Comparative analysis of company case studies

The research analysed how cluster firms tend to structure their organization of manufacturing activities between the cluster and the global scenario, as well as the forms of governance adopted. Moreover, the related innovation activities were also considered and in particular how cluster lead firms approach and manage new product development. Table 9.4 presents in detail the internationalization strategies of the six case studies analysed.

Concerning the internationalization of production, all case studies have located their production in the cluster. At the same time, however - except for Moroso - all of the firms have also invested in the development and management of international manufacturing activities.

The companies’ different strategies can be analysed and compared considering three main aspects: 1) the governance of the value chain, where the choice is between hierarchical models or outsourcing - relational, modular or captive (in line with Gereffi et al., 2005); 2) the location of the production, both in the form of hierarchy or outsourcing; 3) the reasons why to maintain (backshore) the production in the cluster.

From the viewpoint of the governance of value chain (see Table 9.4 and Figures 9.1, 9.2, and 9.3), Arper and Giorgio Fedon & Figli have invested mainly in FDIs (to better control operations and quality output) with limited recourse to global sourcing. On the contrary,

Company

Aku Italia

Diadora Sport

Arper

Moroso

Giorgio Fedon & Figli

De Rigo Vision

Production

location

(hierarchy)

Italy (cluster) (re-shoring) Romania

Italy (cluster) (re-shoring)

Italy

North Carolina

Italy (cluster)

Italy (cluster and other regions) (leather cases, accessories) Romania (bags)

China (cases)

Italy (cluster) China

Japan (some lines)

Supplier location

Italy (cluster) Romania

Italy (cluster) and rest of the World

Italy

China

Vietnam

Mainly Italy

Italy

China

Italy (cluster)

China

Japan

Forms of

governance

(upstream)

Local sourcing: relational Global sourcing: modular and captive

Hierarchy (FDI)

Local sourcing: relational Global sourcing: captive

Local sourcing: relational Global sourcing: relational Hierarchy (FDI)

Local sourcing: relational

Local sourcing: relational and captive Global sourcing: captive

Hierarchy (FDI)

Local sourcing: market/captive Global sourcing: captive/market

Employees in operation dept.

  • 30 (cluster)
  • 300 (Romania)

46 (cluster)

60

n.a.

140 (cluster) 120 (Romania) 1000 (China)

600

Location of the design function

Global

Cluster

Global

Global

Cluster/Global

Global

Location

Cluster

Cluster

Cluster

Cluster

Cluster

Cluster

of product China

development

process

Governance of value chain in the case studies analysed

Figure 9.1 Governance of value chain in the case studies analysed: the Montebelluna cluster Source: Authors.

Governance of value chain in the case studies analysed

Figure 9.2 Governance of value chain in the case studies analysed: the furniture cluster Source: Authors.

Governance of value chain in the case studies analysed

Figure 9.3 Governance of value chain in the case studies analysed: the Belluno eyewear cluster Source: Authors.

De Rigo Vision has completely outsourced manufacturing activities at the global scale, while in-house production is carried out only at the cluster level and limited to selected brand products. Aku Italia adopts different forms of governance, recurring to FDIs as well as global sourcing (both captive and modular, in the same countries of the FDI location). Nevertheless, as regards employment related to manufacturing activities, it is possible to observe that production carried out in-house within the local manufacturing system counts a limited amount of human resources compared to foreign subsidiaries. In general, the scale of the international production is much higher than the production carried out at the cluster level (i.e. Giorgio Fedon & Figli produces 50 million cases each year in China, while in Italy the production is mostly for low volumes of luxury cases and handcrafted items).

When considering suppliers’ location, firms evaluate suppliers’ expertise and quality, but also production costs; in this way, they combine sourcing from the cluster and other Italian regions - mainly managed through relational forms of governance - with global sourcing from low-cost countries (within the European Union and also the Far East). Compared to the other case studies, Moroso has developed a strategy focused on Italy characterized by artisanship as a peculiarity of its manufacturing processes. Moroso stresses the Made in Italy origin of its products by emphasizing the hand-made side of production, which is possible through internal competences as well as small suppliers located close to the headquarters and with whom it is easy to interact. At the same time, all of the companies consider as strategic the fact of maintaining a presence at the local level, where suppliers can be managed mainly through a relational model of governance, fundamental for dealing with complex activities and innovation processes. In fact, local suppliers’ competences should be considered in relation to the need of high-quality and/or complex and innovative products that require customization and interaction with customers.

The location within the cluster is the result of a historical path and a link with the firms’ social fabric. Giorgio Fedon & Figli or De Rigo Vision maintain the production at the local level because of the embeddedness in the local context. Said companies are interested in preserving cluster employment due to the lead firm’s social role in the cluster, but also in exploiting the local workforce’s expertise. However, in order to justify the location of operational processes in a high-cost area such as Italy (and the region of Veneto), the mentioned firms have carried out an upgrading process of their productions focusing on high-end and luxury products. This is consistent with the request of selected global customers who ask for Made in Italy production. In the case of Aku Italia, the cluster firm has explicitly implemented backshoring processes to bring back to the cluster manufacturing activities previously carried out in other European countries (Romania). Diadora Sport production is mostly located in the Far East and Europe, but recently the company has decided to reopen an old factory in the cluster to produce high-quality sneakers. Reasons for this choice are related to the need of improving the control over the production in terms of quality performance linked to the exploitation of the Made in Italy effect. This is particularly true for Diadora Sport that did the history of many shoe products over the last decades. When the owners of another famous cluster company (Geox) purchased in 2009 the company that was in crisis, the new CEO decided to reintroduce the production of high-end products and limited editions (recently eco-shoes too) at the cluster level in order to reinforce and relaunch the Diadora historical brand. This was possible also by exploiting the machineries already available in the former operation department. Arper has invested to internationalize its manufacturing processes beyond its cluster location, but for other reasons. In particular, it has selected another important area for furniture production: the furniture cluster of High Point in North Carolina. This area is a major productive context for furniture production in the USA. The location of a subsidiary has allowed Arper to enter in the US market proposing customized products (contract), and to be close to main customers, becoming ever more effective in logistics. In the meantime, it has invested in increasing the cluster production’s efficiency and quality by improving the degree of automation in the operational department, thanks to internal R&D-based knowledge applied to its machineries and plant processes.

It is important to note that the case studies innovate their products by recurring to global inputs for design, collaborating with international designers or studios. At the same time, however, product development is managed, generally speaking, within the cluster, through a dedicated internal department. Hence, the cluster is still the place where critical activities are located, which then require managing the interaction among design, innovation and operations (and suppliers) accordingly. It is worth noting however, that in the case of Giorgio Fedon & Figli, the firm has replicated its design department in China (within its Chinese subsidiary) in order to manage product development processes more efficiently and to be more consistent with international market requests.

 
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