Costa Case

Porter’s diamond model can be considered as an economical model in relation to competitiveness of the businesses at distinctive locations.

Referring to the components, factor conditions may include capital resources, physical resources, infrastructures and human resources like factors which are playing a vital role for the competitiveness of a business. For an example, well trained expertise baristas can be identified as the working force of Costa Coffee.

Demand conditions may lead to create competitive advantage for the company in the home market. Because they may put the pressure by demanding innovations and it may lead to creation of more innovative products than the rivals. For an example, referring to the Costa coffee there is a wide variation of products targeting the home customers such as ESPRESSO, AMERICANO and MOCHA etc. to meet the demands of the customers.

Supporting industries may support the innovation and internalization process by producing inputs for that. Costa coffee company is associated with the dairy industry and the soy milk industry in order to make its innovations such as hot chocolates.

Rivalry is also an important determinant of the Porter’s diamond. If the rival is putting more pressure on a particular business, to cope with that the company may go for innovations and new strategies. Referring to the Costa Coffee Company, they are expanding the location of the outlets in order to increase the number of customers than the Starbucks Company.

Government may influence with the business by affecting key factors of production, legislation and the competition between rivals at local, regional, national and international level.

Chance can be considered as an element without control of the firm. Those can be both beneficial or create losses for the businesses.