When analysing the first pillar, the factor conditions, it is important to focus on grouping them into basic and advanced. The first group refers to the macro environment, over which the company has limited influence. With its help, advanced factors can be configured that really give you a competitive advantage and help you build your company's strategy. These include, but are not limited to: technical know-how, workforce experience or innovative infrastructures.
The second element of the strategic diamond is the demand conditions, i.e. an in-depth analysis of the demand for the product or service in the company's environment (e.g. country). First of all, it is important to focus on the structure of demand, in order to be able to respond more accurately to consumer demand. Its distribution is also important, as it can be geographically uniform or made up of agglomerations. In this part of the analysis, it is also worth considering what type of product our company produces, because due to the dissonance in the growth rate of demand, a strategy is built differently for a basic good and a luxury good.
The next part of the model, related and ancillary industries, involves an extensive analysis of competitors and the supply chain. We need to consider the companies that directly create competition for our business and those that produce the parts needed for our production process. We need to examine the barriers to entry and market conditions and trends. It may be necessary to spend relatively large amounts on research and development to achieve a satisfactory position, which will require a change in the company's strategy.
The last pillar of the classic strategic diamond is formed by the company's strategy, structure and rivalry. In the context of a business unit, this is primarily about the effect of market competition on driving business innovation. Using this relationship and other available resources, objectives can be set that improve our competitiveness against other companies.