Clusters and the New Economics of Competition - 7437 Words

Clusters and the new economics of competition Harvard Business Review; Boston; Nov/Dec 1998; Michael E. Porter; Volume: 76 Issue: 6 Start Page: 77-90 ISSN: 00178012 Abstract: Todays economic map of the world is dominated by what are called clusters: critical masses - in one place - of unusual competitive success in particular fields. Clusters are not unique, however; they are highly typical - and therein lies a paradox: the enduring competitive advantages in a global economy lie increasingly in local things - knowledge, relationships, motivation - that distant rivals cannot match. Untangling the paradox of location in a global economy reveals a number of key insights about how companies continually create competitive†¦show more content†¦Clusters affect competitiveness within countries as well as across national borders. Therefore, they lead to new agendas for all business executives not just those who compete globally. More broadly, clusters represent a new way of thinking about location, challenging much of the conventional wisdom about how companies should be configured, how institutions such as universities can contribute to competitive succe ss, and how governments can promote economic development and prosperity. What Is a Cluster? Clusters are geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure. Clusters also often extend downstream to channels and customers and laterally to manufacturers of complementary products and to companies in industries related by skills, technologies, or common inputs. Finally, many clusters include governmental and other institutions - such as universities, standards-setting agencies, think tanks, vocational training providers, and trade associations - that provide specialized training, education, information, research, and technical support. The California wine cluster is a good example. It includes 680 commercialShow MoreRelatedLogistics Of Logistics And Transportation1304 Words   |  6 PagesRole of Logistics and Transportation Kevin D. Walden Park University Ms. O’Quinn 29 November 2014 Logistics contributes to and moves the entire economy. Economic developments in recent years have led to the creation of complex company networks and systems of goods flow – in the process, the globalization of procurement, production and sales as well as the division of labor have increased. 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