Established model

Porter’s diamond

Michael E. Porter · 1990

Also known as The diamond model, The competitive advantage of nations

Some places are better at some industries, because of their resources, demanding customers, related industries and local rivalry.

Its place in the frameworkMarket Core›Market Opportunities

What it does

Porter asked why particular countries lead particular industries and pointed to the conditions around the firm: specialised skills and infrastructure, sophisticated local demand, strong supporting industries and fierce domestic competition, with government and chance also playing a part. For a company it is a way of asking where an industry is strong, and so where to locate, source or compete.

Reach for it when: When choosing where to locate an activity or look for partners abroad, and when judging whether a foreign market’s own companies will be hard to compete with.
Where it stops: It explains national advantage after the fact better than it predicts it, and in a world of global supply chains the nation is often the wrong unit. It is a way of thinking about location, not a scoring method.

Michael E. Porter, The Competitive Advantage of Nations, Free Press, 1990.

Why it sits at Market Opportunities

Where demand exists that the organisation is not yet serving — sized honestly, judged on fit as well as attractiveness, and narrowed to a list short enough to act on.

A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:

SizingThe addressable-market distinction between total, serviceable and obtainable market, and bottom-up sizing as the check on top-down figures.
Growth and directionDiffusion-of-innovation work on adoption curves, and the industry-lifecycle literature on how attractiveness changes by stage.
Opportunity assessmentAnsoff’s product-market matrix for the fit question, and the market-attractiveness screens used in portfolio planning.
The shortlistStrategic-choice literature on the discipline of deciding what not to do as the substance of a strategy.
Entering new marketsJohanson & Vahlne, “The Internationalization Process of the Firm”, Journal of International Business Studies, 1977 (the Uppsala model); Ghemawat, “Distance Still Matters”, Harvard Business Review, 2001 (CAGE); Franklin R. Root, Entry Strategies for International Markets (1987), on entry modes.

All of Market Opportunities

What it touches elsewhere

Nothing in a business is decided on its own. A conclusion reached with this model at Market Opportunities lands in these other cores, whether or not anyone follows it there.

PartnersWhere a market is entered through a partnership, the partner is chosen and contracted there.
Business CoreAn opportunity requires a value proposition and the capacity to serve it, which is where fit is actually settled.
Goal CoreA pursued opportunity becomes a long term goal or it remains an observation.
CompetitorsAn unserved opportunity is unusual; establishing why nobody is serving it is part of the assessment.
Time CoreWhether the opportunity is available now is a separate question from whether it exists.

Filed at the same place

These answer questions that arise at Market Opportunities too. Where they disagree with this one, the disagreement is the useful part.

PESTEL analysisA checklist of the outside forces a business does not control: political, economic, social, technological, environmental, legal.
SWOT analysisInternal strengths and weaknesses set against external opportunities and threats.
TAM, SAM and SOMThe whole market, the part your model can serve, and the part you could realistically win.
The product life cycleProducts pass through introduction, growth, maturity and decline, and what to do about one depends entirely on where it is.
Hofstede’s cultural dimensionsNational cultures differ along a small number of measurable dimensions, and those differences shape how a market will receive you.
The Uppsala internationalisation modelCompanies tend to go abroad gradually, starting close to home and committing more as they learn.
The CAGE distance frameworkDistance between countries is cultural, administrative, geographic and economic, and each kind can make a large market less attractive than it looks.

Elsewhere in Market Core

These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.

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