The New Economy: The New Competition

Business clusters are becoming more common in certain circles of today’s society, and normally involve businesses from the same geographical area, though as we will see later on, clusters can have effects that extend far beyond the immediate geographical area. Forming a cluster does not mean that the businesses involved share everything with one another: they may share information but compete for clients, for example.

This method of business makes sense if the area involved has limited resources available to it: if there is only one training facility available, then it would make sense to combine employee forces, particularly if they are both going to be taking the same training course — having them on the same course will save time and money for all concerned, as well as allow the employees to meet people from the same area of business as them.

‘Co-opetition’ (as this phenomenon is starting to be called) between businesses can take several different forms, depending on what types of businesses are involved — there are geographical clusters, which involve businesses which share the same geographical area; sectoral clusters, involving businesses in the same sector; horizontal clusters (businesses which share resources) and vertical clusters (businesses which move resources, i.e. a cluster might form out of a supply chain) — and they all have their own part to play in the new economy.

According to The Economic Competitiveness Group, “the most successful clusters are not only characterized by strong linkages between firms, but also between the private sector firms and the mainly public-sector providers of important local sources of competitive advantage,” perhaps because a cross-sector alliance allows for the greatest range of availability in information and resources. Since the private and public sectors cater to their customers in entirely different ways — even if they are serving what is ostensibly the same customer base — a cluster which crosses those sectors would have a huge range of information available to them because of the different areas the businesses within the cluster cover. If shared, this range of information would allow all the businesses involved to develop a better relationship with their customer due to their better understanding of that person, and would also allow the businesses to develop a better relationship with each other.

An exchange of information like this would lead businesses to develop what is described as a Collaborative Economy Customer Score, where businesses determine the value of customers according to customer ratings, transaction information and the new perspective that sharing information with their cluster brings. It is this particular brand of collaboration — sharing of information leading to a fuller knowledge of a particular customer or group of customers which then perhaps leads to new financial ventures based on that knowledge — which I believe will force the business world to change.

I think that economic clusters will eventually have a ripple effect on business. The first effects of it are already being felt, but if clusters continue to be seen as a viable method of conducting business, as I believe they will, then ultimately the world may see its businesses forming sectors in a physical sense as well as a collaborative one. Economic-geography gives a very valid example when it talks about the Silicon Valley phenomenon: In the 1990s, several computer-related companies set up there and ultimately became highly successful, which in turn led to all those aspiring to work in computer-related fields to try and find a job there. This meant (and still means) that any company wanting to hire people to work with computers had to go to Silicon valley if they wanted to hire the best, and also to more computer-related companies moving there permanently for the same reason/

To put it simply, businesses of a similar nature had begun to ‘cluster’ in the area of Silicon valley, and they continue to do so, which leads me to believe that in the future all businesses will create ghettos for themselves, even if they aren’t quite so literal and physical as the Silicon valley case.

The collaborative clusters effect in business does not seem to be losing its pace; if anything it is gaining strength the longer it lasts. This is rapidly becoming the new face of business, and any company which does not fall in line will suffer from the lack of collaboration, eventually finding itself closing down from sheer lack of connections.

Agreed?

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