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Porter (1990)Management > Global Marketing Management > Lectures > Independent Research > Porter > The diamond > The diamond continued
The Diamond continued3. Related and Supporting Industries. Suppliers and competitors, which are also internationally competitive. If suppliers are international, then they have the greater assets to provide cheaper resources. If companies collaborate, such as R&D, competitive advantage can occur. Transaction costs are greatly reduced as more and more companies trust each other, with the resulting close network of businesses creating much better value for the consumer. It also forces companies to be competitive, as their suppliers are not solely dependent on them for income. Related home-based industries is good for innovation, as companies can increase the flow of information and technology and help each other improve. 4. Firm Strategy, Structure, and Rivalry is determined by a nation’s circumstances and context. Company goals reflect the characteristics of the home country and its markets. Managerial and worker benefits are important to competitive advantage, as where individuals are encouraged to learn and are rewarded, will be the industries which are successful. Local rivalry plays a crucial role in businesses retaining competitive advantage. For example, there is much rivalry in the software industry in the US, meaning that they drive each other forward. Local competition is much more personal, as companies fight over skilled workers. When a company excels in a field, it attracts new competitors, as the company has shown what can be achieved. Competition in domestic markets also encourages companies to go global, especially when there are economies of scale.
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