Free Essay: Diamond of National Advantage; Analysis of Amazon.com

Any business growth, whether local or international, is determined by both internal and external factors. Porter's Diamond model stresses the importance of these factors in helping a business gain a competitive advantage, especially in the global market. According to Porter (1990), "What happens inside companies is important, but clusters reveal that immediate business environment outside companies plays a vital role as well." Porter seeks to answer the question, why are individual companies based in different countries able to maintain consistency in innovation? Porter summarized the answer by stating four significant factors that determine a company's change (Porter 1990). These factors included factors, demand conditions, related supporting industries and firm strategy, structure, and rivalry (Smit, 2010). The paper will analyze Amazon.com and how it utilized the Michael Porter model to gain a competitive advantage in the United States of America market.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Amazon.com is a customer-centric company that started in 1994, whose main aim is to solve customer's problems by helping them chose a product they want online (Ritala, 2014). Jeff Bezos, the owner of the company, was able to utilize all the four factors to be innovative in the market. The U.S.A. market provided Amazon with skilled labor, excellent infrastructure that enabled the business to grow. A study by Kenney (2019) estimates that amazon had employed up to 798,000 qualified Americans by 2020, the highest ever recorded since its establishment.

With the growth in technology and a wide range of products in the market, the American population needed a service that would help them chose what to buy. Amazon covered this demand by assisting them in choosing. Amazon also has established a solid organizational structure that has helped them with the coordination of their activities. Amazon uses a hierarchical business structure. The senior management consists of three C.E.Os who are assisted by three vice presidents (Ritala, 2014). This structure has enabled them to gain a competitive advantage in the U.S.A. market. With a range of supporting industries in the market, Amazon has continuously been innovative in the U.S.A. market. These industries range from companies that sell their products on this site to shipping companies. The supporting companies are vital for the success of Amazon; different industries must produce their products for Amazon to sell them. The shipping and packaging companies are also significant in aiding the delivery of products purchased on Amazon. All these related industries must work together to complement the success of each other.

Porter's diamond of national structure has assisted many businesses seeking to expand their operations globally (Moboya, 2015). Businesses must study the market they want to invest in to make sure that they have covered all the four factors stated by Porter

References

Kenney, M., & Zysman, J. (2019). Work and value creation in the platform economy. Work and Labor in the Digital Age (Research in the Sociology of Work, Volume 33). Emerald Publishing Limited, 13-41.

Moboya, J. & Kazungu, K. (2015). Determinants of competitive advantage in the textile and apparel industry in Tanzania: The application of Porter's Diamond Model. British Journal of Economics, Management & Trade, 7(2), 128-147

Porter, M.E. (1990, March/April). The competitive advantage of nations. Harvard Business Review Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The case of Amazon. Com. Industrial Marketing Management, 43(2), 236-249.

Smit, A. J. (2010). The competitive advantage of nations: is Porter's Diamond Framework a new theory that explains the international competitiveness of countries? Southern African Business Review, 14(1).