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The Porter Diamond Theory in Brief

You are required to select an existing, successful global organisation of your choice. Critically discuss Porter’s four components of firm strategy, structure, and rivalry, factor conditions, demand conditions, and related and supporting industries and their influence on your chosen organisation’s international success.

The porter diamond theory is considered as the model that is made to facilitate appreciate the competitive advantage nations possess because of certain factors available to them and to define how governments can perform to improve the conditions of the position of the country. The use of this theory is to evaluate the ability of the firm to run the business in effective manner in national market. Furthermore, it is also helpful to analyze the ability of national market to remain it remain in competitive environment of global market. It is able to define the understanding of the competitive position of the country in the international market. This theory contains the number of factors for competitive advantages for various countries. The factors of this theory are comprised with firm strategy, structure and rivalry, factor endowments, demand conditions and related and supporting industries. The reports will analyze the Primark, Irish company by evaluating porter diamond theory.

Various factors will be described in the support of the enlargement and achievement of Primark Company in national and international industries. Porter’s National Diamond Theory of Competitive Advantage aids in sympathetic the strategies of Primark Company to create and sustain competitive advantage. This model is facilitates to define that what role the country plays in the growth and the success of organization. The four factors of porter’s diamond strategy will be elaborated in depth to describe the reason for becoming competitive in the national and international market.


Primark is a well known company of Ireland that deals in clothing and accessories and, the subsidiary of AB foods LTD. It has many branches all over the world with the Headquarter of Primark is in Dublin. It has been found that the first store of the company was established in 1969 by Arthur Ryan. The mission of Primark is to provide the latest trend to its customer and make aware them with the new fashion of clothing and accessories. The different segments are focused by this company to enhance the sales. Primark offers various latest clothing and accessories related to men, women and kids. It adopts different strategy to keep the prices low and standards high so that it can remain in the global competitive advantages (Arriaga, Arriaga, Andreu Domingo, Andreu Domingo, Berlanga Silvente and Berlanga Silvente, 2017). There are different departments in the Primark which help to promote its products.

Factors for Competitive Advantages

The firm strategy, structure and rivalry are the factor of porter’s diamond theory that is different from country to country. Firm strategy, structure and rivalry are noteworthy for the success and the growth of the company. These strategies help the organization in developing the different layout and objectives that help in managing the activities of the business, operations and rivalry. It helps out to develop the new innovative ideas in companies. This factor of this model is helpful to determine the goal and aims of the company and the way how to attain it within time frame within its organizational culture. The role of cultural aspect is vital in this factor. It has been analyzed that the regions, countries and provinces can different from one another and in the relations of many factors such as working morale; management and interactions between the companies are made as per different cultures. This structure can provide advantages as well as disadvantages for companies in a definite situation when setting up a company in another country (Fainshmidt, Smith and Judge, 2016).

The fashion industry of Ireland is competitive and it is difficult to attain the competitive advantages in huge manner. There are number of players in this filed that are posing intense competition to Primark. These players are Zara and H&M which provides the same trends and fashion to the customers. It has been found that customers are more loyal towards the brand and online shopping enables them to purchase products and services from their home. Along with that there are number of brands are available that can attract the customers of Primark towards theory work by applying low price of discount strategy (Alexander, 2013). It has been found that there are indirect competitors of Primark such as Tesco and ASDA that are getting advantages from the market thus it can be the threat for Primark.

Primark has expanded its stores rapidly in the Spain, UK, France, Netherlands and Germany which can be assumed in the total to almost 300. It was the bold step of Primark to enter in the market of US because of the different demand and difficult market for retailers. The technological features of the company will be advantageous for the company which reduces the returns. The role of the government is huge in Ireland as it developed the strict rules and policies for international company that need to be fulfilled by company to enter in to the Irish market. It facilitates fashion industry in achieving competitive advantages over international player as well. Thus, it can be said that direct competition is the major part that induce the other organization of Ireland to work for increasing their innovation and productivity in the same industry. There are so many companies apart from that such as Fashion Fair, B Couture, Beuniqu and many more that are endeavouring to be more innovative and qualitative because of the pressure of competitive from leading players in the industry (Elizon, 2018).

Primark: An Overview

It is also the major factor of porter’s diamond theory that is connected to the manufacture and services of organization that is infrastructure and knowledge (Rodrigues and Khan, 2015). It can be categorized under various groups such as infrastructure, material resources and knowledge resources. As per this economic theory, factor endowment is considered as the range of labor, capital, entrepreneurship and land which a nation has it (Klass and Zeiler, 2013.). The above mentioned factors are the major for the country from which a country can earn more by developing it. Along with that it has been analyzed that the country involves the domestic buyers which have different demand for innovativeness and quality that generates the competition in the nation. In the fashion industry, the factors for this can be considered in the term of capital resources, knowledge, infrastructure and human resources. These are the most effective corner of Dublin’s diamond. Ireland has talented and well educated team and the fashion industry in Ireland is having number of skilled and professional people of the same filed which able to provide the effective services to the people.

Primark has employed 68,000 employees which is strong workforce. Training and development program are encouraged by Primark to develop the mutual understanding and providing the effective services to the customers (Associated British Foods Annual report, 2013). It can be defined in the context of Dublin, Ireland that country has quiet supporting infrastructure that is needed by the Primark for operating their processes and linking with their customers. Furthermore, the resources of knowledge are also effective in the term of research about the fashion industry. Dublin has effective capital resources as it has firm string venture capital community. It has the easy access in the funding of the government and debt financing (Gibson,  2015).

It has been found that the Primark’s store energy intensity which is calculated by kilowatt-hour (kWh) per square foot, has been decreased by 11 percent since 2015. ERICC (Energy Reduction Information and Control Console) has the biggest role in the deduction of the electricity by 30 million kWh (Hendriksz, 2017). This software of Primark has offered real time information on the chief energy drivers within any store and it indicates that how an organization should perform in the point of view of energy management. Along with that the primary factors are utilized by Irish fashion industry and Primark which may have huge influence on its competitiveness. After analyzing the scenario of Irish Fashion industry, it can be said that factor endowment in Ireland are moderate for Primark.

Firm Strategy, Structure, and Rivalry

It has been analyzed that the main role of regional and local demand is major as per Porter’s model of national competitive advantage. Demand condition is considered as the major part that defines to the size and nature of customers of products and services (Ozgen, 2011). It has been found that the demand conditions are able to increase the demand of the local products and services in the domestic market. It has been analyzed that the more demand of the products and services in the local market can enhance the demand of the same products in international market. Globalization has enhanced the opportunities in today’s era where the local demand considers being outmoded but porter recommends that the demand of the products and services in domestic market can be beneficiary for the organization. An extensive local market can enable the organization to make perfect its strategy regarding products and services before entering into international market (Smit, 2010). The same is applicable for Primark before expanding its business internationally. It has various stores internationally where numbers of employees are working due to its effective strategy.

The demands of the customers are analyzed by using marketing research which helps an organization to grow. Primark has upper level practice in human resource and it has large stores to motivate volume shopping. The demands of the customers are fulfilled by Primark with the help of e-commerce and target market in which it segmented generation whose age is around 16 to 24 years old (Primark, n.d.). The demand conditions for Primark are shown in the demand of the fashionable clothes and accessories. It is vital for the organization to analyze the latest trends globally and endeavour to implement in the domestic market. There are different arguments can be made in case of Ireland such as the home market of this country is smaller and there is less chance to make huge incentives. However, it is unlikely for the fashion industry to remain under Ireland or by keeping only Irish customers in mind. It has been found that this country is expanding its demand conditions in the countries of United Kingdom that has provided the close bonding between the both countries (Cassidy, Barry and Egeraat, 2009). It has been dropped hugely during past years bit still UK is the big customer of Ireland. Primark has offered services and products in the international market as it has opened number of stores worldwide where people can buy its products. Technology enables people to buy its products without going anywhere (Krishna, Ojha and Barrett, 2017).

Factor Endowments and Resource Availability

 A related and supporting industry is the major factor of Porter’s Diamond forces in national advantages which drive the success not only for the same industry but also for other industries and entire economy. The roles of the suppliers are major in the growth of the market in a region. It is necessary for the organization to involve the industries as it is involved in the manufacturing of the products and services of the organization by being major leader. These suppliers and industries help the organization to develop the internationalization and innovation (Acs, Audretsch, Lehmann and Licht, 2017). It is necessary for the effective growth to develop the strategy in the one sector as the growth of the one sector may impact the growth of the other’s sector. Retailers and distributors, tools and equipment, raw material supporters and other sectors are considered under supporting and related industries. Related and supporting industry is integral factor of national competitive advantage. It has been analyzed that there are number of industries are available in Ireland that are related to fashion industry and have a huge influence of its importance. Furthermore, Digitalization in fashion has changed the entire fashion industry (Deloitte, 2018).

Supporting and related sectors have the huge role in the growth and success of the fashion industry in Ireland. There are various businesses of clothes that are relied on traditional style of clothing and accessories which enhance the difficulties for those who want to buy latest trends in clothing and accessories. The survival of these kinds of businesses assures the growth of Primark as retailer in fashion industry in Ireland (Byun, Lee and Kim, 2016). The related and supporting industries in the context of Primark includes the auxiliary material supply, clothing machinery suppliers and specialized market for textiles. Competitiveness of the clothing industry is completely dependent on the development of infrastructural which involves highways, paved roads and ports of electricity of all customs data and requirements and administrative data.

Conclusions

In the limelight of above discussion, it has been concluded that Porter’s Diamond Model of National Advantage is considered as the vital model that evaluates the diverse factors and conditions of a country. It has been defined in this assignment that how organization are benefitted that operates in business in Ireland. As per this theory, it has been cleared that the role of the factors are huge in the growth and the success of the country. The four major factor of Diamond’s theory has been depicted in depth manner in which Primark Company is chosen that deals in clothing and accessories which is the part of fashion industry. It has been analyzed that there is a grouping of profitable influence which have proved attractive for the fashion industry. Local demand conditions have been shown in positive manner in the context of Primark which shows the positive effect on building competitive edge of most of the fashion industry (National Design &Craft Gallery, 2018). It has been found that customers are more loyal towards the brand and online shopping enables them to purchase products and services from their home. In the factor of factor endowment, the use of software by Primark in saving energy has been elaborated which shows the huge influence on its competitiveness. It has been found that the demand conditions are able to increase the demand of the local products and services in the domestic market. Related and supporting industry is included suppliers and industries that help the organization to develop the internationalization and innovation. Ireland has supported by government in developing the business. Thus, Ireland is the favourable country for the growth of the fashion industry. An extensive local market can enable the organization to make perfect its strategy regarding products and services.

References

Acs, Z.J., Audretsch, D.B., Lehmann, E.E. and Licht, G., 2017. National systems of innovation. The Journal of Technology Transfer, 42, 997-1008.

Alexander, E., 2013, ASOS Doubles Primark Offering. Accessed on 17th December, 2017 from:  https://www.vogue.co.uk/news/2013/06/13/asos-doubles-primark-products-as-profits-surge.

Arriaga, J., L., D.,O., Arriaga, , J., L., D.,O., Andreu Domingo, D., Andreu Domingo, D., Berlanga Silvente, V. and Berlanga Silvente, V., 2017. Facebook in the low-cost fashion sector: the case of Primark. Journal of Fashion Marketing and Management: An International Journal, 21(4), pp.512-522.

Associated British Foods Annual report, 2013. Primark Strategic Marketing Plan, Accessed on 2nd April, 2018, from:  https://hollysnowdon.files.wordpress.com/2015/02/smp-final.pdf.

Byun, J.W., Lee, S., S. and Kim, S.S., 2016. The convergence of IP and financial sectors: Analysis of the national competitiveness by using Diamond model approach. Journal of Digital Convergence, 14, 227-234.

Cassidy, J., Barry, F. and Egeraat, C.V., 2009, Ireland – Industrial Competitiveness in a Small Open Economy, National Institute for Regional and Spatial Analysis, 44, 1-49.

Deloitte, 2018. Digital transformation - the ultimate challenge for the fashion industry. Accessed on 2nd April, 2018, from:  https://www2.deloitte.com/ch/en/pages/consumer-industrial-products/articles/ultimate-challenge-fashion-industry-digital-age.html.

Elizon, 2018. Ireland Fashion. Accessed on 2nd April, 2018, from:  https://www.ezilon.com/regional/ireland/business_and_economy/fashion/index.shtml.

Fainshmidt, S., Smith, A., and Judge, W. Q., 2016, National Competitiveness and Porter's Diamond Model: The Role of MNE Penetration and Governance Quality, Global Strategy Journal, 6, 81-104.

Gibson, J., 2015. The Impact FinTech is having on the Financial Services Industry in Ireland, Accessed on 2nd April, 2018, from:  https://esource.dbs.ie/bitstream/handle/10788/2906/mba_gibson_j_2015.pdf?sequence=1&isAllowed=y.

Hendriksz, V., 2017. Fashion United. Accessed on 3rd April, from: https://fashionunited.uk/primark-sustainability .

Klass, G. and Zeiler, K., 2013. Against endowment theory: experimental economics and legal scholarship. UCLA L. Rev., 61, p.2.

Krishna, S., Ojha, A.K. and Barrett, M., 2017. 12 Competitive Advantage in the Software Industry: An Analysis of the Indian Experience. Information Technology in Context: Studies from the Perspective of Developing Countries: Studies from the Perspective of Developing Countries.

National Design &Craft Gallery, 2018. Irish Fashion: Textile & Clothing. Accessed on 2nd April, 2018, from:  https://www.ndcg.ie/secondskin/designer/irish-fashion-textile-clothing.

Ozgen, E., 2011. Porter's Diamond Model and Opportunity Recognition: A Cognitive Perspective. Academy of Entrepreneurship Journal, 17(2), p.61.

Primark, (n.d.). About Us. Accessed on 2nd April, 2018, from:  https://www.primark.com/en-ie/about-us/about-primark.

Rodrigues, G. and Khan, Z, R., 2015. Competitiveness of clothing industry based on Porter's diamond model: SAFTA countries.

Smit, A. J., 2010. The competitive advantage of nations: is Porter’s Diamond Framework a new theory that explains the international competitiveness of countries?. Southern African Business Review, 14(1)

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My Assignment Help. Understanding Porter [Internet]. My Assignment Help. 2019 [cited 14 June 2024]. Available from: https://myassignmenthelp.com/free-samples/porter-four-components-of-firm-strategy.

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