Case Study Presentation

Changes In Competitiveness Among Visegrad Countries After

Accession To European Union
By Syndicate-7

Syafri Firmansyah | 29321428

Toman Nico Felani Sihombing | 29321535
Wawan Sopian Juliana | 29321622
Zaeny Ahmad | 29321347
Leonora Ludwina Lilasari | 29321453
Raditya Dwi Indrawan | 29321605
Wahyu Gunawan | 29321356

Jakarta, 06 Februari 2022

Operation Management Course – MM5004
ENEMBA 7

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What is Visegrad Countries?
Norway Visegrad Countries
Sweden Estonia

Russia
Latvia The Visegrád Group, Visegrád Four, V4, or
Lithuania
European Quartet, is a cultural and political
alliance of four countries of Central Europe
Belarus
United
Kingdom
Poland
Belgium Germany Ukraine
Czech
Republic

Austria
Hungary
France Switzerland
Romania
Croatia
Boznia &
Herzegovena Serbia
Bulgaria
Monte-
negro
Visegrad Countries
Kosovo began to enter EU
Spain
Turkey
(European Union) in
Greece
2004

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National Competitiveness in a Brief
National competitiveness:
Modern way of describing the development efforts of nations in the times of globalization. This means that
forces driving the changes in the global economy:
• Liberalization of international trade,
• Booming investment by multinational enterprises
• Development of regional integration groupings
→ need to be included into the competitiveness model.

Method to analyze National Competitiveness

Also known as Porter’s Diamond, introduced by Michael Porter in 1990
1 Single Diamond to analyze national competitiveness through 4 (four) key parameters :
1. Firm Strategy, Structure & Rivalry Condition
2. Demand Condition
3. Related & Supporting Industries
4. Factor Condition.
Single diamond only focus on domestic aspect

Introduced by Chang Moon in 1995 as enhancement/development of

2 Double Diamond single diamond. Still rely on 4 (four) key parameters as in Single
Diamond, but instead of just focus on domestic aspect, Double
Diamond also consider global/multinational aspect on its model.

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Porter’s Diamond/Single Diamond – Model & Theory
Porter’s Diamond/Single Diamond Model
1
Firm strategy, The condition in the nation, governing how
Firm strategy, structure and
1 companies are created, organized and
Chance structure and rivalry condition
rivalry condition managed. As well as the nature of domestic
rivalry

2 The nature of home-market demand for the

2 Demand condition
4 industry’s product or service

Factor condition Demand condition

The presence or absence in the nation of
Related & Supporting
3 supplier industries and other related
industries condition
industries that are internationally competitive

The nation’s position in factors of production,

Related & 4 Factor condition such as skilled labour or infrastructure,
Supporting Government necessary to compete in a given industry
industries condition
3

Chance are uncontrolled condition such as natural disaster, changing of interest rate, etc
Chance
Government are exogenous condition such as government policy, regulation, rules & permit, etc
Government

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Limitation of Single Diamond
Single Diamond has several limitation:
• Its model cannot be well applied to all kind/type of countries
• Since the model only focus on domestic aspect
• This is especially for countries with small size and “catching-up”
economies
• Case sample → Single Diamond cannot give clear picture/analysis
of national competitiveness for Singapore and South Korea

Moon et al, 2000

Singapore would remain a "factor-driven economy" due to the internal constraints,
with no chance to reach “a truly advanced status”. Due to the fact that small open
economies often have limited bargaining power in global markets, limited resources
and/or a small domestic demand, in principle, according to Porter's model (Single
Diamond), they do not have good prospects for building a sustainable competitive
advantage

Therefore, it is imperative to include global/international aspect

(not just domestic) in the analysis of National Competitiveness

Development of Double Diamond

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Double Diamond – Model & Theory
Double Diamond Model Double Diamond is an enhancement or development of Single Diamond

Firm strategy, • In the Double Diamond model, instead of just draw for domestic diamond, we add
structure and another line called international diamond
rivalry condition • And using these two diamond lines, we can draw another line called double
diamond which is the average value of international & domestic diamond line

The difference between the double diamond and the domestic diamond thus
represents international or multinational activities. The multinational activities
include both outbound and inbound foreign direct investment (FDI)

Demand Moon, 2000

Factor
condition condition

• In double diamond, national competitiveness is defined as the capability of

firms engaged in value added activities in a specific industry in a particular
country to sustain this value added over long periods of time in spite of
international competition.
• Therefore, a nation’s competitiveness depends partly upon the domestic
Related &
diamond and partly upon the ‘double’ diamond relevant to its firms
Supporting
industries condition
Moon, 2000

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Double Diamond Parameters – Detail Explanation (1/4)

Domestic International

Intensity of local competition Incentives for the international investors

1
Firm strategy, structure
and rivalry condition
Engagement of domestic companies in
Prevalence of foreign ownership
the international value chain

Prevalence of trade barriers

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Double Diamond Parameters – Detail Explanation (2/4)

Domestic International

Demand Size : Demand Size :

• GDP per capita (€, constant prices) • Value of exports (% GDP)
2 • Domestic market size index • Foreign market size

Demand condition

Demand Sophistication : Demand Sophistication :

• Tertiary education level (% of Diversification of export markets
population aged 30-34) (% exports without top three destination
• Buyer sophistication countries)

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Double Diamond Parameters – Detail Explanation (3/4)

Domestic International

Development of the formal and informal Development of the formal and informal relations
relations between economic entities: between economic entities:
• Local supplier quantity • Control of international distribution
• State of cluster development

3
Telecommunication infrastructure:
Telecommunication infrastructure:
Related & Supporting Internet availability (% of population aged 16-
Cost of international calls (minutes to USA for 1 Euro)
industries condition 74 using the Internet regularly)

Education system: Education system:

Science students (per 1,000 citizens aged 20- ERASMUS exchange program participation
29) (% of total students)

Transport infrastructure: Transport infrastructure:

Highway accessibility (km per million of Accessibility of air-transport infrastructure
inhabitants) (airports per 1 million of inhabitants)

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Double Diamond Parameters – Detail Explanation (4/4)

Basic Factors Advance Factors

Domestic International Domestic International

Activity rate / (% of the Number of employees

population aged 15-64, both in R&D activities Number of patent
Value of exports
employed and unemployed, (% of total applications to the EPO
(per capita, €)
4 who constitute manpower employment) (per million inhabitants)
supply)
Factor condition
GDP per person employed in FDI outflows R&D expenditure level FDI inflows
the industry (€) (% GDP) (% GDP) (% GDP)

Labour productivity per hour Local capacity of Extent of technology

(EU 27 average = 100) innovation transfer via FDI

Avarage wage per hour (€)

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Double Diamond Analysis for Visegrad Countries
Czech Republic

1. General characteristics of competitive advantage Czech Republic

• Major strength of competitive advantage: Factor condition , Supporting Industries, Firm
strategy and rivalry :
• Factor condition → due to better productivity and higher activity rate compare with
other visegrad countries.
• Related and Supporting industries → due to the development of clusters and improved
quality of the higher education system
• Firm Strategy and Rivalry → due to Highest level on Intensity of local competition,
Engagement of domestic companies in the international value chain, Incentives for the
international investors, Prevalence of foreign ownership, Prevalence of trade barriers
2. Government and firm roles to establish competitive advantage Czech Republic
• Factor condition → increase labor productivity per hour, FDI outflow, extent technology
transfer via FDI inflow
• Related and Supporting industries → increase local supplier quantity, increase state of
cluster development, increase control of international distribution
• Firm strategy and Rivalry → increase engagement of domestic companies in the
international value chain , increase incentive of the international investor, increase
prevalence of foreign ownership.

3. Most factor that boost the competitive advantage Czech Republic

• Demand conditions improvements, with increasing value of export (%GDP) and
diversified of export
• FDI outflows improvements, for factor conditions and related and supporting industries
• Create international demand condition

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Double Diamond Analysis for Visegrad Countries
Poland

1. General characteristics of competitive advantage Poland

• Major strength of competitive advantage: demand condition
• There is slight increase in Firm Strategy & Rivalry, effect of join
with EU

2. Government and firm roles to establish competitive advantage

Poland
• Demand condition → government conducted policy to increase
export, therefore export engagement of Polish companies
constitutes an essential element of their development.
• Firm strategy and Rivalry → create regulation to increase FDI
(Foreign Direct Investment) inflow in order to increase prevalence
of foreign ownership, this will create engagement of domestic
companies/firm in the international value chain.

3. Most factor that boost the competitive advantage Poland

• Improvements on factor conditions → Improve R n D spending and
employment level
• Improvement on Related and supporting industries → Improve
transport infrastructure and state cluster development

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Double Diamond Analysis for Visegrad Countries
Hungary

1. General characteristics of competitive advantage Hungary

• Major strength of competitive advantage: factor condition, especially on
variable activity rate and lowest labour cost

2. Government and firm roles to establish competitive advantage Hungary

• Factor condition → increasing FDI inflow, transfer technology via FDI

3. Most factor that boost the competitive advantage Hungary

• Improvements on demand conditions → increase the amount of domestic
demand (in order to enlarge Hungarian domestic competitiveness diamond)
• Improvement on Firm Strategy & Rivalry → to create engagement of domestic
companies/firm in the international value chain.

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Double Diamond Analysis for Visegrad Countries
Slovakia

1. General characteristics of competitive advantage Slovakia

• Major strength of competitive advantage: factor condition and supporting
industries
• Factor condition → mostly from domestic due to low remuneration level
• Related and supporting industries → due to high score of variable local
supplier quantity, state of cluster development, internet availability, education
system, transport infrastructure

2. Government and firm roles to establish competitive advantage Slovakia

• Factor condition → on the domestic aspect, government push companies/firms
to create product innovation as on the international aspect, government
encourage the extent of technology transfer via FDI

3. Most factor that boost the competitive advantage Slovakia

• Improvements on demand conditions → domestic and international
• Domestic demand improvement: increase buyer sophistication
• International demand improvement: increase foreign market size, increase
value of export and diversification of export markets.

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Summary of Visegrad Countries Competitiveness After Accession To The European Union (1/2)

Area of Domestic Diamond Domestic Diamond

Using only domestic diamond (i.e Single
Diamond), the nation competitiveness
amongst Visegrad Countries after accession
to EU (2004 vs 2011) is cannot be well
described or gave clear picture since only
domestic aspect is being taken into account

Area of Double Diamond Double Diamond

But when using Double Diamond to analyse
competitiveness amongst Visegrad Countries
after join to EU (2004 vs 2011), it can give
clear and wider view since double diamond
taking account also the international aspect
not only just domestic aspect

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Summary of Visegrad Countries Competitiveness After Accession To The European Union (2/2)

Period (2004-2007) Period of (2007-2011)

2004 2007 2009 2011

Domestic = 100 Domestic = 100 Domestic = 100 Domestic = 100

Czech Double = 96 #2 Double = 97 #2 Double = 96 Double = 93

Domestic = 100 Domestic = 100 Domestic = 100 Domestic = 100

Poland Double = 80 #3 Double = 81 #1 Double = 87 Double = 84

Domestic = 96 Domestic = 96 Domestic = 93 Domestic = 96

Hungary
Double = 100 #4 Double = 100 #4 Double = 100 Double = 100

Domestic = 100 Domestic = 98 Domestic = 99 Domestic = 98

Slovakia
Double = 93
#1 Double = 100
#3 Double = 100 Double = 100

In the period shortly after the EU accession (2004-2007), none of the countries When comparing the results from 2007 with 2011, it can be concluded that only in Poland did the context for the
improved their competitiveness when taking into account only domestic conditions. development of competitive companies improve both in the domestic and external context. The Czech Republic
Once the perspective is enlarged by external factors, a slight improvement can be managed to improve the situation only in the domestic perspective. In the case of the other analyzed countries, both
observed for the Czech Republic and a very strong one for Slovakia. external and domestic conditions for the development of economic activity deteriorated: slightly in Slovakia and
significantly in Hungary.

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Conclusion

11. National Competitiveness is modern way of describing the development efforts of nations in the times of globalization and can be
analysed using Diamond Model through 4 (four) key parameters : (1) Firm Strategy, Structure & Rivalry Condition, (2) Demand Condition,
(3) Related & Supporting Industries, (4) Factor Condition.

22. There are 2 (two) kind of Diamond Model : Single Diamond dan Double Diamond where Single Diamond only focus on domestic aspect
while Double Diamond taking account also international aspect beside domestic aspect.

33. Moon et al. put forward the concept of the "generalized double diamond", in which competitiveness has been defined as: "the capability
of firms engaged in value added activities in a specific industry in a particular country to sustain this value added over long periods of
time in spite of international competition"(Moon et al. 2000, p. 117)

44. The difference in the size of the national diamond and the double diamond shows the extent to which the international context affects the
competitiveness of the economy (Moon at al. 2000, pp. 116-117).

55. Visegrad country with highest improvement of national competitiveness after accession to the EU in the period of 2004-2007 : Slovakia

66. Visegrad country with highest improvement of national competitiveness after accession to the EU in the period of 2007-2011 : Poland

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 Thank You
Syndicate 7

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