Focusing on Regional Competitive Advantage

Module Three

Producing a High Quality Plan: The Essential Components

Evidence-Based

Focused on Regional Economic

Development

Aligned with Vision &

Goals

Broadly Supported

Practical

Team’sRegional

Plan

Overview of Module Three

• Investigate the region’s economic advantage

• Explore regional data to identify regional industrial clusters

• Deliverable: Select industry clusters for further exploration

• HQP: Draft a rationale for industries selected

EXPLORING COMPETITIVE ADVANTAGE

Competitive Advantage

Business shapes the economic value of a

region, but places can help shape, nourish,

and sustain local enterprises and

industry.

Exploring Competitive Advantage

Demand Conditions

Factor Conditions

Firm Strategy, Structure, and

Rivalry

Related and Supporting

Industry

Competitive Advantage Elements

Based on Porter’s Diamond Theory – Porter, M. (1990)

Demand Conditions

What conditions influence demand

for goods or services produced

in the region?

Demand Conditions

Factor Conditions

Firm Strategy, Structure, and

Rivalry

Related and Supporting

Industry

Competitive Advantage Elements

Factor Conditions

• Infrastructure

• Resources & Materials

• Skilled Workforce

Demand Conditions

Factor Conditions

Firm Strategy, Structure, and

Rivalry

Related and Supporting

Industry

Competitive Advantage Elements

Firm Strategy, Rivalry, Composition

• Region’s portfolio of businesses• Entrepreneurship activity and support• Mix of industries

Demand Conditions

Factor Conditions

Firm Strategy, Structure, and

Rivalry

Related and Supporting

Industry

Competitive Advantage Elements

Business and Industry

INSERT YOUR REGION’S CHART

LIKE THIS EXAMPLE HERE

Related and Supporting Industry

Do industries buy and sell from each other regionally?

Do any strong value chains exist in the region?

Demand Conditions

Factor Conditions

Firm Strategy, Structure, and

Rivalry

Related and Supporting

Industry

Competitive Advantage Elements

Value Chain Example

Grape Stock

Fertilizers, Pesticides, Herbicides

Grape Harvesting Equipment

Irrigation Technology

Specialized Publications

Public Relations & Advertising

Labels

Caps & Corks

Bottles

Barrels

Winemaking Equipment

Educational, Research & Trade Organizations

Growers/Vineyards

Wineries/ProcessingFacilities

State Government Agencies

California Agricultural Cluster

Tourism Cluster

Food Cluster

Wine

Source: California Department of Food and Agriculture

OVERVIEW OF INDUSTRY CLUSTERS

Industry Clusters Defined

Similar and related firms in a defined geographic area that share:• Common markets• Technologies• Worker skill needs• Buyer-seller relationships

Two Types of Clusters

• Value chains (Vertical clusters): working together toward a common product

• Competing (horizontal clusters): drawing from the same raw materials, infrastructure, labor force

Auto Industry

Software Industry

Overview of Clusters in Your Region

Understanding ChangesMoving Up or Down

Change in Percentage of

Jobs in Industry over Time

Growing

Declining

Understanding ChangesMoving Left or Right

Relative Concentration of Industryin the Region Compared to the Nation

Less More

Understanding Changes

Emerging• Growth in % Jobs over Time

• Lower Concentration of Industry in Region

Stars• Growth in % Jobs over Time

• Higher Concentration of Industry in Region

Transitional• Decline in % Jobs over Time

• Lower Concentration of Industry in Region

Mature

• Decline in % Jobs over Time

• Higher Concentration of Industry in Region

Location Quotient: Measure of Concentration of Industry

Perc

ent C

hang

e in

Job

s ov

er

Tim

e

Regional Clusters: 2002-2007INSERT YOUR

REGION’S CHART LIKE THIS

EXAMPLE HERE

Regional Clusters: 2006-2011INSERT YOUR

REGION’S CHART LIKE THIS

EXAMPLE HERE

Behind the Bubble Chart

Location Quotient more than 1 = Concentration

INSERT YOUR REGION’S CHART

LIKE THIS EXAMPLE – Move

line to divide 1+ LQ

Behind the Bubble Chart

Industries with Greatest Percentage Growth

INSERT YOUR REGION’S CHART

LIKE THIS EXAMPLE – Adjust red circles

to top 5

Examining the Leaky Bucket

The Regional Economy

Goods or Services Purchased outside

the Region$

Looking at Regional Expenditures

INSERT YOUR REGION’S

CHART LIKE THIS EXAMPLE

Regional Industrial Clusters: Digging Deeper

• Identify the industries within the cluster• Determine if growing or declining• Evaluate regional capacity• Identify potential leakages & opportunities • Determine potential strengthening strategies

Cluster Choices

• Advanced Materials• Agribusiness, Food Processing &

Technology• Apparel & Textiles• Arts, Entertainment, Recreation

& Visitor Industries• Biomedical/Biotechnical (Life

Sciences)• Business & Financial Services• Chemicals & Chemical Based

Products• Computer & Electronic Product

Manufacturing• Defense & Security• Education & Knowledge Creation

• Electrical Equipment, Appliance & Component Manufacturing

• Energy (Fossil & Renewable)• Fabricated Metal Product

Manufacturing• Forest & Wood Products• Glass & Ceramics• Information Technology &

Telecommunications• Machinery Manufacturing• Mining• Primary Metal Manufacturing• Printing & Publishing• Transportation & Logistics• Transportation Equipment

Manufacturing

Examining Clusters in the Region

What industries:• Seem worth exploring further? • Should the region avoid investing for the

future? • May be viable future regional industries? • Are declining but may be worth reviving?

Looking Ahead to Module Four

• Identify the economic leaks in the region• Explore basic avenues for strengthening

clusters• Consider specific strategies within each

avenue• Select potential directions for the region

to explore

Preparing for Module Four

• Draft summary of why industries selected (HQP – evidence based)

• Read the “C.A.R.E. for the Region” flow chart

Final Reflections

What topics did you find most helpful?

What did you find confusing?

What other data do you need?

Other items you want to mention?