Q) The Indian software industry has become one of the leading global markets. According to Michael Porter, a nation’s competitiveness depends on the capacity of its leading industries to innovate and upgrade. Critically discuss Porter’s diamond of national competitive advantage. Illustrate your answer by referring to Indian software industry as an example.
Porter's Diamond is a tool for measuring the competitive advantage of nations especially in understanding the reasons why a particular industry within a nation is a globally competitive one. Factor conditions, firm strategy, structure and rivalry, demand conditions, related and supporting industries, government, chance, etc.are the conditions determining competitiveness. The impact of the important components of Porter's Diamond for the Indian software industry shall be explained below.
Firm strategy, structure, and rivalry
In India, the competition among various software companies is very intense. The rivalry among software companies such as Tata Consultancy Service, Infosys, Wipro, HCL, Tech Mahindra, etc led to the innovation and improvement of the software industry and this intense domestic competition helped them to enter the international business arena.
Factor Conditions
The factor condition is concerned with the availability of natural, financial, and human resources in a country. As India is a highly populated country, there is no dearth of human resources for working in the software industry. The presence of a healthy stock market and the stable economic condition has also helped the companies in raising the required capital.
Demand Conditions
For the software companies in India, there is ample demand from both domestic as well as international customers. The trend in international software demand is also favorable for Indian software industry.
Related and Supporting Industries
Related and Supporting Industries of the Indian Software industry including e-commerce, hardware, etc are also in the growth trajectory. It also contributes to the growth and competitiveness of the Indian software industry.
Government
The Government of India is encouraging the software Industry through various campaigns, Acts, etc. It helps the companies in the software industries to gain a greater level of competitiveness.
Chance
Chance factors such as internal diversity, high population, etc. have heavily contributed to the growth and competitiveness of the software industry in India.
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