Mota, Flavio; Business Analysis and Writing Sample

The article entitled “The Competitive Advantage of Nations,” by Porter, discusses

the forces that shape the competitive landscape of an industry (business). The four forces

(called The Diamond of National Advantage) are (1) Firm Strategy, Structure and

Rivalry; (2) Demand Conditions; (3) Related and Supporting Industries; and (4) Factor

Conditions. Companies have to create efficiency and acquire highly specialized skills, to

remain competitive (Firm Strategy). (Page 79) Moreover, competition creates pressure to

innovate. This includes the need for a company to constantly upgrade itself (constantly

make its methods obsolete by innovating and creating more efficient methods). (Pages

80-82) Furthermore, companies need to be able to sense and adapt to local demands. This

means that companies must focus on the local market in addition to their global strategies

(Home Demand). (Page 82) In addition, a company needs a working relationship with its

suppliers, customers, and distributors. This working relationship provides faster access to

information and quicker turnaround times for new products (Related and Supporting

Industries). (Pages 82-83) A good example of Porter’s Diamond is how the Swiss became

the world leader in watch production, despite not being an economic leader.

The Swiss emerged as the European leader by the 1930s because many Genevan

goldsmiths needed money and they had the skills to make watches. At that time, all

watches were mechanical and required great skill and knowledge of the watchmaking

profession. The quality of the watch depended on the skill and dedication of the

watchmaker. Moreover, there was a strong demand for watches because many farmers

moonlighted as watchmakers (Factor Conditions and Demand Conditions, Porter’s

Diamond). (Pages 1-2) Moreover, the Swiss innovated by producing watchmaking

machinery. Consequently, farmers who needed additional income engaged in

watchmaking activities (e.g. manufacturing watch parts). (Page 2) Moreover, the Swiss

formed a watchmaking guild in the 1601. In addition, the Swiss invested in education,

training, watchmaking academies, and repair schools. (Pages 2-3) Furthermore, the Swiss

pursued a market that others had ignored (Firm Strategy, Structure, and Rivalry, Porter’s

Diamond). Additionally, there was minimal competition. The British attempted to

compete but were unsuccessful and asked the government (Parliament) for help in

leveling the playing field. Furthermore, high-end stores and jewelers provided a

distribution channel for the Swiss watches (Related and Supporting Industries, Porter’s

Diamond). (Please see the Porter Diagram that follows this instrument.)

It is because the Swiss had the expertise, innovation, and skills along with the

hunger (an important component for the success) for the money that they emerged as

leaders as opposed to some other more economically significant country.

Copyright is not claimed on the Swatch name; Swatch is a registered trademark.