Cluster Activation

At WMJ Kelleher & Associates we assist clients in the area of ‘cluster activation’. The work of Professor Michael Porter on the topic of competitive advantage has had a major influence on business leaders and governments throughout the world. Porter argues that the structure and evolution of industries and the ways in which companies gain and sustain competitive advantage lie at the core of competition. He has developed frameworks for understanding competition and has endeavoured to bridge the gap between theory and practice.

Porter’s early work focused on competitive advantage being gained by not only WHAT companies did, but HOW they did it. In his later work Porter broadens the analysis of competitive advantage to include location. The competitiveness of locations is rooted in the nature of the business environment they offer firms. Porter argues that competitiveness arises from the productivity with which firms in a location can use inputs to produce valuable goods and services. Firms may gain competitive advantage from WHERE they locate due to the existence of a phenomenon, which Porter has described as “Clusters”. Clusters are geographic concentrations of firms, suppliers, related industries and specialised institutions that occur in a particular field in a nation, state or city. One of the key features of a cluster is the value of the system as a whole is greater than the sum of its parts.

Porter has further observed that successful economic development is a process of successive economic upgrading, in which the business environment in a nation evolves to support and encourage increasingly sophisticated ways of competing.  Porter states that Clusters are a new way of looking at the economy, competitiveness and can spur innovation and growth.

AT WMJ Kelleher & Associates we have utilised Porter’s framework and approach to clusters to analyse the opportunities for food businesses in a particular location to further deepen their competitive advantage.