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CK Prahalad v/s Porter – Who”ll win?

Posted by Arun Uday on June 18, 2007

Apart from the Five Forces model, which I discussed in my previous post, another of Michael Porter’s contributions to business economics has been the concept of  the “Diamond Model”, which describes the competetive strengths of a nation. One of the important arms of a nation’s “diamond” is the so called “Demand Conditions” of the local market. This essentially refers to how evolved and sophisticated the domestic consumer market for products and services is, which in turn will dictate how innovative the businesses catering to those markets will be. Its not a difficult concept to grasp. Most often, producers of innovations are cutting edge users of that genre of products themselves.  That explains why most of the mobile innovations come from mature consumer markets like Japan, Korea or Nordic countries or why web innovations primarily emanate from the US.  On the other hand, this could be a discouraging prognosis for innovation in emerging countries like India since that would essentially mean that once we are lagging the technology adoption curve, it would lead to a viscious loop where the market for the most innovative solutions will never exist and hence innovation never happen.

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