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Tamarind Group is assessing where to locate production for global sales. Using Porter's diamond of national advantage, a consultant argues that a country's firms in the cut-flower industry are globally strong because of intense domestic rivalry, demanding local buyers, a cluster of specialist growers and logistics firms, and an ideal climate with skilled labour. Which statement is correct?

National advantage here arises from the interaction of Porter's four determinants: factor conditions, demand conditions, related and supporting industries, and firm strategy and rivalry. They reinforce each other, so it is wrong to attribute success to climate, labour cost or government alone.

  1. AOnly factor conditions matter, so the climate alone explains the advantage
  2. BThe advantage arises from the interaction of the four determinants, with rivalry, demand, related industries and factor conditions reinforcing each otherCorrect
  3. CGovernment and chance are the core determinants, replacing the four named ones
  4. DAdvantage derives mainly from low labour cost, so rivalry is irrelevant

Explanation

Porter's diamond has four determinants: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure and rivalry. Government and chance are external influences, not core determinants. The case shows all four interacting, so advantage is systemic rather than from one factor.

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