Porter’s National Diamond Analysis

Discuss about the Global & International Business.

The phrase tourism is come from the Anglo French word Tour. The basic meaning of the tourism is the movement of the individuals from one place to another place for spending some time with leisure, meeting, expedition, sports, study etc. Time changes and accordingly the tourism industry have been changed in the modern times(Mohotti, (Chandi) Jayawardena, & Teare, 2013). Every organisation has its different technique of tourism management in their business operation. To maintain the effective growth in the competitive world different organisation related to the tourism sector in the world have been drastically changed their marketing strategy.  In this report the researcher will analyse the effective of the tourism industry of Sri Lanka. To analyse the importance of the Sri Lankan tourism industry the researcher has researched on the well renowned travel company in Sri Lanka namely “Tangerine Tours (PVT) Ltd”.Tangerine Tours (PVT) Ltdis one of the well known travel organisation which is based on Sri Lanka. To operate their business all over the world the organisation and the management of the organisation spends some marketing research from the different corner of the world and analyse effective places to provide services for the individuals (Robinson & Jarvie, 2008). To make the business more competitive in the market place the organisation evaluates different strategies and methods in their business(Arachchi, 2014). To find the attractiveness of the Sri Lankan Tourism Industry the researcher has obtained Porter’s National Diamond Analysis in this research process. With the help of this model analyse the researcher can find the overall competitiveand investment attractiveness of the Sri Lankan Tourism Industry.

Tourism is measured to the major industry in the earth which is openly manipulated directly by authenticnot reusable personal earnings;cost of overseas travel services, advertising, price and amenities of denotes of shipping, travellerdesirabilitylike as mountain resorts, sea resorts and different places ofchronological or natural curiosity for the people.To provide effective strategies in their business and to grab more individuals in the business process the organisation Tangerine Tours (PVT) Ltd depends upon the Porter’s National Diamond analysis in the market. By the help of this model the researcher can effectively understand the organisational strategy and the structure of the organisation, the competitive market for the organisation, market demand of the tourism industry in Sri Lanka, related different supporting industries and different conditioning factors in the market(Bashiri, Baziyar, &Balakshahi, 2013). To make the comparative advantages for the organisation this model has been formed by Michael E. Porter.Prof  Michael   Porter   first   bring in Diamond  model  is  to  give details  the  different factors of  nationalbenefits  of   the states.  The Diamond model  has   basically four  features  as  firm  strategy,  structure  and  rivalry, factor  conditions,  demand  conditions, related  and supportive  industry(Pforr & Hosie, 2009).  The  factors,  independentlyand  as  a  arrangement,  make  the  situation  in  which a state’s ready for actionbenefits. With this model analysis the researcher can effectively understand different comparative advantages in their business process like

• Organisationalresources availability in the market and their skills
• Different information collection from the market to obtain the proper opportunities for the organisation
• Individual aims and objectives for the organisation
• Innovation capabilities and the investment pressure of the organisation

Chance

These four determinants are the basic determinates of the Porter’s National Diamond model and to extend this model the theorist added two factors also in this model, those are Chances or the opportunities of the tourism sector in Sri Lanka and Governmental act of Sri Lanka in their Tourism Industry(Bennett, 1998). To get better understanding about the tourism sector in Sri Lanka this extended model will help the researcher effectively to analyse their competitive advantages and benefits for the organisation like Tangerine Tours (PVT) Ltd. 

To analyse the chances of the organisation to penetrate their business regarding the Sri Lankan Tourism industry it is very much vital task for the marketers to go through the proper market analyse and collect proper data about the opportunities and the market condition.

Positive factors

• Sri Lankan Tourism Industry is growing in a rapid speed and according to the market research it can be analyse that within the 2.2 million people which is slightly up from the 2015 scenario.
• The another main advantages of this industry is different hotel sectors from the all over the world trying to invest their money in the nation for developing better hotels and services for the traveller. Due to the large number of visitors came from the different corner of the world, the airlines services and transportation services rapidly increases and it adds up more flight services from the western countries(Bulcke, Verbeke, & Yuan, 2009).
• On the other hand due to the low cost accommodation facilities and combination of forest, mountain and sea within short distances different organisation attracted by this tourist sports and it also attracts more travellers in their business (Berg et.al, 1998).
• Biodiversity is one of the vital factors in the Sri Lankan tourism industry to attract more travellers and investors in their business process. This nation is one of the most exciting biodiversity hotspot among the world and it is ranked 25^th in the world.
• Historical and cultural diversity is one of the main strength for attracting the different hospitality industry all over the world(Cavusgil, Knight, Riesenberger, Rammal, & Rose, n.d.).

• The negative media coverage is one of the main negative factors in the Sri Lankan tourism industry.
• The security situation and the terror attack is another vital reason for demotivates the travellers to come in the nation for visit.
• Communication is one of the main problems for the Tourism Industry of Sri Lanka(Riasi, 2015). In most of the places the individuals communicate with the travellers with their local language which is quite problematic for the different nation people mainly for the western countries people to communicate with them(Porter, 1980).

By the help of enhancing the public awareness the tourism industry of Sri Lanka can get their effective outcomes to attract more tourist in their account and it will also benefited for the organisation like Tangerine Tours (PVT) Ltd to plan more tour program in the Sri Lanka to guide the people  better about the places.

To make the industry more popular and attractive towards the tourists and investors for Sri Lankan Tourism the management needs to focus on the factors which may affect the whole business(Greenstein & Mazzeo, 2003). In this factor condition the tourism industry needs to aware about their natural resources and capital resources in the business process.

Positive factors

• The climate and the historical resources are the main advantages for the Sri Lankan Tourism industry to attract more visitors in the nation.
• The Morphology is one of the best parts for this nation. Due to the different culture and Culture belongings with Buddha is one of the great attraction for the all over the place(Chan, 2002).
• The nation has both sea and hills for the tourist to attract in their business which is another biggest strength for the tourism industry to grab more customers and investors in their account.
• Different homemade art work is one of the finest things in the Sri Lanka to attract travellers in their business.

• The main negative factor for the Sri Lankan tourism is this is one of the developing countries. The specialized and skilled labour shortage is observed in the country to produce an effective result in the tourism sector (Buultjens et.al, 2005).
• Due to lack of promotion about the market the tourism industry of Sri Lanka has several unsighted tourist places for the visitors(Rugman & Verbeke, 2005). Due to the attractive tourism sites of Sri Lanka are unseen it becomes less popular towards the travellers. Infrastructure of the tourism industry is not so much developed for the Sri Lanka.
• This is a developing country for that reason it did not have sufficient labour, transportation services and hotels in their different attractive tourist spots which may harm the overall competitive advantages for this tourism industry(Rugman, Broeck, & Verbeke, 1995).  Sea transportation is available but roadways and airlines transportation is not very much upgraded which leads more time consuming factor for the travellers.

Demand Condition is one of the major factor in the Porter’s national Diamond analysis model,  Sri Lankan demand conditions  are  not pretty muchconstructive for  the  tourism sector’s  additionalprogress.  Sri Lankans, once travelling within the nation, the individuals supportsautonomous travelling method to ‘package’ vacations. yet  the  ‘packages’  expanded  by  Sri Lankan travel  companies  are  quite a few times  for  positions  not favoured  by the international travellers(Samarasuriya, 1982).  New  outlines  of tourism industry  are  moreoversluggish  to  expand  in Sri Lanka  and  Sri Lankans  travellers  do  not  appear  to  support  the people.  Trade and meeting tourism is not also extremelyexpanded, as most Sri Lankans travel for vacationsreasons or to trip with family and friends (Sharpley, 2005).

• Demand conditions give the impression to have accessible the business some spirited benefits in their business process. Previous demand throughSri Lankan travellers, particularly for spots that would then turn out to bewell liked for overseastourists, was active in the business and earlydevelopment of the business.
• This early high developmentprototypetogether with the importance of Sri Lanka demand on the similarcharacteristic, time phases and, to a smalleramount, places as overseas demand has becomesignificantall the way through the businessgrowth.

• In the demand condition Sri Lankan tourism industry faces several issues. Due to the lack of innovation strategies in their business process the organisation cannot attract more travellers in their business.
• A promotional activity is very much essential in the tourism industry to gain more travellers from the different corner of the world(De Kluyver & Pearce, 2009).
• The management of the tourism industry in Sri Lanka needs to focus on the transportation and special train facilities on the different occasion and pick time of the travellers.
• Promotion of the tea tourism is very less effective and not sufficient(Jolliffe, 2007). Promotion of the tourism industry is less effective via different websites and educational programme.
• Identification of the different region marketing strategy is less effective. 

Situations  based  in the lead of firm  strategy,  structure  and  rivalry  were  studied  and  are  highlighted in this part. The situations were studied on the source of every firms jointly, on  the  foundation  of  the  figure  of  days  the  firms  had  been  operated  in  Sri Lanka  tourism  industry,  the  dimension  of  the  employees  of  the  organisations,  and  the  kind  of  trade  the  organisationsfunctioning in their business. To assess the proper strategy, structure and the rivalry of the firm this model is quite effective for the tourism industry in Sri Lanka.

• The tourism industry of Sri Lanka is small sized but an environmental and cultural impact attracts travellers more and more towards their business.
• Due to the destination marketing the tourism industry can build an effective business procedure in their business.
• Biodiversity is one of the vital factors in the Sri Lankan tourism industry to attract more travellers and investors in their business process. But apart from the different strategy implementation the business of tourism industry faces several losses due to the vast competitive market in the market.

• For small scale industry the firms have less vision and clear strategy in their business process. Due to the lack of effective business strategy the management of the organisation cannot provide an effective future scope and grab more opportunities in the tourism industry.
• For an entrepreneur tourism industry is one of the most effective and less investment sector in the market. Most of Sri Lankan Tourism Company has lack of experiences in the tourism sector and due to that they often take less risk in the business which can be harmful for the GDP growth of the nation.
• The tourism industry has less innovation in their strategy making so often the management cannot innovate their services in the tourism sector(Schott, 2010). Rivalry becomes the most created monopoly in the business process for the tourism industry. 

Factor Condition

Apart from the tourism industry other different industry and supporting business sectors are also important. To enhance the value of the tourism industry different industry like food, retail and shipping industry are co related with each other.

• The extremely competitive Sri Lankan bunch of Food and drinks has been a keydealer of a variety ofdivisions of the Sri Lankan tourism business. The global competitiveness of different food and drinks businesses has added to the tourism sector’s achievement by givingsuperior quality service and products at realisticcosts; particularly those regard as thehale and hearty productssuch as vegetables, fruits and oil.
• These contributions were also distinguishedas of those of a lot of other states, supporting to make an exceptionalreflection for Sri Lankan food, as well as for several of the drinks also and pressure the well recognizedSri Lankancookingindividuality(Porter, 1980).
• The shipping industry also plays a pivotal role as a supporting industry for the tourism industry. Due to the lack of development in roadways services the shipping industry is growing rapidly and to export or import the product to the western countries this is the only way for the Sri Lankan government to focus on.
• Accordingly due to the effective growth and development in the tourism industry the construction industry also developed rapidly due to the large amount of investment from the foreign hotel company.

• Regional related and supported organisations or industries are very much limited in their business procedure.
• Due to the lack of knowledge in the tourism education and lack of interest in the other activities like hiking, golf, biking different entrepreneur not getting much interest in the investment.
• From the market analysis it can be observed that Sri Lankan government didnot focuses on the developing various shopping malls or medical and health care sector which is comparably an effective sign of the development procedure. 

In this diamond model government play very significant role for the tourism industry in Sri Lanka. By the help of governmental support the tourism industry can grow rapidly within the nation. For developing and building new legal policies and documents government is very essential part.

• To attract more investors in the tourism industry effective foreign direct investment is relies on the effective governmental policy making procedure.
• Sri Lankan government is very much supportive for their growth and development.
• The government’s responsibility in the business has been variable over the time. At the time, it is accurate that a lot of its attempts have been helpful to the business;faults and depriveddevelopment are liable for several of the currenttroubles in the tourism industry of Sri Lanka.

• After the natural calamities like Tsunami the government has changed some policies to protect environment which can create some difficulties for the foreign travellers to feel the comfort of the natural beauty in the seas.
• Other supportive industries lack of growth sluggish the development of the tourism industry(Porter, 1980).
• Language barriers are one of the most harmful effects in the tourism industry for their growth.
• The government have ruled that, Sinhala text to succeed in case of discrepancy which could be difficult for the foreigners to communicate with the local people. 

Market entry strategy is very much essential for any organisation to expand their market in the competitive market. As an employee of Tangerine Tours (PVT) Ltd organisation the individual needs to analyses proper marketing strategies with the help of Foreign Direct Investment approach to make an entry in the Sri Lankan industry.The foreign direct investment is defined as an activity by which the foreign people came to another nation to operate new hotel, business, firms etc (Pfaffenberger, 1983). The organisation Tangerine Tours (PVT) Ltd organisationneeds to adopt this strategy as an entry strategy in the Sri Lankan Market(Kamau, 2014). The FDI is mainly contrasted with the portfolio investment process. According to the operation base the FDI has three types

• Equity acquisition
• Profit reinvestment
• Loans from a parent organisation

Expansion of a tourism industry needs proper investment in whole infrastructure, including transportation, telecommunications and utilities(Green & McNaughton, 1995). Developingnations like Sri Lanka faces lack of necessaryassets, knowledge or information, technology, so FDI is considered as a means of satisfying those gaps. Before the investment plan the organisation needs to aware about the local destination assessment(Barclay, 2000). By relating FDI the purpose increases additional access to international markets. The businessdesires to assess their line of services and global branding perspective in their business. FDI in tourism is intense in performancelike as hotel place, eating place and car leasing. On the other hand, there is small FDI in tour process, travel agencies, reservation systems or airlines as these are inclined to be offered by the host nation(Ramamurti & Hashai, 2011). For instance, the airline sectorseven thoughworldwide in its performance does not unavoidably take positionfrom side to side FDI but in the course of strategic association.

Sri Lanka’s recently established leaders appears to be leaving all out to encourageglobalassociates, with the Head of State constructive a milestone visit to India in the mid of February, at the time, the Minister of Foreign Affairs has furthermoreoccupied in numerousabroadtours,possibly to presentdeclarations to theinternationalsupporterin bothcurrent and conventional(Crane & Larrabee, 2007).The organisation Tangerine Tours (PVT) Ltd needs to expand their services through the FDI marketing strategy with the help of promoting more branding and investment in the hotels and transportation. To grab more people in the business model sustainability is the prime concern for the organisation to reach out their business in the Sri Lanka.

Demand Condition

From the above report it can be analyse that within the tourism industry of Sri Lanka the authority faces several contemporary issues regarding their expansive use of resources and skilled labour force problems in the whole industry(Jones & George, 2006). Being a country of Asia the tourism industry of Sri Lanka faces several terror threats which lead the harmful business process for the industry. Supportive industry development issues are another major problem for the tourism industry(Hampton, 1977). Due to the developing country there are several areas where the government needs to focus their mind to develop their tourism industry towards the world. Establishing Sri Lanka as one of the mainfavoured tourist spots in the globe and accomplishingnoteworthyinput for reaching the dream of socio-economic alteration, social impartiality and speedyfinancialexpansion and wealth in the nationby the help of tourism is anintimidating task in face of the management, concerned stakeholders, to the government, and the individuals (Jolliffe & Aslam, 2009). 

To extend the tourism industry in front of the world the tourism sector needs to aware about the proper creative idea and innovation strategies in their business(Jones & George, 2008). By making effective transportation facilities and getting investment from the foreign investors could not support the whole business process to enhance; it requires proper skilled and educated staffs in the tourism industry to expand this more towards the traveller(Jones & George, 2014). To make the business more competitiveness the industry needs to produce more innovative product and services. Management culture is not helpful, possessions are lacking and principles and approaches are not matching is the major problem for the tourism industry of Sri Lanka(Jain, n.d.).

Policy carrying out has foreverstayed a prime issue for approximately all the civicguidelines in Sri Lanka and the tourism industry is not an exclusionof it. In all purpose, be short of institutional ability is endorsed as the sole most significantissue to such deprived policy functioning(Rangana Sri Shalika Wadippuli Arachchi, et al, 2015). On the other hand, a lot ofcivic policies are poorly executedturn out to be, these are not well prearranged and the substanceis short of consistency and wholeness. This grips fact in the point of tourism course of action in Sri Lanka.

Conclusion

From the above report it can be concluded that, the overall tourism industry of Sri Lanka is depending upon several factors. To make an effective growth and development of the industry the government and the management of the tourism industry needs to focus on various factors which have been highlighted throughout the report. In this report, by the help of Porter’s National Diamond Analysis the research can analyse the overall competitiveness and investment attractiveness of the Sri Lankan tourism industry. To enhance the attractiveness and the competitiveness in the market to grab more touriststhe researcher has recommended few points in this study. By mitigating several contemporary issues the tourism industry of Sri Lanka can grow effectively. 

Firm Strategy, Structure and Rivalry

References

Arachchi, R. (2014). Perception of the eco tourism concepts and its practices in the hotel industry: the case in eco resorts in Sri Lanka. Wayamba J Mgt, 3(2). https://dx.doi.org/10.4038/wjm.v3i2.7442

Barclay, L. (2000). Foreign direct investment in emerging economies. London: Routledge.

Bashiri, M., Baziyar, M., & Balakshahi, A. (2013). Analysis of Various Aspects of Olive Exports Based on Porter’s Diamond Model Singaporean Journal of Business, Economics and Management Studies .- 2013, Vol. 1, No. 6, pp. 103-111. Singapore: National Library Singapore.

Bennett, R. (1998). International marketing. London: Kogan Page.

Bulcke, D., Verbeke, A., & Yuan, W. (2009). Handbook on small nations in the global economy. Cheltenham, UK: Edward Elgar.

Cavusgil, S., Knight, G., Riesenberger, J., Rammal, H., & Rose, E. International business.

Chan, M. (2002). Institutional perspective of foreign direct investment strategy.

Crane, K. & Larrabee, F. (2007). Encouraging trade and foreign direct investment in Ukraine. Santa Monica, CA: RAND/National Security Research Division.

De Kluyver, C. & Pearce, J. (2009). Strategy. Upper Saddle River, N.J.: Pearson/Prentice Hall.

Green, M. & McNaughton, R. (1995). The location of foreign direct investment. Aldershot: Avebury.

Greenstein, S. & Mazzeo, M. (2003). Differentiation strategy and market deregulation. Cambridge, Mass.: National Bureau of Economic Research.

Hampton, D. (1977). Contemporary management. New York: McGraw-Hill.

Jain, T. Features of Leasing Industry in Sri Lanka. SSRN Electronic Journal. https://dx.doi.org/10.2139/ssrn.2125800

Jolliffe, L. (2007). Tea and tourism. Clevedon, UK: Channel View Publications.

Jones, G. & George, J. (2006). Contemporary management. Boston: McGraw-Hill/Irwin.

Jones, G. & George, J. (2008). Contemporary management. Boston: McGraw-Hill/Irwin.

Jones, G. & George, J. (2014). Contemporary management. New York, NY: McGraw-Hill/Irwin.

Kamau, A. (2014). Market entry strategy. [Place of publication not identified]: Grin Verlag Gmbh.

Mohotti, C., (Chandi) Jayawardena, C., & Teare, R. (2013). Responding to the tourism industry training and human resource challenges in Sri Lanka. WW Hospitality Tourism Themes, 5(5), 456-463. https://dx.doi.org/10.1108/whatt-05-2013-0028

Pforr, C. & Hosie, P. (2009). Crisis management in the tourism industry. Farnham, England: Ashgate.

Porter, M. (1980). Competitive strategy. New York: Free Press.

Ramamurti, R. & Hashai, N. (2011). The future of foreign direct investment and the multinational enterprise. Bingley, U.K.: Emerald.

Rangana Sri Shalika Wadippuli Arachchi, Mohd Shukri Ab. Yajid, & Ali Khatibi,. (2015). Ecotourism Practices in Sri Lankan Eco Resorts: A Supplier Perspective Analysis. JTHM, 3(5). https://dx.doi.org/10.17265/2328-2169/2015.10.001

Riasi, A. (2015). Competitive Advantages of Shadow Banking Industry: An Analysis Using Porter Diamond Model. BMS, 6(2), 15. https://dx.doi.org/10.5296/bms.v6i2.8334

Rugman, A. & Verbeke, A. (2005). Analysis of multinational strategic management. Cheltenham, UK: Edward Elgar.

Rugman, A., Broeck, J., & Verbeke, A. (1995). Beyond the diamond. Bingley, U.K.: Emerald.

Samarasuriya, S. (1982). Who needs tourism?. Leiden: [State University of Leiden].

Schott, C. (2010). Tourism and the implications of climate change. Bingley, U.K.: Emerald.

Robinson, L., & Jarvie, J. K. (2008). Postâ€Âdisaster community tourism recovery: the tsunami and Arugam Bay, Sri Lanka. Disasters, 32(4), 631-645.

Berg, H., Öhman, M. C., Troëng, S., & Lindén, O. (1998). Environmental economics of coral reef destruction in Sri Lanka. Ambio, 627-634.

Buultjens, J., Ratnayake, I., Gnanapala, A., & Aslam, M. (2005). Tourism and its implications for management in Ruhuna National Park (Yala), Sri Lanka. Tourism Management, 26(5), 733-742.

Pfaffenberger, B. (1983). Serious pilgrims and frivolous tourists the chimera of tourism in the pilgrimages of Sri Lanka. Annals of Tourism Research, 10(1), 57-74.

Jolliffe, L., & Aslam, M. S. (2009). Tea heritage tourism: evidence from Sri Lanka. Journal of Heritage Tourism, 4(4), 331-344.

Sharpley, R. (2005). The tsunami and tourism: A comment. Current Issues in Tourism, 8(4), 344-349.