The Porter’s Diamond in Silicon Valley
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The Porter’s Diamond in Silicon Valley
Information technology in California is one of the aspects that have resulted in a significant improvement in its economy. Commercial subdivisions have adopted the integrated tools and techniques with the main aim of increasing the efficacy of their operations at low costs. Not only have these technological developments benefited the inhabitants of this geological region but they have also enhanced developments in other zones of the world (Wonglimpiyarat, 2006). Products of this local industry cluster have acquired a significant portion of the global market segments in the recent past especially due to the entry of various corporations with high production capacities. In addition, the worldwide advancements in the category of information technology have facilitated the introduction of new products into the market with the intent of satisfying the technological needs of clients in various segments.
One of the regions in California recognized in the global market for producing a variety of information technology products is Silicon Valley, which is the southern zone of San Francisco Bay. Over the years, this region has exhibited steady and substantial technological advancements that have attracted local and foreign investors (Location-The Most Convenient In Silicon Valley, n.d). Accordingly, it has been one of the global zones, which have enabled the population in various market segments to benefit from current innovations. This is in the form of hardware, software, and other computer-based applications. Some of the renowned global companies in the information technology subsector of this region include Google, Microsoft, Facebook, and Twitter.
Since these corporations have enhanced the growth of the national economy, the four main features of the Porter’s Diamond are useful in explaining the factors that have promoted the competitive advantage of this region in the global structure with reference to the information technology subsection. To start with, the related industries within this zone have enhanced the competitive advantage of Silicon Valley over other geological areas of the world. The technological framework of the United States comprises of various well-established companies in the telecommunications department. This includes Verizon and AT&T (Wonglimpiyarat, 2006). The operations of these commercial organizations rely considerably on social media sites. This has facilitated the growth of Facebook and Twitter. Other technological companies in Silicon Valley that have benefited from the proceedings of these supporting industries include Cisco and Apple especially due to the required network connectivity.
The high demand for information technology products in the local market is also one of the determinants of the Porter’s Diamond, which has resulted in the attainment of Silicon Valley’s competitive advantage in this technological industry. The general population and companies in the modern American society purchase a larger percentage of software applications and technologically advanced devices produced by companies located around Silicon Valley. This is evident from the numerous possessors of smart phones and the users of social media platforms such as Twitter and Facebook. Based on the findings of several surveys conducted in the recent past, this group comprises of 60 % of the American population (Wonglimpiyarat, 2006). This demand has propelled such companies as Google, Apple and Twitter to enhance their innovativeness in the production process as well as expanding their operations to the global segments. Moreover, the principle of economies of scale has enabled the clients to obtain these products at relatively low prices while increasing the competitive advantage of this geographical location (Location-The Most Convenient In Silicon Valley, n.d).
The basic and advanced factors have also determined the position of Silicon Valley in the global IT market. The basic factors comprise of raw materials and unskilled human resources while the advanced determinants entail the highly skilled employees and research services. Based on the principles of the Porter’s Diamond, the advanced factors are responsible for offering a country a competitive advantage over other nations. For example, Silicon Valley and other neighboring zones within the United States have a large percentage of skilled and experienced personnel in the information technology departments. Facebook, Apple, and Google are some of the commercial organizations in this area that employ human resources who exhibit a high level of innovativeness, passion, and creativity in executing their official duties. These experts are also flexible in terms of complying with the policies governing the proceedings in these corporations (Wonglimpiyarat, 2006). Furthermore, the existence of renowned research institutes such as Stanford and Princeton offer effective development facilities required to increase the region’s competitive advantage in the global market.
Another determinant in the attainment of the national competitive advantage of this region is its structure, strategy and the existing trading rivalry. All these technology-based companies use innovation as their main strategic concept, an aspect that has increased the demand for their products and the related competitive advantage. Similarly, the rivalry between such companies as Facebook and Twitter has resulted in quality improvement. This has augmented their experience in overpowering other global companies. Furthermore, in terms of the organizational structure and the embedded policies, the United States has a well-formulated legal framework that governs most trade activities in the region (Wonglimpiyarat, 2006). This has been effective in ensuring that the technological corporations in Silicon Valley focus on meeting the needs of their customers in the local market segment while facilitating their expansion to global segments.
References
Location-The Most Convenient In Silicon Valley. (n.d). The Office Of Silicon Valley. Retrieved from: http://theofficeofsiliconvalley.com/location/
Wonglimpiyarat, J. (September 01, 2006). The dynamic economic engine at Silicon Valley and US Government programs in financing innovations. Technovation, 26, 9, 1081-1089.