There has been many advantages of company clustering in a particular geographic area. The clustering enables networking, increasing bargaining power and leveraging economics of scale. Further, the advantages of industrial concentration are spread across different sectors and also different countries. The examples are cited below:
- California Wine Cluster
The California Wine Cluster comprises of wine making and grape making companies in the form of networks. The various network firms involved are in the form of suppliers of grapes, irrigation and harvesting equipment, public building and various advertising firms, the cluster also contains wine publications which are a source of promotions and information. Local institutions of California are also involved on a large scale. (Victor 2004)
The graphical representation of California wine cluster is shown in the above diagram.
Apart form the disadvantages of facing competition within the cluster. The California Wine cluster provides the following advantages:
. Significant contractual relationships
The buyers of grapes are usually the wine makers. The grapes market is usually an on the spot market where buyers and sellers enter into on the spot transaction. But California Wine cluster provides a place to grape makers for an assured demand of grapes and a place to the wine makers where they can get an assured supply of grapes at quality standards predetermined (Goodhue et. al. 2002).
. Providing additional source of revenue
A vital segment of revenue comes from tourism in the California Wine cluster which was evident from the data of year 2005 where tourism generated revenue of $1.3 billion per annum and accounted for 15 million visitors. The main reason of tourist visiting the wine cluster is that numerous wine makers can be visited in a particular location thus providing time and cost advantage to visitors.
. Reduction in cost per transaction
In California Wine Cluster Shipping ,shipping cost accounts for $11 to $ 17 whereas to other states the cost is comparatively high ranging from $13 to $54 depending on the destination (Stricker et al., 2003).Thus providing advantage to California wine makers.
. Intensive social networking
Social networking platforms are provided by numerous networks, such as the Wine Institute, the Napa Valley or the Sonoma Valley vintners associations etc .example annual golf tournament was organized by the Napa Valley Economic Development Corporation, in the year 2005 having a distinct punch line "Networking in Napa". Thus providing promotional and relation building platform to cluster firms.
Thus the California wine cluster provides a valuable example of how clusters prove to be advantageous and outweigh the shortcomings.
- The Nankang Software Park (Hi-tech Niche Cluster)-bio tech industry cluster
The Nankang Software Park’s Biotechnology Building was started October 2003 in Taiwan. The major reason for growth and expansion of Nankang Software Park can be attributed to the establishment of Nankang Biotechnology Incubator center. Currently Nankang has 36 biotech firms and 16 incubator centers. Nankang has a higher concentration of biotechnology firms than any other area in Taiwan.
Key Competencies of Bio tech industry cluster are:
Such high levels of clusters are opposed to high level of risk and uncertainty but provide numerous advantages given below:
. The network firm complements each other’s resources.
. Various biotechnology research centers are in close proximity to the cluster. Thus providing additional benefits of expert manpower, easy access to funds and state of art infrastructure. Thus numerous universities in close proximity are one of the important building blocks in the materialization of this cluster.
. This cluster is known for its solid foundation in terms if innovation and novelty of products which has been possible because of government and research institutes support.
. The formation of high class collaborative relationships and strategic alliances among the competitors have resulted in diffusion of knowledge and ideas which has led to innovation and further strengthening of cluster. ( Dahl et. al, 2005)
- THE BRAZILIAN SHOE CLUSTER in SINOS VALLEY
The cluster map given below provides a brief outlook of the composition of Shoe cluster it includes more than 180 competitors and also includes forward and backward integration. It has backward linkages with local suppliers of raw materials, machinery and equipments and forward linkages between producers and buyers especially relating to brokers of export and third it has support of local bodies which strengthen its capability of producing world class products.
The Brazilian shoe cluster provides the following advantages:
. The dynamism of all size of companies
. The machines that convert the raw material into finished products are manufactured, thus technical specification is ensured as a paramount consideration in production of other inputs like uppers, soles, dyes.
. There exist broad range of focused and expert which include the services of technical advisors, self employed designers, specialized transport services services thus help in minimization of cost.
. The flow of information locally is facilitated by two weekly publications and four monthly magazines relation to technical details all of them specializing in shoe industry. Thus the information flow is easy and cost effective.
. An important network in the for of local institutions and trade associations provide technical and skill expertise thus helping in providing customized innovative solutions to customers .It also provides access to export market.
Thus the Shoe cluster provides competencies to its forms if all sizes. As per Peas good & Schimtz survey in 1994 provided an important insight that locational advantage of cluster is sourced by the suppliers of raw material and input manufactures.
- Montano IT cluster
Montana’s IT cluster is relatively small. According to the 2002 State New Economy Index, for providing information technology jobs Montana ranks 44th out of total share of jobs. It is emerging at a much faster rate in the national IT industry. The Montana IT cluster posse’s competencies in computer data, processing services, engineering and management overhaul. In addition to some computer-related services, it includes engineering, architectural, and surveying services as well as commercial physical and nonphysical research and testing laboratories. There have been empowerment and diversification competencies in the form of engineering and architectural services. The additional benefits are already provided by commercial non physical research and testing labs of Montana .Montana has seen a very significant employment and establishment growth in engineering and architectural services and also in mercantile nonphysical research and in testing labs. It has above average employment concentrations in testing laboratories, computer integrated systems design, architectural services, and surveying services.
Advantages:
. For a rural state, Montana has an excellent fiber-optic network that provides broadband Internet access in many parts of the state. In metropolitan areas, a large number of local and national Internet service providers (ISPs) offer a variety of services and technologies to individuals and businesses.
. Using this excellent fiber-optic infrastructure, Eastern Montana Telemedicine Network connects a number of rural health care facilities in small towns in Eastern Montana with each other and with locations in Billings.
. Funded by U.S Dept. of Housing and Urban Development Grant Technology Innovation Centers (incubators) in each county—flagship incubator is located in MonTec in Missoula. Shared high-speed communications network.
. The Montana Information Technology Enterprise Center-(MITEC), located in the historic Thornton Building, is a new component of the Cyber. Village and provide 100 percent reliable connectivity with a main and a backup network system.
Thus Montano cluster provides large access to data processing, access to updated information technology and employment opportunities.
- India’s Bangalore Industry cluster
Advantages available:
Extensive growth of Bangalore has contributed to the cluster development. The large growing population of India provides access to cheap labor. The principal characteristic of cluster is efficient software services through outward orientation on off-shore development for exports thus generating potential of earning huge revenues. The cluster has competencies of high technological transfers. But the major drawback of Bangalore IT cluster is it ha a fragmented industry and high attrition rate is another disadvantage (Dilk, 2003)
Conclusion
Contrasting the normal industry sector and industry cluster there exist a huge demarcation between them a an industry cluster transcends the line of production of goods and services and thus spreading across the entire value chain a the cluster is inclusive of not just manufacturers, but suppliers,customers,governmet agencies, local institutions etc. Clusters are network of firms that are connected by the flow of goods and services, which are relatively stronger and more competent than the individual industrial linkages. Anderson (1994) stresses thus it provides competencies in terms of buyer-seller relationship (concentrates on vertical integration, competitors-collabarotor relationship (sharing information), Shared-Resource Relationships (focusing on horizontal integration).
References
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