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Open presentation _PPT 578KB_ - OMIC - Ontario Mineral Industry

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Open presentation _PPT 578KB_ - OMIC - Ontario Mineral Industry Powered By Docstoc
					Resilient Clusters
Ontario Mineral Industry Cluster Forum



                                         April 29, 2005
                      Overview

                       Clustering, and its relationship with productivity, competitiveness and
                        prosperity


                       Roles and relationships between industry, government and civil society


                       Addressing the risks that come with the rewards from clustering




Filename/RPS Number                                                                               1
Prosperity: Seven Forms of Capital

                                                                                     Cultural
                                    Financial
                                                                            Attitudes, Beliefs
                         Money, Financial Systems

                                                                                      Human

                                   Man-Made                     Social      Health, Skills
Physical
                         Infrastructure, Machinery
                                                                                      Insight

                                                                            Data, Pattern Recognition
                          Natural Endowments

                         Natural Resources,
                          Natural Environment
                                                                                   Institutional

                                                                            Legal and Regulatory Framework,
     Source: Harrison and Huntington, Culture Matters, p. 270                Connective Organizations



                                                                                                               2
Two Approaches to Creating a Competitive Cluster

Comparative Advantage

                 Competitive                                             Operational                               Competitive
                   Assets                                                 Systems                                   Strategy

                 (“Physical”)                                      (“Conserve Resources”)                         (“Lower Prices”)
                 natural endowments                            • ―assembly line‖ systems                    • price-, volume-driven
                 man-made infrastructure                       • wholesale distribution                       competition
                 financial capital
                                                                • ―master strategist,‖ heavy                 • all customers
                                                                  regulation                                 • basic services
                                                                                                             • independent companies
Competitive Advantage

                  Competitive                                            Operational                               Competitive
                    Assets                                                Systems                                   Strategy

                   (“Social”)                                          (“Maximize Value”)                         (“Differentiate”)

            •   skilled human capital                              • flexible systems                        •   value-driven competition
            •   trust                                              • tailored logistics                      •   specific customer segments
            •   learning institutions                              • shared vision between                   •   high quality experiences
            •   unique insights                                      public and private sectors              •   partnerships

 Source: Adapted from CAG Ltd., Building New Competitive Advantages to Restore Bermuda’s Tourism Community




                                                                                                                                              3
The Houston Oil and Gas Cluster
                          Upstream                                                                         Downstream

                                                                                Oil                                                     Oil            Oil
                                                                                               Oil          Oil           Oil
                                                                              Trans-                                                 Wholesale       Retail
    Oil & Natural Gas                  Oil & Natural Gas                                     Trading      Refining   Distribution    Marketing
                                                                             portation                                                              Marketing
     Exploration &                      Completion &
      Development                         Production                           Gas                         Gas           Gas
                                                                                                                                                      Gas
                                                                                                Gas                                     Gas
                                                                                                                      Transmis-
                                                                             Gathering       Processing   Trading                    Distribution   Marketing
                                                                                                                         sion




                Oilfield Services/Engineering & Contracting Firms




Equipment Suppliers                        Specialized                                    Subcontractors                            Business Services
                                       Technology Services
(e.g. Oil Field Chemicals,                                                                  (e.g. Surveying,                         (e.g. MIS Services,
Drilling Rigs, Drill Tools)           (e.g. Drilling Consultants,                            Mud Logging,                           Technology Licenses,
                                    Reservoir Services, Laboratory                       Maintenance Services)                       Risk Management)
                                                Analysis)


                                                            Specialized Institutions
                                        (e.g. Academic Institutions, Training Centers, Industry Associations)


    Source: Professor Michael E Porter, HBS


                                                                                                                                                            4
Benefits of Partnership


Revenue
                                              Ways in which partnership can
                                              increase profits:
                                    Profit
                                                 Complementarity
Costs                                            Access to new customers
                                   Salaries
                                   Wages
                                   Benefits      Advantages of scale
                                  Operating      Learning from each other
                                   Costs
                                                 Bringing together unique
                                  Financing       capabilities
                                    Costs
                                                 Making allies of competitors —
                                Government
                                 Charges          neutralizing threats

Source: Alliance Advantage, Doz and Hamel




                                                                                   5
Web of Furniture Activities to Satisfy Customer Needs

                          World-Class                                          Tradition,
                           Academy                                          apprenticeship at
                           Designers                  Acceptable patent      manufacturers
                                                         protection                              High skill working with wood,
                                                                                                             leather
         World-renown
           brands
                                                                              Crafts-             High skill working with cloth,
                                     Design                                                             glass and metal
                                                         Unique Designs       manship
Designers study in
   Paris, Italy
                         Some customized
                                                                            Skilled, high-                Computer-aided
                            design for
                                                                            wage workers                   manufacturing
                             domestic
                            customers



  Annual product line              Flexibility                                 Service
                                                          75% average
      changes                                           industry capacity
                                                            utilization


                                                                                      Consumer design,
            Shorter cycles to bring new    Narrow product ranges at                   decorating, other
               products to market               individual firms                          services




                                                                                                                              6
Implementing Cluster Initiatives

                                    Four Types of Initiatives


                                     – Organizational and Institutional Capacity


                                     – Linkages


                                     – Strategic Leadership
             Cluster
             Strategy                – Ability to Learn and Adapt

           Corporations




                                                                                   7
A recent Booz Allen survey highlighted the growing
importance of strategic security for CEOs
                                                 Booz Allen Security Survey

                 Booz Allen Overview                                                   Key Takeaways

  Assessed impact of Sept. 11th on senior manage-ment’s            Increased concern for day-to-day operations
   view of security, their operations and relationships with          –   75 % expressed concern about vulnerabilities from
   federal and local government authorities                               routine business activities (e.g. mail processing,
  Conducted by RoperASW on behalf of Booz Allen in                       travel, physical security)
   November-December, 2001                                          Increased risk of supply chain disruption
  Interviewed 72 CEOs, presidents and chairpersons in US             –   50% recognize the high vulnerability of supply chain
   firms across three size groups by annual revenues:                     operations and are beginning to review alternatives
            – $1B - $2.5B (39%)                                     Renewed focus on disaster planning and business
            – $2.5B - $5B (33%)                                      protection
            – > $5B (28%)                                             –   75% of executives are reviewing insurance policies
                                                                          and disaster planning strategies
  Financial firms constituted 50% surveyed, retail/
   wholesale (14%), energy & transportation (10%);                  Relationships with gov’t authorities are strong
                                                                      –   75% of participants do not believe Sept 11th will
  65% were services businesses and 28%
                                                                          change their working relationship authorities
   manufacturing/mining and construction
                                                                      –   However, most believe there will be a greater focus
  75% of the firms surveyed generate at least 90% of their               on coordinating physical security
   domestic revenue from the US




                                                                                                                                 8
    Interdependence risk is highlighted by the roles that industries
    play in providing security and continuity to the economy ...


                                                                                   Consumer
             Public Infrastructure          Financial Services                     Products                      Shipping                   Health Care

                                                                               Prevent systematic           Prevent contaminated
                                                                              contamination of key          material from entering
                  Prepare contingency       Detect illicit funds flows          consumer goods                                       Establish plans/ measures to
                                             and prevent harm to                                               shipment flows
                  plans for disruption to                                                                                             respond to health-related
                  traffic infrastructure       capital markets                                                                                  attacks



   Security
  “Chain of               Prepare           Detect                   Protect               Prevent                Respond             Recover
Responsibility”



                                                                                         Public Transportation
                      Airlines                                Energy                                                                 Telecom

            Develop measures to                       Protect against damage                Prevent damage to public            Provide the ability to
            detect and prevent                        to critical infrastructure           transportation facilities and        recover/ restore vital
            security breaches                                                                     passengers                  communications services




                                                                                                                                                               9
It is also evident within extended enterprises and clusters...

                               Pharma / Biotech “Extended Enterprise”


                                                                                            Key Concerns
                                                                                  Dependence on external
              Research Institutes              Marketers                           entities, resulting loss of control

                                                                                  Loss of intellectual property

                                                                                  Patient privacy violations
                                                            Customer-facing
   Academia                                                content aggregators
                                                              (e.g., WebMD)
                                                                                  Increasing volume and
                                                                                   complexity of information flows

                              Pharma and                                          Multiple regulations applicable
                                                                                   to the same information,
                           Biotech Companies                                       depending on:
                                                               3rd Party           – who is using it
    CROs                                                    Administrators /       – for what purpose (e.g.,
                                                                 PBMs                  research)

                                                                                  Increasing liability for actions of
                                                                                   extended enterprise partners
                                           Pharmacy
                  Physicians              Wholesellers /
                                            Retailers




                                                                                                                    10
  …which, while essential to growth and profitability, expose firms to
  risks they cannot control directly
                           Extended Enterprise                       Indirect Control                   Indirect “Threats”
                                                                                             Restrictions in flow of raw materials
                                                                                             Changed customer preferences
                                                                                             Regulatory restrictions
                                                                                             Public infrastructure disruption
             Distribution Channels                               Suppliers                    (telecom, transportation
                                                                                             Adverse media exposure
                                                                                             Market downturn

Government
 Agencies
                                                      Direct Control
                                                                                                               +
                                                                                                        Direct “Threats”

                Plant                                Employees
                                                                                             Employee injuries
                                                                                Strategic    Network intrusions/hacking
                                                                                Partners     Equipment damage
                                                                                             Intellectual property theft
                                                                                             Disruption of manufacturing
                                     Buildings                                                facilities
Customers
                                                                                                              =
                                                                                                   Potential Consequences
                Intellectual                     Networks                                      Lost revenue
                  Property                                                                     Declining shareholder value
                                                                                               Deteriorating operating performance
                                                                                               Financial penalties
                                                                                               Legal exposure
                                                                             Financial         Loss of competitive advantage
                                                                              Markets          Declining goodwill and brand equity
                    Public Infrastructure                                                      Regulatory action
                                                                                               Bankruptcy




                                                                                                                                      11
Summary

  We care about clustering because it helps to improve productivity, competitiveness and
   prosperity



  Realizing these benefits requires both cooperation and competition
   – Industry, government and civil society must design their cooperation in specific, not general,
     terms
   – Actions produce results



  Clusters must ensure they are resilient enough to match the risks that interdependence brings




                                                                                                      12

				
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