The Emergence of Industry Clusters Theory & Evidence Essay

The Emergence of Industry Clusters Theory & Evidence - Essay Example On the other hand, the term ‘industry cluster’ is referred to as the geographic absorption of interconnected businesses, suppliers and associated organisations in a particular field (Cilibrasi & Vitanyi, 2005). The industry clusters are primarily considered so as to enhance the productivity and the profitability of the organisations which would augment the corporate image and the customer loyalty among other competitors in the markets. It would be beneficial for an enterprise to cope up with the competitive challenges of the varied situations and conditions. Therefore, it is also known as competitive cluster or Porterian cluster (Sandiego Association of Governments, n.d.). In addition, an industry cluster also enhances the probability of skilled workers at a quite lower rate as compared to other market scenarios, infrastructure facilities, and distribution facilities among others. Apart from this, an industrial cluster also reduces the business and the financial risks as well as offers flexibility in the management decision processes of the enterprises thereby improving the profit margins of the organisations. ... This assignment is divided into five phases including introduction, key particulars related to industry clusters, relevant theories on the origin and emergence of industry clusters, plans and policy recommendations and finally conclusion. Key Particulars Related To Industry Clusters Industry cluster is defined as the group of interrelated companies and industries mainly found in the micropolitan areas, but each cluster is unique in size, core potencies and dealings. The industry clusters are the groups of firms in a specific geographical region that share a universal market, technologies, workers’ skill and are also linked with the buyer-seller relationships. It makes an area competitive as well as a viable location for the development of varied industries. According to Klepper (2010) industry clusters are vibrant entities which might change depending upon the existing industries or on the exterior conditions. These are the geographic deliberations of competing, opposite, or i nter-reliant firms and industries that might perform business operations with each other or with exterior enterprises. The firms present in the cluster may be aggressive and cooperative in nature. This is due to the fact, that at the initial stages of development, the area or market is entirely new and the rivals are also quite less as compared to others. Thus, it can be affirmed that no explicit benefit is offered by any specific region or market at the preliminary stages of development of clusters. However, after the establishment of the cluster, the area becomes competitive as well as feasible for business prospects which enhance the economic growth of the area. As a result, it attracts new industry entrants, which increases the competitiveness of the region. This can also be