Porter’s Diamond Model Strategy Template

Description
In a March 1990 HBR (Harvard Business Review) article called "The Competitive Advantage of Nations" (link here: https://hbr.org/1990/03/the-competitive-advantage-of-nations ), Prof. Michael E. Porter, from Harvard Business School, outlined the "Strategy Diamond" strategic economic model (also known as the "Theory of National Competitive Advantage of Industries"). With this framework, PORTER tries to theorise what would explain differences in competitive advantage at an international level between different industries and countries. E.g. what explains that a certain industry is thriving in country X compared to country Y? Therefore, variying from the well know 5 forces framework (available here: https://www.eloquens.com/tool/LQlESvak/strategy/strategic-analysis-tools/porter-s-five-forces-framework-strategy-consulting-powerpoint-templates ), its aim is to analyse the firm's competitive advantage (or disadvantage) at a country level, outlining the strong elements (or location advantages) that tend to influence specific firms or industries.

The model is therefore highly pertinent when a company is looking to:
- expand internationally with a market entry in a given country- make a FDI (Foreign Direct Investment)


The framework has 4 Central elements and two influencing components (Government and Chance):

🎯 CENTRAL ELEMENTS 🟥 

- Firm Strategy, Structure & Rivalry: intensity of domestic competition, structure of competition (existence of monopolies, duopolies, cartels etc.), maturity of competition compared to international players, average age of firms adressing the market, level of difficulty to create or manage a company, typical organisations of firms etc.
- Factor Conditions: the underlying essential conditions of the nation to provide for the industry in terms of education, skilled workforce and infrastructure. E.g. land (including natural resources), capital, labor force, labor education level, national infrastructure quality etc.
- Related & Supporting Industries: domestic industries that tend to influence the given analysed industry, making them essential for the analysed industry to exist. A successful and superior industry rarely is autonomous, it works hand in hand with the success of others. E.g. AI and Education OR automobile and primary goods. Analysing the presence, absence and strength of dependence of these supporting/related industries is therefore key to make strategic decisions.
- Demand Conditions: strength of demand, size of domestic demand, purchasing modes, buyer behaviour, cultural compatibility etc.

Relationships between each of the 4 central elements:

Firm Strategy, Structure & Rivalry  < - > Factor Conditions
Firm Strategy, Structure & Rivalry < - > Related & Supporting Industries
Firm Strategy, Structure & Rivalry < - > Demand Conditions

Demand Conditions < - >  Factor Conditions
Demand Conditions < - > Related & Supporting Industries

Related & Supporting Industries < - > Factor Conditions

🏛 GOVERNMENT 🟦

This is the existence, abscence and strength of government as a "catalyst" or "challenger"', to quote PORTER, for the industry or specific industry players. Are protectionist measures put in place? What regulations exist to keep international players at bay? What constructive plans are put in place by the gorvenment towards national players? (trade shows, access to financing, government contracts, access to the best national talents, subsidies, arranged mergers, influence on currency etc.) Also, is the nature of Goverment support actually positively influencing the industry, or is it rather more negative? If so, why? What are the underlying reasons? Companies playing in industries should also take into consideration that Governement support can also be volatile, therefore exposing the industry to international competition or to other threats from time to time (the reverse statement is also true).

Relationships of GOVERNMENT with the central elements:

Government < - > Demand Conditions
Government < - > Factor Conditions
Government < - > Firm Strategy, Structure & Rivalry
Government< - > Related & Supporting IndustriesGovernment  Firm Strategy, Structure & Rivalry

🍀 CHANCE 🟩 (Only one way)

In some situations, the random factor of "Chance" or "Luck" can play in favor (or the reverse), for a specific industry AND/OR for specific companies in the industry. For example, starting a company just before an unexpected government support strongly accelerating the growth of the industry, is a massive chance factor. In the same vein, having the company founded by the most adapted person for its unplanable story (e.g. Steve Jobs & Apple Inc. between 1980 and 2010), also plays a role in the sucess of the industry or firm. Other examples: random events, natural disasters, sciencific breakthroughs, pandemics, terrorist attacks, economic crisis...

Relationships of CHANCE with the central elements:

Chance -> Factor Conditions
Chance -> Demand Conditions
Chance -> Related & Supporting Industries
Chance -> Firm Strategy, Structure & Rivalry


Note: this additional element was not in PORTER's original paper.


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Given the popularity and notoriety of the framework, I decided to build a template for any analyst to use to represent the location advantages and equilibriums for a given market in a given industry and country. In one quick look, it enables to visualise what elements tend to influence each other more or less strongly and consequently adjust market entry tactics or the global strategy of the firm.

The Best Practice is:
- an editable Microsoft PowerPoint Template Slide
- 1 Excel Model to plot the Table (with two tabs)
- with an online & offline 6 step-by-step methodology, with pedagogical illustrations for each step.

Should you have any questions on using this top tier Strategy Diamond Template slide and framework, you're welcome to reach out to me via Private Message.

Good luck!
- Tim

Additionnal resources and sources on Porter's Strategy Diamond: 
- Visual Paradigm Online (another representation): https://online.visual-paradigm.com/fr/infoart/templates/strategic-analysis/yellow-and-blue-porter-diamond-model-strategic-analysis/-
- Porter, M.E. (1990). The Competitive Advantage Of Nations. Harvard Business Review- Grant, R.M. (1991). Porter’s Competitive Advantage Of Nations: An Assesement. Strategic Management Journal
- 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
- Business 2 You: https://www.business-to-you.com/porter-diamond-model/
- Think Insights (August 21, 2022) Diamond Model – How to assess nations’ competitiveness?. Retrieved from https://thinkinsights.net/strategy/diamond-model/.

⭐️ Bundle of 19 Strategy Consulting Frameworks (including this one): https://www.eloquens.com/tool/a7rgt4Bb/strategy/management-consulting-templates-and-frameworks/classic-strategy-frameworks-template-slides-bundle