Question

After reading the article by Michael Porter on his Diamond of National Advantage (in addition to Dyer et al, (2020), Chapt 9, p.164, Figure 9.5), apply Porter’s Diamond Yahoo company and an international geographic market where the organization currently does business. Briefly apply the four factors of the diamond Yahoo and a specific market location (country or region). You may need to do research on the company and its operations in that international market. How important do you feel the “clustering” of related and supporting industries might be to Yahoo?

Answer 1

Porter’s Diamond of National Advantage-Case of Coca-Cola

Porter’s diamond of national advantage puts forward four main factors which provide a competitive advantage to firms in relation to their country and global market targeting. These factors are as follows; factor conditions, demand conditions, related and supporting industries and lastly, firm strategy, structure and rivalry in their countries -Smit, A. J.

To begin with, the demand conditions as explained in the Porter’s diamond, when the demand of a certain product is higher locally, then the local firms concentrate more in the production and improvement of that product than any foreign firm existing in their country. When the Coca-ColaCompany began its operations in USA in the year 1886, the demand for the non-alcoholic beverage in the country was very high. The company concentrated in the production of the product and grew in terms of sales and profitability before any foreign firm would do so. When the company gathered adequate financial resources, it sought to expand its operations to the African markets where the reception was also superb.

As far as the factor conditions are concerned, this basically means that a country creates its own supporting factors. In the USA, Coca-Cola enjoyed rapidly growing technology and innovations especially in the bottling of the product. The challenges that were initially faced concerning bottling where competitors would imitate the bottles was soon taken care of. This helped the company grow by helping it avoid any stumbling blocks in its early stages of establishment.

Related and supporting industries form another factor that led to the establishment of Coca-Cola and its growth. Coca-Cola has enjoyed the positive impact of globally competitive suppliers and bottlers who enable the company to have a rooted supply of the product in the African market through a franchise agreement.

Lastly, the firm strategy and structure is so unique. For instance, the company is family based majorly and is based on a secret formula of the manufacture of the concentrate which is distributed to the target market’s bottlers to be mixed with carbonated water to form the product. This structure and strategy has enabled the company to operate without the threat of counterfeits since the ultimate products will not be the same in terms of quality of taste.