There are three main elements included in the diamond model:
1. Production factors: This refers to various inputs required for industrial production, including human resources, natural resources, knowledge resources, capital resources, and infrastructure. Production factors can be divided into primary production factors and advanced production factors. The former, such as geographical location, natural resources, non-technical labor, and capital, can usually be obtained through passive inheritance or simple investment; The latter, such as senior talents, research institutes, higher education systems, and modern communication infrastructure, require significant and sustained investment in human and capital to obtain.
2. Demand conditions: This mainly refers to the demand situation in the domestic market, including the structure, scale, and growth potential of demand. The demand in the domestic market is an important driving force for industrial development, and the demand structure is often more important than the demand scale. A diverse and segmented market demand structure can stimulate the innovation drive of enterprises, thereby enhancing the competitiveness of the entire industry.
3. Related and supportive industries: These refer to upstream and downstream industries associated with the dominant industry, whose international competitiveness directly affects the competitive advantage of the dominant industry. A sound industrial chain with positive interactions between upstream and downstream industries can form effective "industrial clusters", thereby enabling sustainable development of industrial competitive advantages.
The diamond model also includes a fourth element, which is the performance of corporate strategy, corporate structure, and industry competition. This element mainly focuses on the strategies, organizational structures, and management decisions and attitudes adopted by enterprises in the face of domestic and international industry competition. The strategy and organizational structure of a company need to adapt to the country's historical and cultural resources and industrial environment, while the management also needs to have the ability to respond to competition and challenges. These four elements interact and influence each other, together forming the core content of the diamond model.