Cluster Approach

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MICRO,SMALL & MEDIUM

ENTERPRISE MANAGEMENT

SIGNIFICANCE OF CLUSTER APPROACH : A CASE STUDY

SHWETANG PANCHAL 09MBA22

GUIDED BY

Mr. Jignesh Darji


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INTRODUCTION OF CLUSTER

APPROACH

` It refers to provide technical assistance tohelp Small and Medium Enterprises (SMEs)

to become more competitive by

` fostering inter-enterprise linkages as well as` collaborative relations with local support

institutions.

` It aims at helping SMEs combining their

strengths and jointly take advantage of

market opportunities or solve common

problems with a combined effort.


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` Clusters are geographic concentrations of` interconnected companies,

` specialized suppliers,

` service providers, and

` associated institutions

` in a particular field those are present in a nation or region.

` Clusters arise because they increase the productivity

with which companies can compete.

` The development and upgrading of clusters is an

important agenda for governments, companies, and

other institutions.


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` The cluster approach covers differentmodalities of inter-enterprise

` and enterprise/institutions collaboration:` horizontal networking (among SMEs),

` Vertical networking (among SMEs and largerenterprises) and` clustering where larger concentrations of enterprises

operating in the same locality and belonging to sameor complementary sectors are concerned.

` The cluster model provides the framework forbusiness-to-business and business-to-environment cooperation.


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` Cluster development means that LED (Local EconomicDevelopment) initiatives are concentrated on

` encouraging and supporting inter-firm collaboration,

` institutional development and support in targeted

industrial sectors.` The sectors are targeted at those that offer the most

local economic development potential.

` Where the local economy has existing clusters this may

provide a more targeted approach to improvingeconomic development activity by leveraging resources

in the direction of greatest potential return.


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` A geographically proximate group of interconnectedcompanies and associated institutions in a particularfield, linked by commonalities and complementarities(external economies)

` An end product industry or industries

` Downstream or channel industries

` Specialized suppliers

` Provider of specialized services

` Related industries (those with important shared activities,labor, technologies, channels, or common customers)

` Supporting institutions: financial, training, tradeassociations, standard settings, research


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DEVELOPING NETWORK

` Special attention is paid to encouraging local peopleengaged in the same cluster to meet together to enable

business development opportunities.

` For Example :

` These could include encouraging local fishermen and fishprocessors to meet and exchange ideas on improving

facilities and adding more value to their products so they

would all benefit.

` Another example could be to start a craft network. Thenetwork could jointly market their goods and then start

inter-trading with each other, building synergies.


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PROVIDINGCLUSTER SPECIFICINFORMATION

DEVELOPINGCLUSTERRELATEDMARKETINGEFFORTS

` One of the most effectiveways of developing a clusteris to gather information aboutbusinesses and institutionalsupport systems in thecluster and then produce it sothat it can be shared.Thereafter, with a small

amount of effort, supplierlinkages can be developed.These do not need to besophisticated.

` Once a cluster has been

identified and it starts

developing, there areopportunities to promote it

and attract supporting

investment as well as

promoting business

opportunities externally

for cluster members.


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DEVELOPING DEMAND-LED SKILLS AND

EDUCATION TRAINING PROGRAMS

` A significant benefit to developing a cluster initiative isthat a

` key outcome of business networking will be an appreciation

of skills needs in the sector.

` When a number of businesses express a skills need, it ismore likely that training or education will be provided.A

lone voice is not likely to be taken as seriously.


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DEVELOPING CLUSTER-FOCUSED PUBLIC PROCUREMENT AND

LOCAL PURCHASING AGREEMENTS (CASE STUDY)

` The public sector is often the largest buyer in a city and assuch there are opportunities to enable local businesses to

access tender processes more easily.

` It is often difficult for small businesses, If its not in cluster,

to bid for large government contracts.` A cluster initiative here could help in to develop a food

supplier network to supply government catering needs.

` A logical cluster development initiative could be to

encourage suppliers of basic food products to enter into

some form of food processing.

` Cluster development activities could then move on to

transportation, storage and packaging of food products.

From there it is likely businesses could start retailing and

producing processed foods for the private sector.


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THANK YOU

Cluster Approach

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