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Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
Clusters & New Economics Of Competition 1
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Clusters & New Economics Of Competition 1

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    • 1. Clusters & The New Economics Of Competition A Cluster Is the Manifestation of the Diamond at Work
    • 2. Introduction to Clusters <ul><li>Today’s economic map of the world is dominated by clusters: critical masses – in one place – of unusual competitive success in particular fields. </li></ul><ul><li>Clusters are a striking feature of virtually every national, regional or state economy. E.G., Silicon Valley, Bollywood or Pune auto cluster. </li></ul>
    • 3. Productive Use of Inputs <ul><li>Competition in today’s economy is far more dynamic. Companies can mitigate input-cost disadvantages through global sourcing. </li></ul><ul><li>Now competitive advantage rests on making productive use of inputs, which requires continuous innovation. </li></ul>
    • 4. Environment <ul><li>What happens inside a company is important but clusters reveal that the immediate business environment outside companies plays a vital role as well. </li></ul><ul><li>Clusters often extend downstream channels and customers and laterally to manufacturers of complementary products. </li></ul>
    • 5. Why Cluster? <ul><li>Reduce costs </li></ul><ul><li>Specialize </li></ul><ul><li>Leverage on another’s specialties </li></ul><ul><li>Increase rates of innovation </li></ul><ul><li>Pursue joint solutions to common problems </li></ul><ul><li>Build common labor pool, technology and infrastructure </li></ul><ul><li>Learn collectively what it takes to be competitive </li></ul>
    • 6. What Is a Cluster? <ul><li>Clusters are geographic concentrations of interconnected companies and institutions in a particular field. </li></ul><ul><li>E.G., Suppliers of specialized inputs such as components , machinery, services & specialized infrastructure. </li></ul>
    • 7. Clusters and the new economics of competition. Harvard Business Review ; Boston; Nov/Dec 1998; Michael E. Porter; http://polaris.umuc.edu/~fbetz/references/Porter.html
    • 8.  
    • 9. Constituents <ul><li>Many clusters include governmental & other institutions such as universities, standard setting agencies, think tanks, vocational training providers & trade associations. </li></ul><ul><li>Clusters promote both competition and cooperation. Rivals compete intensely to win & retain customers. Without vigorous competition, a cluster will fail. </li></ul>
    • 10. How do clusters collaborate? <ul><li>Inform— newsletters and cluster directories </li></ul><ul><li>Learn— seminars, conferences and training </li></ul><ul><li>Market— strategic plans for exports, cluster brochures </li></ul><ul><li>Purchase— buyer-supplier linkages </li></ul><ul><li>Produce— bid on projects, joint ventures </li></ul><ul><li>Build Economic Infrastructure —technology transfer and telecommunications </li></ul><ul><li>Networking —formal and informal </li></ul>
    • 11. Clusters and the new economics of competition. Harvard Business Review ; Boston; Nov/Dec 1998; Michael E. Porter; http://polaris.umuc.edu/~fbetz/references/Porter.html
    • 12. Clusters Are Critical to Competition <ul><li>Clusters increase productivity of companies based in the area. </li></ul><ul><li>Clusters drive the direction and pace of innovation, which underpins productivity. </li></ul><ul><li>Cluster allows each member to benefit as if it had greater scale or as if it had joined with others formally – without losing flexibility. </li></ul>
    • 13. Improves Productivity <ul><li>Better access to employees & suppliers </li></ul><ul><li>Access to specialized information </li></ul><ul><li>Complementarities </li></ul><ul><li>Access to institutions & public goods </li></ul><ul><li>Better motivation & measurement </li></ul>
    • 14. Clusters & Innovations <ul><li>Presence of sophisticated buyers. </li></ul><ul><li>Companies plug into customer needs & trends speedily. </li></ul><ul><li>Ongoing relationships with others within the cluster enables learning about evolving technologies, marketing concepts & so on. </li></ul><ul><li>Close involvement of cluster members in the innovation process. </li></ul>
    • 15. Stimulates New Business Formation <ul><li>Needed assets, skills & inputs are easily available in cluster locations. </li></ul><ul><li>Cluster often presents a significant local market & an entrepreneur may benefit from established relationship. </li></ul><ul><li>Local financials institutions already familiar with the cluster may require a lower risk premium </li></ul>
    • 16. Stimulates New Business Formation <ul><li>Individuals working in a cluster can more easily perceive gaps in products and services. </li></ul><ul><li>Barriers to entry are lower. </li></ul>
    • 17. Maharashtra clusters <ul><li>Centre releases Rs 15 crore for the Rs 67 crore auto cluster being established in Pune-Pimpri-Chinchwad. Sectors planned for the cluster include auto electronics, CAD/CAM and rubber/polymer & plastics. </li></ul><ul><li>Other clusters proposed are at Roha and Thane Belapur (for chemicals), Ichalkaranji (textiles) and Aurangabad (auto components). </li></ul>
    • 18. Auto Cluster in Pune <ul><li>Automotive component manufacturers, trade associations, engineering colleges, research institutes, banks, financial institutions (FIs) and government agencies have been asked to develop & promote this cluster. </li></ul>
    • 19. Cluster Development Programme UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
    • 20. UNIDO in Action UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Cluster Development Programme Honduras Indonesia Bolivia El Salvador Nigeria Nicaragua Mexico Jamaica Madagascar Tunisia Zimbabwe Morocco Senegal Pakistan India
    • 21. India Project <ul><li>UNIDO was requested by the Indian Ministry of Industry to promote pilot projects in selected clusters , and formulate a national cluster development programme. </li></ul><ul><li>With initial funding provided by the Italian Ministry of Foreign Affairs, a comprehensive Project was prepared to promote cluster development. </li></ul>

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