Rethinking Public-Private Partnerships. Strategies for Turbulent Times.
Emergence of drone cluster in Poland - Introduction
1. Akademia Leona Koźmińskiego
Microeconomics of Competitiveness Program
Lecturers:
Prof. Zbigniew Bochniarz
Prof. Jacek Tomkiewicz
FINAL REPORT
Emergence of drone cluster in Poland
Paweł Bombola (leader), Ph.D.
Artur Kwaśniewski, Ph.D.
Marek Kądzielski, M.A.
Warszawa 2016
2. Table of contents
1. Introduction ..............................................................................................................................
2. Academic foundations: key Porter’s definitions ......................................................................
3. History of drones......................................................................................................................
4. Analysis of drone market .........................................................................................................
5. The drone cluster in Poland......................................................................................................
6. Polish aviation industry............................................................................................................
7. Analysis of the leader...............................................................................................................
8. Porter’s diamond ......................................................................................................................
9. Hypotheses ...............................................................................................................................
10. Scope of potential applications for drones .............................................................................
11. SWOT and PEST analyses.....................................................................................................
12. Legal environment..................................................................................................................
13. Porter’s 5 forces model ..........................................................................................................
14. Discussion of qualitative & quantitative research..................................................................
15. Strategic input- gaining long-term competiveness.................................................................
16. Ideas: gaining competitive advantage ....................................................................................
17. Conclusions – verification of hypotheses...............................................................................
18. Bibliography:..........................................................................................................................
3. 1. Introduction
The drone market is very dynamic: each day one publishes new information about the new
solutions and applications. In result, more and more firms are interested in this particular
business. These facts strengthen the conviction that from economic point of view a “leap into
future” constitutes a reasonable solution in this situation. In result, the winner may grab the
most profitable segment of the rapidly growing market by offering the most advanced and
sophisticated solutions, which shall constitute a considerable value added for the clients.
Substantial value added will enable for offering the unique values for the clients from other
sectors of economy and it may also form an extra impulse for further research and
development works in both drone and aviation industries.
4. 2. Academic foundations: key Porter’s definitions
The name of the course is Microeconomics of Competitiveness, so authors should define,
what the competiveness means. There is a short selection of various definitions, which
are relevant for this report.
Michael Porter states, “The only meaningful concept of competitiveness at the national level
is productivity1
.”
The World Economic Forum’s Global Competitiveness Report defines competitiveness as
“the set of institutions, policies, and factors that determine the level of productivity of a
country.”
IMD’s World Competitiveness Yearbook defines competitiveness similarly, but more broadly,
as how an “economy manages the totality of its resources and competencies to increase the
prosperity of its population.”
The authors want to focus on clusters, since according to Porter well-established clusters can
support economic development. Also, other scientists proved, that well developed cooperation
builds economic power.2
The reasons why the authors deal with the problem of clusters is the following: in the opinion
of Porter3
, productivity in the meaning of a difference between revenues and costs
constitutes a key element influencing competitiveness of an economy in every country.
The bigger the difference, the more competitive the economy for its products are sold for
greater prices that the products of its competition. This also means that they are valuable
enough for the clients. Basing on the authors’ observations, we may produce a hypothesis that
the drone business constitutes an example of industry sector characterized by high scale of
productivity. Authors believe that development of drones is expected to support dynamic
development of Polish economy.
1
Productivity is an average measure of the efficiency of production. It can be expressed as the ratio of output to
inputs used in the production process. (Source: https://en.wikipedia.org/wiki/Productivity)
2
The Role of Social Capital in Cluster and Regions’ Performance: Comparing Aerospace Cases from Poland
and U.S.A, page 2
3
http://www.trendhunter.com/keynote/competitiveness-keynote
5. A cluster is a geographic concentration of related companies, organizations, and institutions in
a particular field that can be present in a region, state, or nation. Clusters arise because they
raise a company's productivity, which is influenced by local assets and the presence of like
firms, institutions, and infrastructure that surround it4
.
In other words, PRODUCTIVITY is the ultimate goal. Thus, clusters are crucial for
sustainable economic development5
.
Below please find a selection of additional definitions of the concepts related to clusters.
Cluster initiative – an attempt to organize many different entities in a way enabling for their
effective cooperation. In the framework of such initiatives, one usually takes steps aimed at
achievement of common goals by increased engagement of the firms and/or institutions being
the members of such an initiative. Cluster initiatives may as well transgress the borders of a
cluster and country borders. This means that these initiatives may expand beyond the direct
scope of interests of such cluster. Porter specifies the following common characteristics of
such initiatives:
a) „A shared understanding of competitiveness and the role of clusters in competitive
advantage.”
b) “A focus on removing obstacles and easing constraints to cluster upgrading”
c) “A structure that embraces all clusters in a nation or state.”
d) ‘Appropriate cluster boundaries.”
e) “Wide involvement of cluster participants and associated institutions.”
f) “Private-sector leadership”.
g) “Close attention to personal relationships.”
h) “A bias towards action.”
i) “Institutionalization.6
”
4
http://www.isc.hbs.edu/competitiveness-economic-development/frameworks-and-key-
concepts/Pages/clusters.aspx
5
Source: http://www2.itif.org/2013-competitiveness-innovation-productivity-clearing-up-confusion.pdf
6
Porter. On Competition, p. 277-282
6. One should highlight that in the case of Poland there are no spectacular examples of so
advanced and developed cooperation in the framework of the defined clusters and beyond the
same.
Cluster organization7
– formally organized collaboration between cluster members
consisting in a given form of organization grouping its participants, defining the scope of
liability, formal specification of the method of conduct for cluster members, and formalized
relations between the same.
Another important aspect connected with both the clusters and drones is the productivity.
Clusters facilitate growth of productivity, which finally leads to growth of prosperity.
Without increase of productivity, there is no increase of prosperity8
. An intermediate result of
such growth of productivity is increase of competitiveness of a given economy. Report on
competitiveness shows that Poland occupies 41st
place in terms of competitiveness9
. Russia,
which is considered as a retarded economy, is on position 45 in the same ranking. This proves
that there is still a lot to be done to improve competitiveness of Polish economy and
prosperity of Polish citizens. Pursuant to Porter, clusters stimulate competitiveness of national
economy. This is one of the key reasons why that the authors have dealt with clusters.
The next vital aspect connected with drones is innovativeness. The drones are per se the
innovative solutions. Consequently, one may assume that dynamic growth of this particular
technology ought to modernize the entire economy. This is a vital question since as it was
mentioned Poland occupies 41st
position in competitiveness ranking, having far way to reach
the leaders. Without a considerable improvement of this very element, it will be extremely
difficult to achieve growth of both productivity and prosperity.
The authors focused on that since drones means potential driven by limitless number of
applications both in civil and military areas10
.
7
Encyclopaedia Britannica: https://www.britannica.com/topic/information-system/Information-systems-
audit#ref730096
8
http://www.isc.hbs.edu/competitiveness-economic-development/frameworks-and-key-
concepts/Pages/clusters.aspx
9 The Global Competitiveness Report 2015–2016 p XV
10
http://www.skywolf.pro/blog/co-to-jest-dron/, https://www.seas.harvard.edu/news/2015/10/what-drones-can-
do
7. Value chain can be enriched on a regularly bases, which would increase profits. Drones are
not only modern stuff. It can be widely used in so-called old industries in order to improve
quality of services, lower the costs, increase portfolio of services and offer completely new
solutions, which have not been used so far.
Finally, drones can improve competitive position of various companies, so again it creates
demand for those solutions. This is an excellent example of application of the new
technologies in the old economy what leads to synergy and improvement in Value Proposition
for old sectors of industry.
What’s more, our research reveals that there is a good environment in Poland, since there is a
long aviation tradition.
Drones’ Industry has huge potential and is growing worldwide due to:
Demand driven by: military applications, big business and private usage11
Value Chain, which can be enriched, what creates Value Added for customers
Changes of business models in various businesses, what develops productivity
Development of new products / services and economic growth
Generic growth of competiveness
As one already mentioned, a number of applications goes to infinity, and that is why it is
crucial to analyze this business thoroughly in details in order to understand better these
phenomena and their impact upon the future.
„President of Urząd Lotnictwa Cywilnego (ULC) said that Poland can be one of key
international players onto UAV market12
”.
11
http://press.pwc.com/News-releases/global-market-for-commercial-applications-of-drone-technology-valued-
at-over--127-bn/s/ac04349e-c40d-4767-9f92-a4d219860cd2
12
http://biznes.interia.pl/makroekonomia/news/polscy-producenci-dronow-staja-sie-waznym-
graczem,2387318,2156?utm_source=paste&utm_medium=paste&utm_campaign=other