Benefits of Strategic Management Models

Nowadays, strategic management models are importance to senior executives that they need to evaluate battle management systems as well as science is always changing and improving all the things necessary to effect efficient organizations. Management strategies are important to all organizations and countries that are developing or developed to meet the objectives of each organization (Bahareh Khanali 2008). Meanwhile, the objective of strategic management models is to help their performance of corporation and learn how to create value from the use of learning strategies. Thus, the company will collect information and expectations regarding competition in the industry are important to define strategies after that managers need to measure performance using data appropriate to the management of strategic management process. In addition, the strategic competition will receive a higher return than the average when companies use the strategic management process. Therefore, successful business still is not easy to perform. Those providing or participating in the strategic decision to bring the strategies used must be consistent and important factors such as basic knowledge of managers.

Porter’s generic strategies1 model is commonly used to analyse in Japan. Porter’s generic strategies are widely used in America and Europe, but while Japan has not shown a case study on Porter’s generic strategies. This research study about the Japanese strategy of Porter’s generic or continued under the management of “tanditional Japanese strategy” by using Porter’s generic strategy to process. Japan’s experience economy in the industry was resembles economic crisis and lower management and economic distress in Japan owning to lack of analysis of long-term business plan, layoffs and non-profit. The system industry is the interdependent relationship between community organizations and private sector. According to Ishikawa (1988) observes that Japan can not meet rapidly changing demand of the market is entrenched group decision making and the formalized systems likely to slow down. After Japan was experiencing economic distress after the company began to find ways to cut out the bad decade and their commitment to the Japanese management system and discovered Michael Porter’s (1980, 1985) generic strategies, which is the most important organization and renews the organization. The research sample used in this study consists of case management staff from large companies. The test survey of 101 samples from Japanese companies operating in the Tokyo show in Japan’s four strategies may begin to change the strategy of the Porter-based strategies, but traditional Japanese strategies2 abide. One example is the per cent of Japan uses frequency of strategic by product differentiation strategy, cost leadership strategy, supply chain and training (see Table1). Moreover, since the use of strategic Porter occurs then the article called “Can Japan compete?” (Porter & Takeuchi, 2000) Ministry of Economy Trade and Industry of Japan has established a reward “Porter Prize” for Japanese companies to succeed and maintain profitability in the industry, especially the strategy and methodology of the process, innovation in products. Porter award is intended only to improve the competitiveness of Japanese companies. Recently, bring to generic strategies get attention in public debate in Japan after that change the key policy and strategic changes necessary to achieve the system’s traditional Japanese companies increasingly use the strategy of Porter. According to Porter’s and Takeuchi (2000) explains that decades Japanese economic recession, especially in the case of Japanese companies increased competition in global markets.

Meanwhile, Porter’s diamond model is the model used in the decision of the operators in the business extensively instance evaluate the success of the Indian shrimp industry in Thailand and international competition and the environment of the country. The keywords of this case are shrimp industry, competitiveness, flexibility3. Shrimp industry and exports in India and Thailand which the two species of shrimp has growth in the global shrimp market and industry they are P. vannamei and P. Monodon4. In addition, the suppliers of cephalopods are the most in India to Europe by 83 per cent volume of exports. In Thailand have many industries about aquaculture related and services such as chemicals and fertilizers. While P. vannamei is more delicious than P. Monodon. On the other hand, P. Monodon commands a special price. As a result, the global markets have exploded in demand. It is need to understand the competitive environment in the shrimp industry in India and Thailand. This means that Porter’s diamond model can be analysed to help the case of this industry (Porter, 1990). According to Porter states that the ‘national environment’ composing of four factors: internal rivalries, related industries, and firm strategy structure and factor conditions these are created from Porter’s diamond model. An additional, government is mainly played role in national competitive environment of an industry (Silpa, Yadav et al 2007).

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Nominal Group Technique used the diamond model for analysis Indian and Thai shrimp industry due to it can help flexibility theory. The India’s shrimp industry on Porter’s structure, India is the five points in the shrimp production. The shrimp farms are owned by small farmers to 90 per cent. The P. monodon is the main of species in shrimp culture. And India is the biggest frozen shrimp in the export which share of culture is about 80 per cent (MPEDA, 2006). The Indian shrimp industry and national competitive environment is used Porter’s diamond model to help and evaluate. However, India needs to develop infrastructure and also the foreign has not been to India for investment in shrimp industry owning to many business companies comes from family owned inherited that was happened over the decade.

A part of Thai shrimp industry on Porter’s structure, since 1993 Thailand is the producers in farmed shrimp in the world where has successful of transform shrimp for a high cost product. Thai shrimp industry entries toward low cost competition product for change direction from a high cost product result of a successful in shrimp exports industry. External factors mean trade policy and elasticity of demand is domestic support export competitiveness in Thai shrimp sector those factors affect the efficiency of product growth (Ongsritrakul and Hubbard, 1996). The market share belonged to Thailand around 27 per cent which export frozen shrimps more than 1.5 billion bath per year. The overview and the conditions and factors such as factor conditions, demand conditions and role of national government cause by Thailand gained advantages more than India, overall from these differences that contribute success in supporting the global market.

Moreover, Porter’s Diamond has presented the rating about panel of respondents on flexibility of competitive elements that India has negative rating higher than Thailand because of India lack of flexibility in shrimp industry scenario. It describes about how to respond to new threats and to arrange situation in the industry (see Table 2). Porter’s diamond is the elements of the competitive conditions within the country to facilitate international success. The operations of the diamond model show flexibility and support to enable the company to leverage competitive advantage environment. This research has identified factors that can lead role industry to competition by diamond model analysis (Silpa, Yadav et al 2007).

Not only Porter’s diamond model and generic strategies model only widely used, but SWOT analysis5 model influence in performing analysis of business success. One of example is SWOT analysis applied to micro enterprises (MEs), small-to-medium enterprises (SMEs), and large software enterprises (LEs)6: an Austrian study which interviewed random sample of 174 executives from Austrian Software Company. Most managers of Austria’s largest software face significant obstacles in the growth of the business community because the nature of the software industry has globalised, high performance can also be used for other countries in the European Union. Research reviewed problems from software entrepreneurs with small-to-medium and micro Software Company which software innovation, investment and areas of collaboration between companies and joint ventures. Current models of collaboration between companies which factors affecting the scope of work and its impact on business success to determine the importance of cooperation between companies, especially SMEs. For the study on the experimental nature of the business of micro and small to medium enterprises contribute to its high-performance software for benchmarking. These results will be combined for special features and needs of micro, small-to-medium and large enterprise software to help professional managers, especially from young companies to develop market entry strategies of successful organizations survives in a dynamic business environment. Thus, implementation of the SWOT analysis, micro enterprise (ME), small-to-medium (SME) and large organisations (LE) are factors that can influence different strategies to isolate and identify the organization, which means the key of the most successful. The result from the analysis of factors that must be considered by managers as part of the strategic planning process prior to the scheduled corporate strategy because of high globalised nature of the software industry to make available in other countries in the European Union. SWOT analysis also led the development of successful corporate strategies to survive in a dynamic business environment for Europe’s young into the market (Edward, October 2002).

Obviously, models as a pattern often depends upon the managers to apply these strategies are how to be successful. Strategic management models are set to show action in helping to make decisions about allocation of resources to meet corporate goals of bodies. Managers in many industries have led some strategic management models used in their business, which is a help in decision analysis and business problems. The decision-making is important and has influenced many leaders and managers. Models are the technical advantages as the face of competition and the decisions and it can also increase as the decision in the case of the initial models to take part in educational and research issues in economic or competitive in global market and will appear when analyzing the strengths and weaknesses of the business to bring these things to change and develop on the spot.

In this section awareness and focus on Porter’s Diamond Model. Maxoulis, Kalogirou et.al (June 2007) observes that Michael E. Porter (1990) states that ”The competitive advantage of Nations” suggest a new theory of competitiveness it is called diamond model it’s as a system such as the ceramic tile industry in Italy. The model illustrates why some industries in nations are more rival than others. The model argued that national home stand by the organization played a key role in creating opportunities to benefit the global level.

The diamond model stands for four factors, which impact companies of the specified group. The four factors are in brief below:

• Context for firm strategy and rivalry: company directs competition will increase efficiency and innovation

• Strategy: Domestic capital markets impact the company’s strategy. Because some countries capital markets are long-run outlook, while other countries are short-run outlook. America is likely to increase competition in the industry as short-term investments. At the same time, Switzerland is likely to increase competition in the industry to invest long term (Krishnamurthi, 18 November 2007).
• Rivalry: Porter says that Competition is intense in Japan; many companies are diligent company that will compete in most industries (Krishnamurthi, 18 November 2007). The competition of international

cannot drastic and with environmental and adequacy of the differences between companies that can provide a useful excuse for managers who exceed performance with their competitors. (forumuz.biz, 28 January 2009).

• Demand conditions: If customers are demanding in the economy resulted in increased pressure on the company so it will always be forced to improve their competitiveness such as French wine industry is the country that experienced wine consumers. These consumers can help to produce high quality wine (Krishnamurthi, 18 November 2007).
• Factor (input) conditions: Skilled labour and capital structure in the factors of production. Porter suggests that countries that lack resources to allow them to compete in the industry, also known as one of the disadvantages that a change advantages. Therefore, these countries will struggle to overcome the problem of resources. For example Switzerland was the first country experiencing labour shortages. They dismiss workers – turned to focus on innovative clock / high-end watches (Krishnamurthi, 18 November 2007).
• Related and supporting industries: Industry support is critical to the competitiveness of companies including frequency of partners and related industries are often in conflict, regional, national. For instance, Leather footwear industry and other leather products in Italy and U.S. car industry in Silicon Valley Detroit (Krishnamurthi, 18 November 2007).

The government of role in the diamond model will act as a catalyst to increase its demand for advanced products with an emphasis on creating special factors to stimulate local competition is limited to work directly and anti-trust regulatory enforcement (Maxoulis and Kalogirou et al, June 2007). At forumuz.biz (28 January 2009) reports that large textile industry in India can be supported multi-directional and the local economy. Account the total production of most industrial countries over 20 per cent and employment has more than 15 million people and exports account for more than 30 per cent making India a net foreign exchange industry, the largest (Dalmia, 1994). The Government of India the economic reforms in the new format in 1991 made the economic situation of India is continuously improving due to the government to focus on the liberalization policy.

It seems that benefits of Porter’s diamond model resulted in large companies bring to the widespread use in countries like America or even Europe. That bringing the Porter diamond model used in the process of organization and the national competition is an indication that the Porter diamond is a dynamic relationship between the four factors. According to Porter suggests that when he has been building diamond model by four years, it apply approximately a hundred industries and ten nations. This situation is supported by The Competitive Advantage of Nations, page 855 in 1990 (Dong and Hwy, November 2000). Furthermore, Porter’s diamond has become a strength benefit of implement. The evidence shows that Puerto Rico of the international competitiveness by using Porter’s diamond. The ten industries maintain competitiveness in Puerto Rico during the take the principles of Porter’s diamond in five years time7. Puerto Rico is a small industrial country in the Caribbean. Puerto Rico would like to know the potential of countries in global competition has led to the Porter diamond framework and apply in Puerto Rico Puerto Rico in the industry can increase opportunities to compete on health sector opportunities because of Puerto Rico’s exports merchandise and services can also link industry to promote exports and benefit other industries such as tourism. Puerto Rico also shows that competition in the food sector can be competitive against the competition in its health sector since the expertise of local engineers and specialists with knowledge and technical work. About the chemical formula of these local companies because of they have expertise that comes from betting the Federal Drug Administration Puerto Rico can be shown effective in the development of this sector, both foreign and domestic. But Rico Puerto Rico should focus on to determine which company to a member of the competition because of external factors cause by the Porter diamond and local governments. These are necessary to promote new industries and increased competition on international markets level. Strengths of the Porter diamond allow increased competition in the country’s exports (Luz Leyda, 2006).

And other industries have used Porter’s diamond weakness resulted from the strength to compete with competitors in the same industry is aerospace industry to the Porter diamond framework is a specific factor to strengthen Hong Kong as a hub for air transport industry and transport, international and Hong Kong has also estimate that natural resources can increase the ability the same level to compete with neighbouring countries. Hong Kong application using Porter’s strategy, as Porter’s diamond competitive business aviation industry and the intense competition that Cathay Pacific has made more than HK$4.8 billions budget to create independent cargo terminal building and cargo because terminal will bring the race because of strong intensity at the airline will have more options to benefit from reduced costs of freight and more than that can increase capacity to manage demand in the future. Therefore, Hong Kong’s aviation industry attempted to find strategic ways to cope with competitive business. After using the Porter’s diamond analysis principles and then acquired ideas that are way to maintain Hong Kong as a hub for air transport might be done by creating a free trade city or bilateral agreement with the mainland (Yui-yip Lau, 25 May 2009).

Additionally, this case involved the theory and Porter’s diamond, clustering and Performance Matrix (Martilla and James, 1997) as a tool for critical help in better management framework through the complexities of social phenomena, including thirty-three Singaporean financial clusters to introduce the main benefit of clustering the interaction between companies, which the matrix shows strength and weaknesses, to evaluate excellence in the industry maintain national competition and depth information. According to Singapore is a country example of the power in overcoming weaknesses into strengths, which makes factors in creating national advantage. Singapore is a small island and strategic geographical location, natural harbour good centrally located between the West and East, a location for the address of a development bank and international financial centre8. Singapore has a strong group of banks with 107 banks (www.mas.gov.sg) in order to have the world’s seventh largest holder of foreign currency reserves US 85.8 billions (May 2003). Money market in Singapore is the trading and short-term instruments such as money treasury securities. In addition, In August 1999, Singapore rank among the country was successful in most financial markets of the World Economic Forum Global Competitiveness Report (Kuah and Day, November 2005).

Porter (1990) stated that “clusters in the Competitive Advantage of Nations as being: the connection between suppliers and related industries, Institutions specialized in limited locations. Innovation, improvement and change is seen to be central to creating competitive advantage”. Arthur (1990) argues that strength of clusters can lead to attracting more of these regions and with the innovation will bring success to more innovation. Swann (1999) and Baptista et al (1996) noted that region not just to accumulate knowledge and human capital increase information exchange matures, but that does not comply with regulatory and imprecise means of spreading the knowledge is limited to areas outside clusters is a dynamic course of business associated with certain production companies and expansion of manufacturing in the cluster. Research results from the thirty-three respondents found that Singapore supported the financial industries that are necessary conditions of the cluster. For these reason is Singapore was identified key terms correctly and maintenance industry as well. On the other hand, seven manager groups who answered the comments do not match; they thought that Singapore lack of skilled labour and environmental provisions in the good work. The researchers in this case said that we believer in the Porter diamond that it obtains two advantages. The first is Porter’s diamond that shows the actions to make real what happens within the suitable for article of analysis. And the second is the expression of Matrix applying Porter’s diamond potential in the organization has added more confidence in decision making and appropriate conditions and incentives for their manufacturers and workers of the company (Adrian and John, November 2005).

In particular, the strengths of the work to Porter’s overall competitiveness in the industry from global competition and has identified many interesting things in the country’s major industrial nations. (Bruce and Eamonn, 1998). Robert (2004) says that factors in the Porter’s diamond will support it with its own, such as deterioration or improvement in one factor will affect the next one factor. This will highlight the natural characteristics of the micro economic power in the country: the link between these growth factors, strengths and weaknesses of the industry. Allows the strengths of Porter’s work occur because the client shared technology resources, distribution channels and suppliers and industry groups have occurred in geographic trends.

Nevertheless, diamond is a good principle to benefit many industries, whether with you, but it must have criteria set geographical different (Dunning, 1993), especially in small related Porter’s single diamond related with those countries are limited number of variables. They must use variables of different countries to add the ability to compete on international markets for this reason Porter accepted variables are important to the international competitiveness of the country or the world for diamond version, but he clearly does not include these variables. Unfortunately, these variables were not clearly disclosed in his diamond model (Dong and Hwy, November 2000). Rugman says that Porter began training in the study of conditions in the country’s largest and most wealthy in America and very little Canadians. But in Canadians have been affected adversely by Porter’s diamond due to be limited by geographic labour and location (Eden, August 2004).

From Dong and Hwy book (November 2000), according to Rugman (1991) argues that Porter’s single diamond weakness has two defected that the first is the role of government cannot be true to all unfold and the second is multinational activity inappropriate was established. For example, Porter analyzed and revises the international competition of Canadians. Canadians are just one in ten of the economic scale in America. Canada is relatively small and relies on the sales market in America. In fact, assumptions made that the U.S. diamond has been involved with Canadians diamond industry in Canada industrial multinationals due to sales of more than 70 per cent of their. The alliance of American-Canada fortify free trade this point. The weakness of Porter’s diamond is not just a case of the Canadians, but more than 90 per cent of the world’s countries by multinational industry of small open economies can not use the porter diamond. Moreover, other comments that critics Porter’s diamond from Dong and Hwy (November 2000) explains Porter that attempt to enter into new factors like those described, which is not identical to original. In contrast, at forumuz.biz (28 January 2009) reports that Porter’s diamond more concentrated with developed countries and the role of government is both positive and negative. Sometimes good intentions of the government make non-competitive impact on international and domestic industry. Porter’s lack of bringing core modem that led to the application in Canada. Porter focused on the home diamond in Canada that cannot identify the competitiveness of Canadian, but Canada is a successful cluster use of resources-based. They can add value in itself.

Besides, Porter said in his book that Canadians affected Canadians are the only thing is factor driven. Discrepancy is the basis of industry and the dangers of misleading the wrong way, such as policy advice to Canadians. An aspect of the role of natural resources of the Porter is old fashioned9 and has been used in the wrong way. He said that dependence on natural resources bad as they dependence on technology standard or unskilled labour that is common these changes by comparative advantage in natural resources to the specific advantages in the process of resources, which can confirm that these sources of sustainable competitive advantage. For example, Alcan, Noranda and Nova are successful multinationals in Canada, which demonstrates how to add value by managing the introduction of these resources. But the idea of Rugman said if Porter crosses a border, he changes the mistake (Dong and Hwy, November 2000).

Dong and Hwy (November 2000) observes that the discussion in the case of Canada and the defects of the diamond that is called when a very attractive industry and business, because Porter Rugman two people who have a reputation and expertise in the business community of the world. Porter is in the field of strategic management while Rugman is in the business community abroad. For the reason, Porter’s focused on competitive strategy national and corporate, but on the other hand Rugman’s focused to precede realities of multinational companies than just beat the competition business. Thain (Dialogue, 1992) recommends that the discussion should focus on the practical fact of the introduction of good features that can be used Porter real treat because of the most important. Rugman is currently building another important point that makes policy recommendations on the basis of Porter might sound, but they do not correspond with the analysis of Porter (Rugman, 1992, p.59).

Conclusion

The evidence from several cases demonstrates that the model is that business and industry recognized in many countries and many leading companies. To be successful in that model to bring in the business process or the industry itself to develop a step to compete with national and global level that may be considered as a tool and model important mechanism to drive the process and industrial movement continued. Those executives should be aware of how strategic management is a process in place to adapt management strategies to broaden. Operating divisions are also improving and personnel and, importantly, to increase its competitive ability in organization and capabilities of each employee to promote a professional approach, we can make the company a leader in the industry.

The popularity of the model are whether SWOT, Diamond or Generic resulting executives are confident and effective business decisions more because these are the cornerstones in the management strategy. Administrators can select a model in their competency and meet all environmental factors within and outside the mind. This model can help these executives with strategic change and resolve the problem on the spot. However, these executives should have a good basic knowledge of operating systems and vision in the work of the model chosen, however, have good management skills in the use of a single model may not achieve the organization. The successful of companies and industries will achieve, thus the management and staff should cooperate in order to perform.

But while the model may be used with both strengths and weaknesses in the model, each have it that the conditions will be factors internal to the case analysis of Porter’s diamond model is known and famous throughout the world and has been used widely. Porter suggests that when he has been building diamond model by four years, it apply approximately 100 industries and 10 nations. The diamond model is a good principle to benefit many industries resulted in large companies bring to the widespread use in countries like America or even Europe. At the same time, critics have come to this model the well-known in business circles as Rugman argues that Porter’s single diamond has two defected that the first is the role of government cannot be true to all unfold and the second is multinational activity inappropriate was established and he focused to precede realities of multinational companies than just beat the competition business whereas Porter’s focused on competitive strategy national and corporate.

Eventually, the dispute between Alan Rugman and Michael Porter on the diamond model in its opinion may be different, whether because of several factors that makes either the aspects or different perspectives. But no one can rapidly identify who someone is wrong because the business strategy and management strategies to modify at any time. So what should realize is bringing experts to comment on each application and change the power of ideas to improve the system and how the same level of business to competitors and to compete successfully.

This report is the first report on the basic knowledge in strategic management models widely used business from past until present and to bring more information in this report to know and find ways to develop a good knowledge in the future.

Bibliography

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Document

• MPEDA (2006), Mission Document. Marine Products and Export Development Authority, Ministry of Commerce and Industry. Government of India

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