Question

What is the interrelationship of the Porter model with the real world? Please make sure you first understand what a Cluster is, and describe in detail BOTH of Porter's models and why they have been successful. Please identify one cluster in the world and describe in full terms as prescribed by Porter how that Cluster works. Your work needs to be detailed and show both of Porter’s models discussed. You can choose any cluster anywhere in the world, but make sure that it is a Cluster.

Answer 1

Michael Eugene Porter was the American Economist propagated the business strategy of reducing the Cost of Production based on his own publication of the Book "The Competitive Advantage of Nations" (1990). The Economic Theory model framed by the Porter was influenced by the following descriptions of factors which has interrelationship with the Real World.

The term Cluster in Economics refers to the collective advantages of all the firms in each countries competing with their own ideas of implementing with innovative and impressive techniques in producing the Goods and Services. The optimal mix of Inputs are used in the modern Productive Strategy in order to obtain the advantage of Cluster of Economic Techniques in Competitive Business Ventures in all Countries of both Developing as well Developed Economy.

Let us discuss the Cluster example with the detailed description. Cluster can be broadly categorized into two main supporting sections. They are 1) Vertical Cluster and 2) Horizontal Cluster. The Vertical Cluster is mainly focuses on the Unique Assets in which the technical dificulties are removed. For example Using more Robotics in the manufacturing process will helps a lot to produce more Units of the Products in the long-run.

The Internal Economies are coined with the Activities of Robotics in the Process Movement. Using Robotic Technology is the Vast and Mass Task of implementation. It involves Extensive Research and Development Process. Many Industries takes the advantage of the Geographical Advantage on their own Industrial Area. The developed Countries like Japan, China and US are considered as the Prominent Users of Robotics. The Robotics was considered as the One among the Optimal Input used in producing the Goods. Many Countries has its own Industrial Park in which the Advantage of Internal Economies are used. Internal Economies relation of Economic Cluster refers to the Sharing of Innovative Knowledge within the group of Companies with the situation of Perfect Competition. This is also known as Geographical Advantage as already mentioned above. The Economic Cluster also urges the companies to safeguard their competitive Advantage among Global Network of the companies. So The use of Robotis Advantage spread to all the Producers which in turn create the Demand for their products with fine Quality. The Reputation of the Firm also increases.