Marketing
Issue No. 2 - September/October 2001
Ganging Up on the Competition
Playing to your strength is an old sports principle that applies equally well to business. Mark Douglas of Ethos Australia is in the business of forging strategic alliances that extend business opportunities; he thinks we may dwell too much on our limitations.
“Too often, business development strategies tend to focus on weakness. Where we have the best opportunity to excel is by building on strength,” Mark says.He advocates cluster development as the best way to build on South Australia’s natural competitive advantages, for permanent economic benefit. The Department of Industry and Trade thinks so, too; support for two new industry clusters has been announced under the auspices of Business Vision 2010.
The difference between a business network and a business cluster is a principal concept.
A network is a smaller group, typically three or four companies which pool their resources to form an umbrella arrangement for marketing goods or services cooperatively. The network can be vertical (along a value—adding chain) or horizontal (between nominal competitors) and most often exists to develop specific international or interstate opportunities — a large contract, for example.
A cluster is a broader concept. It is a geographical concentration of companies within an industry, working across the value chain to maximise growth opportunities by improving efficiency as well as exploring new markets.
Most often, a successful cluster enjoys some kind of natural advantage. South Australia’s wine industry is the classic example; climatic advantages make it easier to grow a large volume of superb grapes in South Australia. As a result, manufacturing (winemaking) takes place and attracts ancillary operations to serve the manufacturers — such as chemical firms and packaging fabricators.
“Some clusters emerge naturally, while others need help,” Mark says. “There is a critical mass to be achieved, after which clusters d...
