Porter's Diamond Of India.docx

“Samsung Electronics has formally opened a new factory in India, which the South Korean tech group says is the world’s biggest mobile phone manufacturing plant, part of its plans to expand production in the world’s fastest growing major mobile phone market. Porter is not preoccupied with explaining the export and import patterns of nations but rather with explaining why some nations are more competitive in certain industries. He identifies four elements that are present to varying degrees in every nation and that form the basis of national competitiveness. The Porter diamond consists of : (1) factor conditions, nation’s resources, basic factors: a large labor force, natural resources, climate, or surface features, as paramount factors in what products a country will produce and export. Advanced factors include: the skill levels of different segments of the workforce and the quality of the technological infrastructure in a nation. abundant skilled workforce in India, India boasts a vast network of technical and management institutions that are of the highest international standards. These institutions develop excellent human resources. India also has a strong base of an English-speaking population for business purposes. Example real life: Japan did not acquire its advantage in automobiles because of its natural resources of iron ore—it has virtually none and must import most of the iron it needs. These countries developed their productivity and advantages in producing these products through deliberate efforts. (2) demand conditions, A sophisticated domestic market drives companies to add new design features to products and to develop entirely new products and technologies. Companies in markets with sophisticated buyers should see the competitiveness of the entire group improve. huge market base and fast-developing spending habits of middle-class Indians (3) related and supporting industries, supporting industries spring up to provide the inputs required by the industry. This happens because companies that can benefit from the product or process technologies of an internationally competitive industry begin to form clusters of related economic activities in the same geographic area. Each industry in the cluster serves to reinforce the productivity and, therefore, competitiveness of every other industry within the cluster. joining the 'Make in India' program (Prime Minister Narendra Modi launched the Make in India initiative on September 25, 2014, with the primary goal of making India a global manufacturing hub, by encouraging both multinational as well as domestic companies to manufacture their products within the country.) will also help Samsung to compete more effectively with rivals such as China’s Xiaomi, which became India’s biggest smartphone brand by shipments earlier this year. Samsung was the top smartphone seller in India but it was overtaken by Xiaomi — the Chinese rival that just went public in Hong Kong — at the end of 2017. Xiaomi is also building up its presence in India, where its cheaper devices have appealed to priceconscious consumers. in the country. More than 95% of Xiaomi smartphones sold in India today are made in India, allowing the company to avoid the tariffs on imported smartphones that have hobbled(move unsteadily) rivals such as Apple (AAPL).

Apple (AAPL) started manufacturing some iPhone models at a plant in Bangalore last year, but it still imports the vast majority of its devices into the country. It recently tripled its Indian manufacturing base by adding four smartphone plants It now has a total of six factories that it says can produce two smartphones every second. (4) firm strategy, structure, and rivalry. The more intense the struggle to survive between a nation’s domestic companies, the greater will be their competitiveness. This heightened competitiveness helps them to compete against imports and against companies that might develop a production presence in the home market.

Government and Chance Apart from the four factors identified as part of the diamond, Porter identifies the roles of government and chance in fostering the national competitiveness of industries. First, governments, by their actions, can often increase the competitiveness of firms and perhaps even entire industries. Governments of emerging markets could increase economic growth by increasing the pace of privatization of state-owned companies, Second, although chance events can help the competitiveness of a firm or an industry, it can also threaten it.

government policies should not be designed to protect national industries that are not internationally competitive but should develop the components of the diamond that contribute to increased competitiveness. vibrant democratic setup, which is aptly underpinned by a broad legal framework and independent judicial system. The Indian government also allows foreigners to make direct investments in the country's firms by way of acquiring share and debentures.