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TitleTo what extent is Porter’s Diamond a useful concept in explaining the home and host locations of international businesses?
TagsStrategic Management Competitive Advantage Supply Chain International Business Competitiveness
File Size229.1 KB
Total Pages7
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locations such as Belgium, Spain and Brazil (Frynas and Mellahi, 2011) which

according to Hofstede‟s dimensions have very similar scores.

Consequently I think that for the understanding and choice of home and host location

the model should only be a starting point of the environmental analysis, i.e. a

research on a macro level, but it should then be followed by a more thorough

research on a meso (e.g. competitor analysis, Porter‟s Five Forces) and micro (e.g.

value chain analysis, cultural analysis) level (Hollensen, 2011: 104). Even though

such researches are very costly and time-consuming, they are necessary for making

the right decision because location is crucial for international success. If not, a failure

because of a wrong location would be even more costly as in the case of M&S when

it closed all its stores in the US. That is why additional models should be used to

gather more in-depth and purposeful information on exact needs and industry

characteristics in order to explain what is behind organisational location decisions.

In conclusion, no model can be perfect and in fact, no model actually is simply

because countries and companies differ fundamentally and no generalisation is

possible. All environmental analysis frameworks have missing considerations. What

matters from a company‟s perspective however is the combination of the right models

that best fit to its own needs and capabilities for sufficient results. Porter‟s Diamond

Model alone is not enough for fully making or explaining the decision where to

internationalise. It is however an excellent starting point because it provides the basic

selection criteria for understanding home and host locations and how to build and

exploit competitive advantages.

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