Group 10

Trisha
Vaibhav
Varun
Vasu
Vedika
Viraj
Zubin

Building National Competitiveness

through Sustainability
 Porter’s Diamond Model
Firm’s structure
A & Rivalry
Firm strategy, structure and rivalry
describe the conditions of a country
determining how firms are organized
and run. Goals (i.e. firm goals, goals
of individuals), domestic rivalry and
new business formation determine
this factor as well.
C Factor Conditions
Factor conditions represent the factor
endowment of a country and can be
distinguished in basic factors and advanced
factors. Natural resources, physical
resources, unskilled labor as well as capital
resources belong to the basic factors,
whereas modern digital data communication
infrastructure and highly educated personnel
represent the advanced factors.
Chance
Government
Chance & Government
Chance contains events that cannot be influenced by
firms, e.g. acts of pure inventions, major technological
discontinuities and surges of the world or regional
demand.
The government can influence each of the four
determinants in a positive or negative way.
B Demand Conditions
Demand conditions describe the manner
of domestic demand for products or
services in a certain industry. Three
broad attributes are significant: the
composition, the size and pattern of
growth as well as the
internationalization of domestic demand
Related & Support
D Industries
Related and supporting industries
are industries, in which firms can
share activities intersectoral in the
value chain, e.g. technology
development, suppliers,
distribution channels and
marketing.
 Methodology for Diamond model analysis 3

Determinants Interval Scale Causal Variable Proxy Variable

Factor Conditions: Basic 1 to 10 Natural Resources Available potential of renewable energy

Quality of maths and science education. Renewable

Scientists infrastructure and
Factor Conditions: Advanced 1 to 10 energy infrastructure. Patent applications field under the
innovation
PCT for renewable technologies
Demand conditions market Currently installed capacity in MW
1 to 10 Market Size and Growth
volume Market growth (% p.a.)
New investment by region (VC/PE)
Demand conditions
1 to 10 R&D Investment 2007 in million USD
sophistication
Education Index
Share of medium & high-tech value
Related companies 1 to 10 Related and supporting firms
added in total manufacturing
Gross domestic expenditure on
Support 1 to 10 R&D Investment
R&D
Competition in Home product
Firm Rivalry 1 to 10 Competition intensity
market
Corporate M&A by country of
Firm Structure/Strategy 1 to 10 M&A Innovative drive
Target. Capacity of innovation
financial support systems and
Government -2 to 2 Govt Support
environmental regulations
Hofstede: Values for “Masculinity”
Culture -2 to 2 Impact of National Culture
and “Uncertainty Avoidance”
Methodology for Diamond model analysis 4

Capex (₹ Cr) 210

Annual Fixed Charges (₹ Cr) 10

Container Cost (₹) 50,000

Refrigeration & Insulation Cost (₹) 80,000

Electronics & other (₹) 20,000

Total Unit Cost (₹) 1,50,000

Unit Price 2,50,000

BOP (NPV Basis) 6 yrs.

Methodology for Diamond model analysis 5

Requisite Gap (MT) 33,00,000

Replacement Potential (MT) 64,00,000

Total Potential 97,00,000

Unit Capacity (MT) 24

Units Required 4,04,167

Unit Revenue (₹) 3,60,000

Market Size (₹ Cr) 10,100

Double Diamond model comparison : Germany 6

World leader in installing renewable energy

technologies
Wind sector 75% of the German wind energy systems are exported Solar sector

By 2022, the last nuclear plant will have been closed

TAX on petroleum raised to 65 cents per litre

Surface Area Surface Area

737 Germany 255 Global 707 Germany 239 Global

6
 Competitive Advantage Through Sustainability 7

Competitiveness Index
GCI is defined by the World Economic Forum as a set of institutions, policies, and factors that determine the level of productivity of a
country, conditions of public institutions and economy and people. It has 12 pillars of competitiveness on which are measured under 3
stages

Factor Driven Efficiency Driven Innovation Driven

Countries compete based on their Efficient production processes & • Business Sophistication
factor endowments, primarily increase product quality
• R&D Innovation
unskilled labor and natural resources • Higher Education and Training
Basic Requirements :- • Goods and Labour Market
• Institutions Efficiency

• Infrastructure • Financial Market Development

• Macroeconomic Environment • Technological Readiness

• Health and Primary Education • Market Size

 Competitive Advantage Through Sustainability 8

Sustainability Driven Competitiveness Index

Green Innovation Index Change in market share

• The speed at which green Sectors with a competitive edge
output will replace conventional
products and processes
02 today are more likely (but not
certain) to be successful in the
• Ratio of green patents to total future.
(green plus non-green)
patenting activity
01 where eis is the level of exports from
sector s in country i.

where pisG is the number of green Green production at the

patents and pis the total number of
patents in sector s and country i.
Aggregation of Factors
Empirical analysis of the three key
factors that predict competitive
success in the green economy.
04
These factors need to be combined
with the way we calculate National
Competitiveness Index.
03 outset
To assess the readiness of
individual sectors for the green
economy, we need a measure of
the starting position for every
sector and not just for those that
have been defined as ‘green’ by
today's standards.
Revealed comparative advantage v/s Green Innovation Index 9

880 country-sectors
Competitive Advantage Through Sustainability 10

Country specific Statistics

Competitive Advantage Through Sustainability 11

How much green innovative are competitive countri

The country-sectors most likely to replace complacent incumbents are those located in the top-left quadrants of the scatter
plots. These country-sectors do not currently enjoy a comparative advantage (low RCA score), but could break into the
market on the back of their strong green innovation record (high GII score)

Leading Examples Lagging Examples

Japan Germany European China/Korea

• Only country with median
GII > 1
• Most green innovative
country in the world
• 61 sectors above average
green innovation
accounting for Japan’s 2/3
manufacturing output
• Deepest level of green
innovation in its 15 largest
manufacturing sectors
• Long lasting green
positioning observed as
early as in 1990s
• Strongest record on
green innovation in
Europe
• Second only to Japan in
terms of green
innovation
• Clear competitive
advantage by investing in
social responsibility as
content workers produce
good results
Countries
• Alarming results from
United Kingdom and
France
• Italy has the poorest track
record among major
European economies
• The only 3 countries where
median GII < Median RCA
• 40-50 sectors in UK, France
and Italy have GII=0 which
form 30% of
manufacturing output in
Italy, 24% in UK and 17% in
France
• China has highest median
RCA of sectors with GII=0
• Low level of green
innovation among the
largest leading sectors in
China and Korea
• Refined petroleum
products sector already
seeing the shift with
France outperforming US
which has one of the
highest scores
 12

8 countries
 Competitive Advantage Through Sustainability 13

Sector Analysis
There are marked differences in the market structure and organization of innovation activity between sectors. Some sectors
are characterized by structural stability and innovative activity is concentrated in a few incumbent firms. In other sectors,
innovation is dynamic and turbulent, with frequent market entry and innovation activity across a wide population of firms

01 In two sectors, engines & turbines motor vehicles, green innovation

is driven by the leading country-sectors. There is a clear positive link
between green conversion and comparative advantage. In these four sectors,
the current competitive
02 In a further two sectors, domestic appliances and
accumulators/primary cells/batteries, there is little
landscape may prevail

difference across countries in terms of green innovation.

Absence of Japanese innovation
03 In iron and steel and for steam generators, there is little
variation in comparative advantage, but there are marked }
Indicating that innovation activities
allocated to other sectors
differences in green innovation. Germany and France lead in such as engines and turbines
steam generators while UK and France in iron

04 Electricity distribution and Electric motors. Korea, UK

and US mid-ranking in terms of comparative advantage, }
Countries high on GII can catch
up with current leaders having
but strong on green innovation high RCA
 14

The Example of Japan for Sustainable Future

Shifting Geo-Economics: Shares of World GDP (%)

Collective sustainability of the firms of a country

drive the sustainability of the nation. Being
innovative for sustainable development is foreseen
as the most important competitive strategy for the
coming generation

Geographic Breakdowns of Patents (GII Advantage)

Japan is one of the most important scientific

and technical centers of the world. It is one of
the three countries of North East Asia where
maximum patents are being achieved, the other
two being South Korea and China
 15
The Example of Japan for Sustainable Future

For example, Toyota pioneered hybrid vehicles, and now it is

pioneering fuel-cell vehicles and zero-emission electric
vehicles. This can be part of a strategy for deep
decarbonisation, but it is also part of a strategy for prosperity,
because if Toyota gets there first with the best cars, that will
mean more prosperity for Japan

Revealed Comparative Advantage(JAPAN)

Car Proporti
Total Exports
Exports on

(Top 15
countries) in 0.0755
7275.6 549.4 RCA
Automobile 13
Industry (in $Bn)

0.1337
Japan (in $Bn) 698.1 93.4 1.77
92

Thus, the countries that achieve the green technologies, the green transport, the low-carbon energy, the low-energy buildings, the
energy-efficient appliances, the green materials, and the waste-recycling systems will be the winners of the new world economy
 16
Why US is not on the GSCI?

OPTION 01
US Ranks low in social issues and resource intensity
US has the highest RCA across the world, however it lacks behind in GII
which degrades its GSCI

OPTION 01 The United States is an ecological debtor, consuming some 207 percent of its
ecological capacity, according to the Global Footprint Network. It ranks as the 46th
greatest ecological debtor worldwide out of 151 countries evaluated

OPTION 01
Studies show that the average U.S. citizen uses 11 times as many resources as the
average Chinese, and 32 times as much as the average Kenyan

OPTION 01
Over the past three decades, average temperatures in the continental U.S. rose five
times more than for the century-long period since 1901

OPTION 01 In a 2010 survey of consumers in 17 developed and developing countries

undertaken by National Geographic, Americans ranked last in green consumption
habits
Thank You !