Custom «Cluster Development» Essay Paper
No single organization can exist successfully in solitude. Every company needs the support of other companies and infrastructure around it for it to succeed for instance, logistical infrastructures, suppliers etc. Cluster development cuts across the board from companies, businesses, institutions to governments. Cluster development not only helps to improve the productivity of companies, but also the economic prosperity of local communities. By developing clusters in their key positions, a firm amplifies the connection of its success and that of the local communities. The result is the sustainable growth and profitability of the firm, which in turn has multiplier effects to the local economy, from job creation in supporting industries to increased demand for secondary services. The key to successful building of clusters by firms in the local communities where they function is through identification of gaps in areas that greatly constraint their productivity such as transport, supplies etc. A company should identify those areas that it can handle single-handedly, as well as those that require collaboration with other companies. Cluster development through collaboration helps firms to create shared value; a concept that leads to sustainable productivity and prosperity of companies and communities.
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The concept of creation of shared value through cluster building is not only beneficial to the companies but to the surrounding communities as well. I totally agree with firms developing clusters in order to create sustainable profitability. Consider Yara, the leading mineral fertilizer company in the world, which decided to fund the improvement of the bad roads in Tanzania and Mozambique to enable farmers to access fertilizers and agricultural inputs. It is important to note that though road building is unrelated to Yara’s business, it is a productivity driver to Yara since with good roads; farmers can easily travel and purchase fertilizers from Yara’s selling outlets. However, not all companies have adequate capital to invest on improving the unrelated areas that are limiting their productivity, and therefore, as much as this idea sounds very good with a lot of benefits, only established companies with good financial back up can adopt it. Besides, the goal of every company is to make profits and that is why I think very few companies will be willing to adopt this idea since it involves huge financial risks without a surety about the period of time it will take for a company to start getting sustainable profits. In conclusion, I would say that the building of clusters is a promising idea that should be tried by companies to fully reap from its benefits.
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