Diamond Of Competitive Advantage.docx

PHILIPPINES: The Services Capital of the World

The Philippines is considered a world leader in the services industry. The success of the Services industry in the Philippines can be explained through the use of Porter’s Diamond Framework. Michael Porter’s Diamond Model (also known as the Theory of National Competitive Advantage of Industries) is a diamond-shaped framework that focuses on explaining why certain industries within a particular nation are competitive internationally, whereas others might not. According to the National Economic and Development Authority (NEDA), the Philippine economy posted a 6.1% growth in the fourth quarter of 2018, driven by the Services sector which posted the highest share to GDP of 56.2%, followed by Industry (34.8%), and Agriculture, Hunting, Forestry and Fishing (8.9%). Services have been one of the strongest and fast-growing sectors of the Philippine economy. While this performance is considered as stellar by most analysts, there is still huge potential for increasing value-added in services outputs, as well as deepening participation in global value chains. The following statements are discussion on the factors of National Competitive Advantage of the Service Industry in the Philippines The Competitive Factors. The Philippine population is comprised mostly of very young workforce with mean age of 24. This means that the workforce consists young, strong, innovative and idealistic population. It is also an advantage of Philippine firms because the human resources are abundant. Firms in the Philippines also hold advantage on its high literacy rate, English proficiency both in oral and written and the Filipino trait of being flexible. The firms in the Philippines such as the Business Process Outsourcing Companies (BPOs) are thriving because of lower labor costs compared to other Native English Speaking Nations (for instance America and Australia). The same is true with the health care industry, Filipinos are known for being hospitable and having close family ties. Aside from the fact that there is an oversupply of Nursing or related degrees, Filipinos display a more sensitive and compassionate assistance to their patients. Thus, other Nations would prefer to hire Filipino nurses. The Firm, its strategy structure and rivalry. Firms in the Philippines has an advantage in the BPO industries because of the competitive factors such as the age, English Proficiency, interpersonal skills and knowledge on technology. According to Porter, technology and knowledge (know-how are the two most important preconditions in achieving the national advantage. In 2015, Philippines is known to be the leader in BPO industries, though, Philippines is competing head on with India , but studies show that Multi-National Companies (MNCs) would prefer hiring Filipinos because of a more neutral accent, higher education attainment and lower labor costs. The Demand Conditions. Because of Globalization, competing firms and nations utilize resources to cope with the science and technology to make operations standardized, easier and faster. MNCs would also be looking for cost-effective decision making leading to choosing the Philippines and its people to do the services tasks.

The Factor Conditions. Although it is very evident that there is more to improve in terms of the methods and techniques, facilities and machineries, tools and equipment, the infrastructure, the laws that govern it and other related factors; Philippines is thriving to be at par with its neighboring Asian Countries. The Related and Supporting Industries. Tourism perhaps is one of the fastest growing industries in the Philippines, with this growth, the supporting industries would also move in the same direction.

References: https://www.dti.gov.ph/resources/statistics/gross-domestic-product-gdp http://industry.gov.ph/category/services/