Advantages Of Porter Diamond

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Dunning (1977) states that the decisions on entry mode decisions are determined by the composition of three sets of advantages - ownership advantages, internalization advantages and location advantages. If a firm possesses the more OLI advantages, the greater the propensity of adopting an entry mode with a high control level such as wholly owned ventures, the outcomes shown in the figure below. Stopford, John M.; Susan Strange; John S. Henley (1991) state that the eclectic paradigm contrasts a country's resource endowment and geographical position (providing locational advantages) with firms resources (ownership advantages), the four outcomes shown in the figure 2 below. If the firms possess competitive advantages and higher in the transport costs than foreign locations , the firms therefore make a FDI abroad in order to save the transportation costs. But if the country has locational advantages, strong local firms are more…show more content…
Porter ,1990), nations are most likely to succeed in industries where the national 'diamond' is the most favorable. The diamond has four interrelated components: (1) factor conditions, (2) demand conditions, (3) related and supporting industries, and (4) firm strategy, structure, and rivalry, and two exogenous parameters (1) government and (2) chance, as shown below. Figure 5. Porter Diamond (Traill, Bruce; Eamonn Pitts,1998) However, Rugman and D’Cruz. (Moon, H.C., Rugman, A.M., &Verbeke, A. ,1995) argues that this model fails to include the effects of multinational activities which has led the people to underestimate the potential of certain nation’s economy. Similarly , Moon, H.C. A (1994) argues that Porter's methodology does not take into account the organizational complexities of true global operations by multinational firms. Therefore, the degree of the applicability on the Porter’s Diamond model is debatable. Case Study on Panasonic Business
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