Diamond model

According to Michael Porter, the model's creator, "These determinants create the national environment in which companies are born and learn how to compete.

These views analyse the organisation without taking into consideration relationship between the organizations strategic choice (i.e. Porter generic strategies) and institutional frameworks.

Two of the aforementioned pillars focus on the (national) macroeconomics environment to determine if the demand is present along with the factors needed for production (i.e. both extreme ends of the value chain).

The last pillar it looks at the firm's strategic response (microeconomics) i.e. its strategy, taking into account the industry structure and rivalry (see five forces).

[1] A lack of less important factors, such as an unskilled labor force or access to raw materials, can be mediated through technology or by implementing what Porter calls "a global strategy."

Also, resource constraints may encourage development of substitute capabilities; Japan's relative lack of raw materials has spurred miniaturization and zero-defect manufacturing.

Since domestic competition is more direct and impacts earlier than steps taken by foreign competitors, the stimulus provided by them is higher in terms of innovation and efficiency.

"[2] The role of government in Porter's Diamond Model is "acting as a catalyst and challenger; it is to encourage - or even push - companies to raise their aspirations and move to higher levels of competitive performance ..." .

The role of chance basically denotes the idea that it may occur that many times a product or an enterprise may get an opportunity to maximize its benefits out of sheer luck.