Management of industrial clusters. Tutorial

that she will not abuse this liberty to the detriment of them. To convince them that the firm may itself bound by certain principles, promising (implicitly or explicitly) to guide them in adapting to unforeseen circumstances. A set of such principles constitutes, by definition, Kreps, "organizational culture" of the firm. Compliance with a selected principle, even when it is clearly disadvantageous, gives her the reputation of "reliable" and "fair" that provides tangible long-term benefits. However, the maintenance of reputation is not without costs. Every organizational culture adapted to a strictly defined category of random events. When you distribute the same principle, distant from each other in the field of adaptation to changes becomes less effective. This is an obstacle to vertical integration: the boundaries of the firm, says D. Kreps, will be determined by its organizational culture and place where best adaptation of some activities will be balanced against the worst adaptation in others.

The level of interaction between supplier and customer

Suppliers are more difficult to achieve desired prices and conditions of supply, if the company the consumer is their main customer. In this case, the welfare of suppliers is directly related to consumer welfare. Suppliers are forced to defend it with reasonable prices, improve product quality, develop new products and services.

Suppliers competitors have significant competitive pressure if unable to provide private companies with more favorable conditions, in terms of price, quality, consumer properties of products or delivery times.

Of the company to the consumer is difficult to influence key suppliers. For example, Intel is the leading supplier of microprocessors for PCs. It is on the microprocessor accounts for a significant part of the cost of computer — to 20%. Company PC makers who buy Intel products, are interested in the lowest possible prices, so they will try to get the microprocessor of similar quality from AMD's main rival Intel.

If suppliers ' products account for a significant part of the cost of production of the final products, if these products plays a crucial role in the production process and/or to a large extent determines the quality of manufactured goods, competitive pressure suppliers high. It is great and if a few large suppliers control the production of most products of the industry and prices in it (as in the case of microprocessors). Moreover, the pressure provider (or group of providers) to the consumer is higher, the more difficult the transition to another supplier. Major suppliers with good reputations and growing demand for its products is less likely to make concessions than

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providers struggling to expand its customer base or increase the loading of its production capacities.

The competitive pressures of suppliers is large and when buying their item costs the manufacturers less expensive than production of the same products on their own. For example, manufacturers of lawn mowers, cultivators, snowplows acquire motors from other manufacturers, not made them yourself, because when small volumes of production unprofitable. Manufacturers of small electric motors, supplying its products for the electrical industry, save due to the significant production volume; their costs are much lower than would be the manufacturers of electrical goods if they decided to establish their own production of such engines. (Even if the manufacturers of electric motors would set the prices of their products below the cost of production of electrical products, but above its own costs, they still provide a sufficient profit.) Therefore, consumers are heavily dependent on the main supplier until, until they reach a scale of production that would justify vertical integration. Then the balance of power will change in favor of the supplier. The stronger the threat of vertical integration in the markets of suppliers, the faster the company negotiate with vendors for favorable conditions for themselves.

Suppliers have a strong competitive influence in a situation when are unable or find it impractical to produce products of appropriate quality. For example, if suppliers deliver components with a high level of marriage, producers of finished products incur heavy losses on the warranty and replacement of defective parts, what's bad for their profit, reputation and competitive position in the market.

It is increasingly the practice of creating long-term partnerships between manufacturers and suppliers. This allows to implement the system of deliveries "just in time", reducing inventory and operating costs; to accelerate the development of new models of components; to improve the quality of components and reduce scrap; reduce expenses of the supplier and, accordingly, the purchase price. All this increases the competitive advantage for those companies that effectively communicate with key suppliers.

For Dell Computer strategic partnership with key suppliers — a key element of the strategy to transform the company into a world leader in the production of computers, servers and workstations with minimal costs. Through established relationships with suppliers Dell gets high-quality components at competitive prices, allowing the company to provide enormous competitive pressure in the market, forcing competitors either to rebuild relationships with suppliers, or accept free-it is very disadvantageous

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position. Effective interaction with suppliers one or more competitors is another important source of competitive pressure.

Competitive pressure from companies to consumers

The degree of competitive pressure from companies to consumers depends on two factors: first, the possibility consumers dictate the terms and prices of supply, and secondly, the level of competition and the importance of interaction between producers and consumers.

V. Methods of competitive pressure from companies to consum-

ers.

Competitive pressure from consumers can also range from significant to low. Consumers (especially if these are large companies that purchase considerable volumes of products) often benefit in сделках12. The larger the consumer the more they purchased, the share of production, the stronger its impact on sellers. Often large buyers can get discounts and various concessions.

Consumers exert a strong competitive pressure in that case, if you can provide the best for yourself on price, quality, service and other terms of transactions.

Large retail stores such as Wal-Mart, Circuit City, Home Depot, typically achieving significant price discounts from the manufacturers, since the latter is interested in the fact that their products were widely available in shops and is conveniently located in the sales area. Retailers work with one or several manufacturers, but rarely all at once, so the latter compete for the right to enter into contracts with large or popular retailer that brings that additional benefit. In US and UK supermarkets often force food manufacturers to pay a separate fee for the placement of their goods on the best places in the trading rooms.

The difficulties of transition to another provider weakens competitive positions of the buyer and put it in dependence on the supplier.

But small consumers, offer vendors additional advantages, can provide competitive pressure on suppliers in certain circumstances.

If the cost of the consumer to change the brand of the product or the transition to substitutes is relatively high. Buyers, it is relatively easy changing of the brand of the product or working with multiple vendors, have additional possibilities to exert pressure on the latter. If the products of several competing suppliers similar to each other, the buyer switches from one brand to another without any cost and rather, go the extra mile, wanting to retain the right of conclusion of the contract with the consumer.

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If the products of competing suppliers are very different, consumer is difficult to switch to another brand without additional costs; therefore, the provider can be sure that the consumer dependent on it and will not require any additional concessions.

If the number of consumers is small, or if the consumer is especially valuable for the vendor. The less potential buyers you have, the harder the vendor to find behind-the-Maine in the event of loss of one of them. The prospect of losing a consumer to induce the supplier to go the extra mile.

If consumers are well informed about products, prices, and production costs of the supplier. The better informed consumers are, the better their position relative to the supplier. In particular, the Internet opens new possibilities of information search: it is possible to find data on prices and consumer characteristics of different brands of cars, on the conditions for obtaining loans, and even make a purchase. An experienced user can spend using Internet a real marketing study and determine the most advantageous conditions of purchase, and then use this data when negotiating with suppliers.

If there is a real threat of vertical integration of the companiesconsumers "back" to the industry provider. Companies such as AnheuserBusch, Coors, Heinz, integrated into the industry, its suppliers — manufacturers of metal packagings, to obtain a more favorable competitive position. Retailers gain a competitive advantage by developing and promoting its own brand along with brand mi their suppliers. The chain of stores WalMart, for example, against its largest supplier, Procter & Gamble created its own brand of washing powder Sam's American Choice at a price 25-30% lower than the Tide of production Procter & Gamble.

If consumers can choose the place and time of purchase. If consumers don't like the retail price on new cars, it can postpone the purchase or to buy a used car. If the company does not satisfy the rates and warranties on the software, she can create it yourself or defer the purchase until new, more perfect version. If students believe the prices of new textbooks is too high, they can take in the library or buy used copies.

Consumers have little competitive pressure in those cases, if you do purchase infrequently or in small quantities, and if the change mark is associated for them with considerable costs that automatically "snaps" the consumer to the provider. For example, a company that uses the workstations, Compaq or Hewlett-Packard, working in the Microsoft Windows operating environment, is unlikely to go to the station of Sun Microsystems, working in the UNIX operating environment. Changing the operating system re-

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quires significant financial and time cost of retraining staff, as well as waiver programs based on Microsoft Windows, with which the company worked for many years, and replacing them with programs running in UNIX.

Conclude that not all consumers have the same capacity to exert competitive pressure on suppliers; some of them have lower sensitivity to prices, quality and service. For example, independent retailers have on producers of tires less competitive pressure than Honda, Ford, DaimlerChrysler (buying tires very large quantities), and are less sensitive to product quality. The plants are more demanding of the quality and design of the tires, as it affects the quality and appearance of the finished product, and exert stronger competitive pressure on the price and quality. Clothing manufacturers face strong pressure from large retail chains such as Kmart or Sears, but can achieve much more favorable terms when selling products to private boutiques.

Competitive pressure as a result of the interaction between suppliers and buyers

Partnerships between providers and consumers become an increasingly important factor of competition at the level of B2B (industrial goods), in contrast to the level of B2C (consumer market). Many suppliers that serve industrial customers, found it in their interest to work closely with partners in such matters as the organization of deliveries on time, order processing, electronic payments, information sharing on the volume of sales. Wal-Mart, for example, daily provides to its suppliers (Procter & Gamble, etc.) information about the sales volume at each store to get those timely restock of goods in the warehouse. Dell Computer, together with its largest client companies have created an electronic network, bringing together more than 50 thousand corporate customers that Dell employees know about the most popular configurations and price changes in the world, accepting orders electronically and misleading customers about their performance, process electronic payments, receive the data of credit history of consumers, etc. Additionally, Dell installs on the computers specified by the customer software so that the latter saves time on preparing a PC to work and is upgrading the software and hardware of their clients. Such relationships between Dell and its customers create tremendous competitive pressure on other manufacturers of computer equipment, forcing them to developed for its corporate clients more profitable bundles.

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The strategic importance of the five-factor model of competi-

tion

Model five factors of competition allows to fully analyze the nature of competition in a particular industry, to assess the degree of influence of each factor, the nature created them competitive pressures and the overall structure of the competition. As a rule, the stronger the overall impact of the factors of competition, the lower the level of profit of all competitors. The most dangerous competition for the firm in the case when all five factors present in the market is very tough conditions; the profitability of almost all of the participants drops to zero and below. From the point of view of profitability a very unattractive situation, when competition among sellers is very strong, the barriers to market entry are low, competition of substitutes is high, and the sellers and the acquirers have equally strong pressure on deals. In the U.S., this situation is observed, in particular, in the manufacture of tires and apparel, where historically the profitability of the companies is low. Conversely, if all factors of competition is negligible, then the competitive structure of the industry conducive and promises high profits.

In an ideal from the point of view of profitability the competitive environment neither suppliers nor consumers can not dictate terms when concluding contracts, there are no worthy substitute goods, entry barriers into the industry are relatively high, and the competition between existing players is moderate.

Note, however, that such a situation is unfortunate from the point of view of the consumer, who would prefer the most efficient market and the highest win consumers from investing in all sectors of the economy. The companies get zero profit, but they have no incentive to leave the market.But even if some of the five factors of strong competition, the industry is of interest to those companies whose strategy and market position provide sufficient protection from competitive pressure and allow you to profit above average.

The effectiveness of the competitive strategy of the company is determined by the effectiveness of the company's protection from the influence of the five factors of competition, the ability to offset competitive pressures and the ability to create a sustainable competitive advantage.

The task of managers is to develop a strategy that protects the company from the influence of the five factors of competition, allows you to dictate favorable for the company rules of competition in the industry, creates additional pressure on competitors, and perhaps even defines the business model of the industry. To cope with this problem, managers must

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know the nature and prospects of development of competition in the industry and strength of each factor.

Conclusion:

Porter's model provides a convenient paradigm for analyzing factors that affect performance and profits in the industry. It helps to systematize the tools of the economist to answer questions about how the firm can profit; on the sources of opportunities and threats for successful business development; the basis for strategic decision-making by the firm; suitable for both the services sector and manufacturing sector.

Disadvantages of the model:

The model does not account for the dynamics of demand. In addition, it focuses on the entire industry rather than on specific firms.

It does not take into account the role of the state.

It is qualitative, not quantitative, and therefore cannot give clear predictions and is not amenable to careful analysis.

Checklist:

1.What are the main forces of competition that affect a firm in a market economy.

2.How does the mechanism of competition between suppliers and manufacturers.

3.How does the mechanism of competition between producers and consumers.

4.What kind of risks are reduced by the market with zero marginal costs in production?

5.What kind of competitive pressure increases monopsony market?

6.How is the profit level with the action of the five forces of com-

petition?

7.How does the elasticity of demand for the opportunity to experience competitive pressure?

8.What are the methods of competitive pressure from companies to consumers.

9.How does long-term interaction between the companies on the bargaining power of the manufacturer? The consumer?

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Tasks:

1. Deployed comment:

Porter's model is just an illustration of the formula of profit of the company without adding anything new.

Profit=(Price-Average Cost)*Product Quantity 2. Deployed comment:

Porter analysis changes our view about the necessity of antimonopoly regulation of the economy to protect consumers.

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Chapter 3. The cluster concept of M. Porter. The change in the structure of competitive forces in the global economy

According to M. Porter, one or several firms, reaching competitiveness in the world market, extends its influence on the immediate environment: suppliers, consumers and competitors. In turn, the success of the environment have a positive impact on further growth of competitiveness of the company. In the end, a "cluster" - a community of firms, closely related branches, which are mutually promoting growth of competitiveness of each other. For the entire economy of the state of clusters play the role of points of growth of domestic market and base for international expansion. After the first in the economy are often formed new clusters and international competitiveness of the country increases. High competitiveness of a country rests on strong positions of separate clusters, whereas outside of their participation, even the most developed economy could provide mediocre results. The company's competitors from industries having international success, and sometimes whole clusters are often located in the same city or area. The concentration of rivals, customers and suppliers contributes to the effectiveness of specialization of production. But even more important is the influence of geographic concentration on improvement of production processes and innovation within the cluster.

When the cluster is formed, all productions start it give each other support. This does not mean that competing companies will start to work on each other. However, this means that the distribution needed for the development of information happens faster.

The competitiveness extends up the processing chain. The cluster companies are forced to raise the quality of the supplied semi-finished products, thus forcing its suppliers to increase the competitiveness.

This, in turn, means that the technological ahead of the companies supporting industries within the cluster influence on the competitiveness of the final product of all the competing participants in the cluster. Therefore, they will have to find new ways of product differentiation, i.e., to increase competitiveness at the expense of own technological growth and not due to improved materials used. The same influence and territorial localization: companies have to generate intense competitive methods, focusing not on the stability of the corporate structure and competitiveness of the final product. The benefit applies in all areas of relations. New manufacturers coming from other industries in the cluster, accelerate the development,

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stimulating different approaches to R & d and providing the necessary resources for the implementation of new strategies. Happen free exchange of information and the rapid spread of innovations through the channels of suppliers or the consumers having contacts with numerous competitors. The relationship inside the cluster, often absolutely unexpected, lead to the development of new ways of competition and generate brand new opportunities. Human resources and ideas form new combinations. The cluster becomes a vehicle for overcoming the isolation on domestic issues, inertia, inflexibility, inflexibility, and collusion among competitors that reduce or completely block the beneficial effects of competition and the emergence of new firms. Thus, the presence of a cluster allows national industry to maintain their advantage and not give it to countries who are more likely to upgrade. The presence of a cluster of branches speeds up the process of creating factors where there is a group of domestic rivals. All firms from a cluster of interrelated industries, make investments in specialized, but related, technologies, information, infrastructure, human resources, leading to a massive emergence of new firms. Clusters are the cause of major investments and attention of the government, i.e. the cluster becomes something greater than the sum of its individual parts. In the process of cluster development of economic resources begin to flow to it from isolated industries that are unable to use them productively.

The competitors of the leader of the cluster, established in a bitter struggle in the domestic market, has gained experience of successful confrontation to the strongest firm in the world, created a competitive product compared to its products.

Therefore, the fierce competition of cluster's firms on the domestic market and abroad poured in the joint expansion. Firms cluster due to mutual grinding become carriers of the same "business ideology" and, based on it, abroad defeat the aliens. The cluster center is often a few powerful companies. Among the leading large firms remain competitive relations. Therefore, the cluster should not be confused with a cartel or a financial group. Further, the cluster provides exceptionally favorable conditions for the development of specialized industries, primarily serving and supporting nature. A leading big companies and firms need a lot of adapted to their technologies, equipment, materials, etc., which creates a large market for small firms with innovative orientation, which in the future and become a generator of competitive advantages. The cluster provides employment and many small firms - suppliers of simple parts, i.e. the structure of the cluster, in principle, copies the structure of the national community firms, but with one

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