This is from the “Accounting Makes Cents” podcast episode #21 released on Monday, 5 September 2022.
In this episode, we’re going to discuss Porter’s Diamond model, which is a theory highlighting a nation’s competitive advantages in the international market. But we are going to put a twist to it by talking about it in Game of Thrones style.
If you’ve been following my blog, you may remember a post that I did a few years back, during the height of the final season of the TV series, where I tried to explain PESTEL, an environmental analysis tool, as the Hand of the King or Queen of Westeros. And after 3 years, I thought it relevant to do another one in that style since we have been blessed with a new series, the prequel to the Game of Thrones called the House of the Dragon. Full disclosure: I have not been paid by HBO or the series creators to plug the show here in the podcast. I have not even started watching the series, although I am quite sure I’m going to be caught up in it soon enough.
Anyways, I’ll link up all these side comments on the show notes for anyone wanting to find out where they come from. So let’s start on our topic.
Jump to show notes.
What is the Porter’s Diamond?
As mentioned, Porter’s Diamond model is a theory which looks at a nation’s competitive advantages in the international market. The model’s creator, Michael Porter, has stated that the existence of certain attributes in an environment lends to the…I suppose, you could say drive and push for companies to become more competitive and successful.
So what are these attributes? According to Porter, there are four of them: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure and rivalry. Let’s try and go through each one in GOT terms.
Factor conditions refer to the nation’s natural, capital and human resources. Some countries are known to be rich in certain resources, which makes it easier for specific companies to establish their businesses in those countries. There are two kinds of factor conditions to consider. One is natural and the other is created or manufactured.
For natural, think about dragonglass. This is a volcanic substance that is very important in its capability to kill a White Walker. A lot of dragonglass can be found in Dragonstone, because you guessed it, Dragonstone is a volcanic island in the Narrow Sea. It is also where the ancestral seat of House Targaryens can be found. So if you are someone who creates art and craft using dragonglass, Dragonstone is where you need to be.
For created or manufactured, a nation like Astapor would be a good example. Astapor is known to breed the Unsullied, these elite slave-warriors known for their skill and discipline in battlefields. The Unsullied are built that way, if one can say that, and the Astapor environment highly likely contributed to building them that way. The Unsullied are trained at a very young age to become unaffected warriors. So if you are a company wanting to raise something military, you might want to visit Astapor for that.
Demand conditions refer to the local market and how sophisticated the customers are with their product or service expectations. Demand conditions are the main drivers for a company to grow, to innovate, and to improve in quality. In Game of Thrones, this could be shown in the various categories of swords available. We have Needle, which is Arya’s sword and looks like a short fencing sword, good for quick stabbing. And then we have a couple of swords made of Valyrian Steel and a couple of daggers made of Dragonstone. As you will remember in the story, if you need to kill a White Walker, you should demand to have a Valyrian Steel sword or a Dragonstone dagger. With having these demands from customers, this would be pushing and driving weapon masters and blacksmiths to make better weapons.
Related and supporting industries
Related and supporting industries refer to the presence of businesses that support the main company. There is more advantage if a company is close to its suppliers and collaborators. Take Wildfire for example, a potent, flammable liquid created by the Alchemists’ Guild. The Alchemists’ Guild is based in King’s Landing, hence, in the show, wildfire can be found and always seemed to be used at King’s Landing.
Firm strategy, structure and rivalry
Lastly, we have firm strategy, structure and rivalry, which refer to how companies are created, organised and managed, which then affect their strategies and structure. Rivalry or competition pushes companies to keep improving so that they either gain or keep advantage. I don’t think there is enough time to discuss all the strategies and structure and rivalries that happened when the War of the Five Kings exploded after the death of Robert Baratheon. We’ve got Joffrey Baratheon, Stannis and Renly Baratheon, Balon Greyjoy and Robb Stark. We don’t even count the others outside of the Five Kings like Daenerys or the schemes of others that were not kings like Margaery Tyrell, the High Sparrow and others. But in having the war, and all these battles, each side was always strategising to gain and win the fight for the Throne.
Show notes simplified
Porter’s Diamond is explored in Game of Thrones style. In this episode, MJ the tutor discusses the various conditions and factors of a nation or country, which need to be present to offer a company competitive advantage.
PESTEL and the Game of Thrones
House of the Dragon trailer
“Ding Ding Small Bell” (https://freesound.org/s/173932/) by JohnsonBrandEditing (https://www.youtube.com/channel/UC1RImxnsbfngagfXd_GWCDQ) licensed under CC0 Licence.