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ACCA Strategic Professional · Strategic Business Leader · Environmental issues

Zelmar's footwear industry is globally admired. Its designers say that the home market's fashion-conscious buyers reject ordinary products and demand new styles every season, forcing firms to innovate faster than foreign rivals. Which element of Porter's Diamond is mainly being described, and what does it imply?

This describes demand conditions. In Porter's Diamond, sophisticated and demanding domestic customers push firms to innovate and raise quality, which prepares them to compete internationally. The scenario focuses on buyers rejecting ordinary products, not on suppliers, labour costs or chance events.

  1. ARelated and supporting industries; clusters of suppliers reduce input costs
  2. BDemand conditions; demanding home customers pressure firms to improve and anticipate global needsCorrect
  3. CFactor conditions; abundant cheap labour lowers production costs
  4. DChance; an unpredictable event has shifted competitive positions

Explanation

Porter's demand conditions refer to the nature of home demand. Sophisticated, demanding buyers push firms to upgrade quality and innovate, giving them an edge abroad. The scenario describes customers, not suppliers, labour costs or random events.

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