Porter's Diamond - Case Analysis of Spain

1625 Words Jan 14th, 2013 7 Pages
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Porter’s Diamond
Analysis of Spain (Topic 8)

Manuel Gall
6 Elboden Street
7004 South Hobart mrgatt@postoffice.utas.edu.au Strategic Management
University of Tasmania
Dr. Dallas Hanson

Submitted on October 23, 2012

Introduction: Porter (1990) raised the question: “Why does a nation become home base for successful international competitors in an industry?” According to porter’s diamond, the answer lies in four elements, namely the factor conditions, the demand conditions, the related & supporting industries and in the context for firm strategy and rivalry (Fisher, Hughes, Griffin & Pustay 2009). These four factors interact in a self-reinforcing system that essentially
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However, these basic factors can be bought on the global market and are generally not anymore a source of competitive (dis)advantage (Porter 1990).
Probably the most important physical resource of Spain is its beautiful nature (tourism), its national language & culture (similarity with South America) and its broad access to the sea (infrastructure). Overall, Spain has a world class traffic infrastructure (roads, railroads, ports, airports) that ranks among the top 10 in the world (WEF 2012).
A major problem in Spain’s factor condition is the availability of capital resources. Both the access to loans (rank 122[5]) and the finance possibility through local equity market (96) are among the worst in the world (WEF 2012A). To facilitate growth of new and existing industries profound changes in the banking industry and the financial market are needed.
Advanced factors, such as a specialised well-educated work force, are much more important for an innovation-driven economy like Spain than basic factors. Overall, Spain’s enrolment quotes from primary to tertiary education is exemplary (WEF 2012). However, the quality of the education system (rank 81) is miserable for a developed country that employees 71.8% of its work force in the service industry (OECD, 2010 & WEF 2012). Moreover, simply having a highly educated human resource base represents no competitive advantage as long as they are not highly specialized to a industry’s particular needs (Porter

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