Porter's Diamond

1. Determining the Competitive Advantage of Accor: Application of the Porter’s Diamond

In order to find out the reason why each organization gain different competitive advantage in particular industries, Porter (1990) proposed the diamond model. This model, appraising why every single enterprise has competitive advantage in global competition, consists of four elements: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry (Figure 1). In addition, the competitiveness can be indirectly influence by government and chance (Porter, 1990).

Figure 1. Porter Diamond Model (Source: Porter, 1990)

National factors: these include basic factors (e.g., natural resources, physical resources, human resources, technological resources and capital resources) and advanced factors (e.g., communication infrastructure, sophisticated and skilled labour and research facilities).

Related and supporting industries refer to raw materials suppliers, distributors and retailers, research organizations, financial organizations, transportation systems and industries which use specific technology, raw materials and laboratory facilities.

Firm strategy, structure and rivalry relate to the ways in which organizations and firms are founded, managed and organized, all of which greatly affects competitiveness. In order to gain competitive

advantage, certain strategies are suggested to show how firms might manage and organize their business.

Demand conditions determine the circumstances of domestic demand for the products of an industry. Porter (1990) regards that a big growing domestic market which will boost the technology development and efficiency among producers can be a competitive advantage for a nation. In contrast, small domestic markets having low economic