Researchers and theorists are continuously striving to realize the distinct characteristics of highly competitive businesses in order to apply those characteristics in the lower profile organizations. Industries and firms are compared, at a global level, in order to evaluate the rankings from the most competitive to less competitive firms. . Hence, it may be concluded that the concepts of national and global competitiveness are new concepts in the business world. This paper would discuss the Diamond Model presented by Porter. This paper would further analyze if the model was accurate, correct and applicable under all circumstances (Chandler &. Hikino 1990).Do Porter’s ideas on national competitive advantage adequately explain the means by which specific nations have achieved economic success?
Porter admits the importance of new trade theories presented by different academics and declares that “A growing literature on the relationship between imperfect competition and trade investigates the role of these and other markets imperfections in determining trade. The basic theme is that virtually every market imperfection creates a rationale for trade even if factor costs are equal across nations” (1990, p, 777). On the other hand, regardless of his positive response to the theories, he does not verify these theories as complete and accurate. To share his own knowledge and to contribute to this debate he then proposed his own model.The ‘diamond model’, presented by Porter, for the competitive advantage of nations was designed to understand the factors that may affect the competitive position of a nation in the global market. Porter has described 4 chief factors that collectively create and affect the global competitiveness of a firm in a particular industry. In addition to those 4 key factors, Porter also mentions that the government forces and luck also play their role in national competitive advantage (Smith, Mcsweeney &. Fitzgeral 2008).