital and infrastructure, and the quality of research institutions. This can give some countries an advantage since they may have access to better resources or a more productive workforce. Demand Conditions: The demand conditions look at the nature and size of the domestic market as well as foreign markets. This includes the preferences of customers, the buying power of the customers, and the ability to modify products to meet the needs of the local customers. This can be beneficial for businesses since they have a larger pool of potential customers to sell to. Related and Supporting Industries: This aspect of the diamond focuses on the quality of the local suppliers and distributors. This includes the presence of forward and backward linkages between related industries, the presence of specialized suppliers, and the availability of a local skill base. The better the quality of the related and supporting industries, the better the products and services a company can provide.