The De Boer Diamond Model
Businesses often strive to gain a competitive advantage over the competition. In order to accomplish this, they often turn to the De Boer Diamond Model. Developed by Professor Harry De Boer in the mid-1980s, the Diamond Model is a diagnostic tool which delineates the four key characteristics of a successful business venture: (1) factor conditions, (2) demand conditions, (3) related and supporting industries and (4) firm’s strategy, structure and rivalry. This model was created to help business owners identify the key elements of their particular market that will enable them to develop a competitive advantage.
The first element of the model — factor conditions — refers to the physical and human resources available for a business to use in order to create the product or service. These include the landscape, resources such as labor and capital, the availability of technology and infrastructure, the capabilities of management, the educational qualifications of labor force, and so on. All of these factors help determine the cost structure for the business, allowing for the development of a competitive advantage.
The second element — demand conditions — is related to the number of potential customers and their desire for the product or service. It also includes their purchasing power and the ease of access to essential inputs and distribution channels. Factors such as these will help the business identify potential markets and what competitive advantages they offer.
The third element — related and supporting industries — relates to the businesses and organizations that can influence a business’ competitive advantages. This includes suppliers and subcontractors, distributors and marketing organizations, governmental organizations, and research and development organizations. All of these can influence the efficiency and effectiveness of the firm’s strategies, helping to make the business more competitive.
Finally, the fourth element — firm’s strategy, structure and rivalry — refers to the internal decisions made by the firm to ensure its competitiveness. This includes its marketing strategies, decisions on new sources of labor and capital, how it organizes and segments the production of its products or services, how it deals with competition, and the structure of its operations. This element is important for understanding how the firm is able to adapt to changing market size and demands.
The De Boer Diamond Model is an effective tool for assessing the competitive positions of firms. Using the framework, businesses can understand the strengths and weaknesses of their particular market and develop strategies to gain the edge over the competition. The four elements of the Diamond Model provide the necessary information needed to identify the factors that will make a business successful in the long term. It is ultimately up to the individual firm to put these elements into practice and develop an effective strategy for success.