How can concentrated clusters enhance the management of supply chains and improve overall firm performance? How might this management concept vary between international firms and domestic firms? What are the negatives of the concentrated cluster theory? (in 3 to 4 pages with cited references)
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Concentrated clusters are businesses located within one geographic location, which are linked
or related in some way. An example is a supplier, a producer, and a distributor who rely on each other
to maintain success. Concentrated clusters offer many benefits to organizations involved. The frequent
interactions among firms can improve productivity, development, and organization of processes. A
higher level of trust is also developed when firms work closely with each other on a regular basis (Sellers
2012). Examples of concentrated industry clusters include the Napa Valley, California wine industry and
Silicon Valley. Each of these regions contains a specific industry, where capabilities, raw materials, and
talent are located.
Organizations can be more productive, when supplies do not need to be shipped a great
distance. If production decreases or increases, for example, raw materials can be obtained quickly, to
meet changing demands. Short distances for shipping supplies can reduce logistics costs and help
organizations generate more revenue. When distributors are local, companies can reduce shipping
costs as well. There is no need for shipping via rail or air, which may be more costly. Even when
organizations produce goods that are distributed nationally or globally, they can cut costs for ...
The concentrated clusters enhanced in management of supply chains are given. The negatives of the concentrated cluster theory is provided.