Question No.

03:
A) What do you mean by Global strategy?
B) What is the component of Porter diamond?
C) Explain the five forces model by Michael Porter with example?

What do you mean by Global strategy?

Global strategy refers to a comprehensive and integrated plan of action that a company formulates to
achieve its objectives on a global scale. It involves making decisions about how to compete in
international markets, allocate resources across different countries, and leverage the benefits of
globalization while managing the challenges. Some objectives of Global strategy:

• Strategy represents management’s idea on how to best

• attract customers

• stake out a market position

• conduct operations

• compete effectively

• create value

• achieve goals.

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 What is the component of Porter diamond?

The Porter Diamond model, also known as the Diamond of National Advantage, consists of four
interconnected components that collectively influence a nation's or region's competitive advantage in
specific industries. These components, often referred to as determinants or attributes, are as follows:

1. Factor Conditions: This component relates to the nation's inherent factors of production, including labor,
land, natural resources, capital, infrastructure, and technological capabilities. The quality, quantity, and
efficiency of these factors impact the competitiveness of industries. For example, a skilled and educated
workforce, advanced infrastructure, and access to cutting-edge technology can be advantageous for
certain industries.
2. Demand Conditions: Demand conditions refer to the characteristics of the domestic market that drive
and shape the demand for products and services. Sophisticated and demanding local customers can
stimulate innovation and product improvement. An example would be the German automotive industry,
where high local demand for quality cars has driven manufacturers to develop advanced and high-quality
vehicles.
3. Related and Supporting Industries: The presence of strong related and supporting industries in a
country can positively affect the competitive advantage of specific industries. These industries form a
cluster that fosters innovation, knowledge sharing, and collaboration. For instance, the Swiss
watchmaking industry benefits from a cluster of suppliers, specialized machinery producers, and skilled
artisans.
4. Firm Strategy, Structure, and Rivalry: This component examines how companies within a nation are
organized, managed, and how they compete. The nature of domestic competition can influence companies
to innovate, increase efficiency, and strive for excellence. Intense competition pushes companies to
continually improve and innovate. The rivalry between Japanese automakers like Toyota, Honda, and
Nissan is an example of how competition can drive innovation and efficiency.

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These four components interact and influence each other, creating a mutually reinforcing system that can
enhance the competitiveness of specific industries within a nation. It's important to note that the Porter
Diamond model does not include "five forces." Instead, the model focuses on these four attributes that
contribute to a nation's or region's ability to excel in certain industries on a global level.

C) Explain the five forces model by Michael Porter with example?

The Five Forces model, also developed by Michael Porter, focuses on defining the structure and
competitive dynamics within an industry. It examines five key forces that shape an industry's
attractiveness and competitiveness. These forces are:

1. Rivalry Among Competing sellers: This force assesses the intensity of competition among
existing players in the industry. High levels of rivalry can lead to price wars, decreased
profitability, and aggressive marketing campaigns. For example, the smartphone industry
experiences intense rivalry between companies like Apple, Samsung, and Huawei.
2. Threat of New Entrants: This force considers the ease with which new competitors can enter
the market. Barriers to entry, such as high initial investment requirements, strong brand loyalty,
or strict regulations, can discourage new entrants. An example is the pharmaceutical industry,
which often faces significant regulatory hurdles that deter new companies from entering.
3. Threat of Substitute Products or Services: This force looks at the potential for customers to
switch to alternative products or services that serve a similar purpose. For instance, ride-sharing

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 services like Uber and Lyft are substitutes for traditional taxi services, leading to disruption in
the transportation industry.
4. Bargaining Power of Buyers: This force measures the influence customers have over the
industry. Strong buyer power can lead to demands for lower prices, better quality, or more
favorable terms. The retail industry often experiences this force, as large retailers can exert
significant pressure on suppliers to lower prices.
5. Bargaining Power of Suppliers: This force evaluates the influence that suppliers have over the
industry. Suppliers with strong bargaining power can demand higher prices or better terms,
affecting the profitability of industry players. The airline industry, for example, is impacted by
the bargaining power of aircraft manufacturers like Boeing and Airbus.

The Five Forces model helps businesses analyze their competitive environment and formulate strategies
to navigate challenges and take advantage of opportunities. It's important to note that the Five Forces
model and the Porter Diamond model are distinct frameworks, each offering insights into different
aspects of competitiveness and industry dynamics.