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Porter's Diamond Framework Analysis

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Criticism:
Lazonick (1993) took up the challenge with porter regarding the issues of rivalry, issues regarding rivalry alone cannot pressure firm to produce more innovative products. When a firms faces too many issues from their competitors, they may rather choose to imitate their competitors’ products than innovate products at their own risk. When foreign competitors come up to take challenges with firms, firms would rather choose to be cooperative the business with their current competitors to prevent decline of products. Porter’s diamond framework concept most of the time focuses on the home based market due to competitiveness of a national business system is usually derive from their home based market (Porter, 1990). Single diamond framework …show more content…

These are the key aspects that can affect the organisation and management structure of a firm, all these interpersonal communication, management attitude, and social norms have yet been taken into consideration for Porter’s diamond framework. Moreover, Porter’s diamond framework does not cover how national culture will then affect the competitiveness in the national business system (Bosch & Man, 1997). Porter also mentioned that in firm structure and strategy, Japan business system prefers to maintain long-term relationship with their suppliers in the automobile industry is not based on their cultural perspective but rather it is due to pressure under those economic circumstances. This sentence is proven wrong by Whitley (1991), Japanese culture is well known for close connection and long-term employment in order to make their business system unique. Businesses in Japan have strong bonding with their partners to create strategies in reducing uncertainties, likewise these cultural factors is the action that leads to keiretsu being formed in Japan business system (Earley & Singh, …show more content…

Diamond framework is proved to be an important and effective model that is developed by Porter. It is used as a measuring tool for competitiveness of firms, sectors and even countries. Demand factors is the key object that will affect the competitiveness more than other factors do, then follow by the government. In order to sustain the competitive advantage, nation is supposed to upgrade the model for a better result. In fact, Dunning and Rugman did an additional extension to Porter’s Diamond framework. However, they do not have enough supporting document to prove that Diamond framework should not be use in the nations. Although Porter’s framework is widely used as a guideline for the nations, but it is not reliable for long-term usage as it does not sustain long-term competitiveness for the national business system. According to research, Porter’s diamond framework can only be used in mature and manufacturing economy as for those economy that are yet to mature they are not recommended to use diamond framework. Furthermore, double-diamond theory is more useful and suitable for smaller export dependent such as Korea and Singapore as well as China. Overall, double diamond is proven more effective for global comparison. In addition, different National business systems have their own way of dealing methods and protocol. Therefore, diamond framework can only be use as a general

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