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Cluster Theory & Competition

In this thinking, competition is driven by cost, and cost depends on the cost of inputs. The prescriptions are to accumulate factors and compete where the nation had a comparative advantage (Porter 1998b, p.8).
             Though Porter (1990; 1998a; 1998b; 1998c; 2000; 2001) has been the first champion of cluster theory as an underlying factor in a nation's competitive position, he was not the first to discuss localisation economics. There is a history of research in spatial economics (in which Adam Smith himself participated), but it is Alfred Marshall (1842-1924) with his study of the agglomeration of cotton mills in Northern England who is the first leader in the field . In his book Principles of Economics (1890) he describes that agglomeration and industrial districts contain the following key ingredients:.
             1. Knowledge spillovers. The something "in the air- that makes "the mysteries of the trade become no mysteries- and promotes "unconscious-, tacit learning.
             2. Increased supply. The common pool of factors of production (particularly labour) reduce the cost of production.
             3. Specialisation. Specialised inputs lead onto higher productivity (Smithian approach).
             4. Comparison shopping. On this subject, Marshall (p. 273) states the following:.
             The convenience of the customer [ought] to be considered. He will go to the nearest shop for a trifling purchase; but for an important purchase he will take the trouble of visiting any part of the town where he knows that there are specially good shops for his purpose. Consequently shops which deal in expensive and choice objects tend to congregate together; and those which supply ordinary domestic needs do not.
             Porter's primary point of conflict with Marshall is Marshall's belief that "The causes which determine the economic progress of nations belong to the study of international trade and therefore lie outside of our present view-. The belief that economics is somehow not dependant on business is heavily criticised by Porter (1998b) and classified as a "disconnect-.


Essays Related to Cluster Theory & Competition

1. The Philips Company - Moving Forward to the Year 2040

The population density and the high level of education in the Netherlands will lead to the formation of a specialized cluster in the future. The cluster will start out in the city where Phillips was founded, Eindhoven. ... Nanotechnology is highly complex and new theories will be mainly spread face-to-face within the Dutch cosmopolitan centre. When evaluating the four determinants stated above, it can be concluded that Philips faces large challenges in the form of larger competition which arises because of the high opportunities and a smaller role for accumulated knowledge in the past. ... D...

  • Word Count: 5490
  • Approx Pages: 22
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2. Retaining Traditional Industry in a Globalized World

Hence, traditional industries have such common characteristics as labour-intensive, small-sized, crafty (cultural, creative) or rural, regional (clusters, cottage) as well (Hunter, 2008 and Koga, 1968). ... Recently, Wang and Xie (2004) do name some earlier theories developed by earlier researchers: economic take-off and transformation and a big push theory. ... Mixed traditional industries enhance comparative advantages in terms of clusters or region innovation (Kaufman & Todtling, 2000), a small part develop into small-scale operations (Sugihara, 2007) whereas the pure form rarely exists o...

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3. Soccer Coaches and Leadership

Researchers selected 16 to 30 members from each team at each level of the competition using a cluster sampling method. ... Price and Weiss (2013) examined the effectiveness of coach and peer leadership for individual and team outcomes of team sport athletes by using the transformational leadership theory. ... Team success was measured using the competition points of each team in a 16-game season. ...

  • Word Count: 1531
  • Approx Pages: 6
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4. Contemporary Urban Development in Australia

Specifically it analyses the urban design principles underpinning the master plans for both the ACI site and the overall Green Square Draft Structural Master Plan against principles derived from some well known urban design theories. ... The paper concludes that there are encouraging aspects of the master plans that appear to be consistent with classic urban design theory. ... The designs for the 11 hectare Green Square Town Centre and the 11.25ha ACI (Meriton) site were both chosen through competitions. ... According to Schurch (1999) neither a well developed body of theory nor a core of prac...

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5. Reasons behind the Irish Celtic Tiger

They followed the cluster theory very successfully and very intelligently. ... The E.U. , Competition and deregulation The implementation of the European Union's single market programme, combined with Ireland's steadfast commitment to early participation in EMU, gave a fillip to inward investment. ... Moreover, the 1992 Single Market programme involved a panoply of pro-competition commitments in public utilities and transport, which, though initially introduced with some reluctance by the Irish authorities, proved highly beneficial to the economy. ...

  • Word Count: 1917
  • Approx Pages: 8
  • Grade Level: Undergraduate

6. Television Broadcasting in China

With the increase in the sheer number of TV stations, competition became a factor for many managers for the first time. ... Competition in the Chinese television market has intensified rapidly as television channels have multiplied and more and more foreign programs have poured in. ... Strategy is a cluster of decisions about what goals to pursue, what action to take, and how to use resources to attract audiences. According to Michael Porter, who developed a theory of how managers can select a business-level strategy " a plan to gain a competitive advantage in a particular market or i...

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7. A Monster in the Mirror: Mary Shelley

When the cluster of body parts are finally stitched together and reanimated, Victor abandons it in horror, regretting his decision to devise it. ... The concentration of emotion, adventure, and imagination during the Romantic Era led to new ideas of creation, such as Darwin's theory of evolution. ... Erasmus Darwin was a physician who started to develop a theory in natural philosophy concerning the evolution of organisms. ... Darwin investigated the aspects of the problem as how organisms pass through transitional stages, how sexual competition impacts the development of species, and how ...

  • Word Count: 2436
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