3.3 Clusters in Ecuador
The business structure of Ecuador is composed mostly of micro, small and medium sized enterprises (see Figure 3.1), and so the creation of competitive advantage, unlike the large firms, is limited by the lack of economic and technological capacity. In this context SMEs depend on the close relationship with their immediate environment, i.e. its articulation with other companies and institutions with which they can create productive and competitive synergies.
Figure 3.1:Business Structure of Ecuador
Source: Survey of Manufacturing and Minery, 2007
According to the indicators of the World Economic Forum in the last four years, Ecuador has been located in the last places in the index of competitiveness, which could be related to a low level of association between companies. Indeed, Ecuador occupies the place 91 of 142 of how prevalent and well developed and deep clusters are. Ecuador presents a weighty average of 3.2 in a scale from 1 to 7, in which 1 equals non existing and 7 widespread in many fields. In comparison of the global mean (3,6), Ecuador is 0,4 points. This can be explained because the competition is based on the exploitation of comparative advantages, i.e. price and cheap labor. However, globalization has influenced companies to understand that only through innovation and value creation, they are able to generate competitive advantages at national, regional and global levels, which creates conditions for business partnerships (Hernández and Dávila , 2003).
After reviewing the concept of clusters and the relevant experiences in Latin America, it is possible to analyze what is happening in Ecuador. A survey of mining and manufacturing from the year 2010 elaborated by the National Institute of ...
... middle of paper ...
...vering and in 2011 it reached 850 million USD. It is worth to mention that the tourism sector has been potentiated the last years due to an increment of the international spending of the BRIC countries (Brazil, Russia, India and China). “Emerging economies continue to lead international tourism expenditure, with all BRIC countries except India, reporting double-digit growth. China posted an extraordinary 31% increase in spending, while the Russian Federation (+28%) and Brazil (+15%) likewise saw a sound increase during the period” (World Tourism Organization, 2013 )
According to Institute of Promotion, Exports and Inversion (PROECUADOR, 2012) in the tourism industry there are 49 associations which are composed by hotels, restaurants, farms, different chambers and municipalities working to attract and provide adequate service to both domestic and foreign tourists.
“ Ecuador Business > Economic Overview & History,” Ecuador Explorer, http://www.ecuadorexplorer.com/html/business_in_ecuador.html, vie we d on 18 November 2004.
Increased global trade has intensified competition in amongst businesses all over the world. Finding and capitalizing on the most efficient sources of finance, trade and production is what gives a business or even a country a competitive edge over other international entities. Corporations have reacted by targeting the labor market and reducing money being spent on labor intensive activities. This led to a series of global events and trends ranging from downsizing of labor forces to outsourcing manufacturing activities to developing countries with lower wages and even automating processes through technological advancements to minimize use of labor. Global economic changes caused countries to shift away from the Industrial Age activities of manufacturing which was predominantly unionized.
De Wit and Meyer (1998) refer to market tendency towards homogeneous variety and tighter international linkages as globalization. The need for global strategy is outlined by the fact that companies are subject to global forces and consumer demands. As a consequence, firms are faced with a challenge of modifying their existent strategies to gain and sustain their competitive advantage in a rapidly changing environment. A well-designed global strategy can help a firm to gain a competitive advantage, that as identified by Sumantra Ghoshal of INSEAD can arise from Efficiency, Strategy, Risk, Learning and Reputation (Appendix1). Therefore, to create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition.
In 1999, following the transition to civilian rule and after an inspirational visit to Brazil to study the emerging manufacturing sector, the business made a strategic decision to transit from a trading based business into a fully fledged manufacturing organization. In a country where imports constitute the vast majority of consumed goods, a clear gap existed for a manufacturing organization that could meet the 'basic needs' of a vast and fast growing population.
After the initial shock I was more interested in what effects Intel has had in Costa Rica economically, socially and politically. In particular, did the move of Intel into Costa Rica have positive or negative consequences on the small country? In this paper I will examine the dynamics of the relationship between Intel and Costa Rica and will consider the implications of this interaction for large corporations relationships in developing countries. Using the case study of Intel in Costa Rica I will use a costs-benefit analysis to show why foreign direct investment has positive effects on the host economy.
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
In 2000, about 2.1 million tourists visited. In 2008, the tourism increased to 4.218 million. In 2009 it decreased by 11%, only 3.8 million tourists. 13% of tourists increased at 2012 leaving it with 6.84 million. The last study of visited tourists in 2012, more than 6.8 million tourists arrived!
In today’s world, we’ve attained one the most advance economies the world has ever seen. Transactions have become more efficient and the world can make exchanges from any location. Economies of countries are now intertwined due to international business and alien companies. Companies would find themselves starting in one part of the world, then creating firms and expansions all over the globe. A lot of these reasons are for global competition, which is unescapable due to the internet and resource distribution, availability, and cost.
Incorporation of SMEs and International companies to better define, penetrate and gain access to both local and international
the author offers a theoretical framework, which outlines the underlining factors that contribute to national competitiveness. Michael Porter’s work was met with contrasted views. While some academics praised the model for its wealth of information and the convenient framework it generated (Greenway, 1993), many other academics in international business criticized the model for its theoretical flaws and lack of empirical evidence.
World Tourism Organization UNWTO. International Tourism Exceeds Expectations with Arrivals up by 52 Million in 2013. World Tourism Organization UNWTO. N.p., 20 Jan. 2014. Web. 6 Mar. 2014.
Global Competitiveness As the world becomes a smaller place, economies are shifting away from national economies to global economies. Robert Reich, Ira Magaziner, and Michael Porter each offer a different view of how a company remains competitive in this global economy. Reich stresses the difference between American-owned corporations and American competitiveness. Magazine highlights the growing need for innovation and the avoidance of national complacency.
The economy can be clearly identified as the most beneficial aspect of tourism. “According to recent statistics, tourism provides about 10% of the world’s income and employs almost one tenth of the world’s workforce” (Mirbabayev, 2007). In Australia alone, Tourism contributed $87.3 billion in 2012, and employed 908,434 (7.9%) people (Kookana & Duc Pham, 2013). Tourism is “one of the most profitable and rapidly developing industries in the world” (Popushoi, 2004). Every year the number of tourists increase dramatically and consequently the revenues from tourism will increase substantially.
Is tourism an industry and if not, what is it and how can it be defined? To answer these questions we need to find the definition of industry first. An industry is a group of firms producing products and/or services that are close substitutes for each other(……). To be considered as an industry, it must meet three factors -- individual businesses, revenues of those businesses, and a common product. Now let’s see what tourism is. However, there is no single definition, that is to say no agreement on what tourism should be. There are some reasons: tourism includes a number of diverse sectors (e.g. transport, accommodation, attractions, other services); tourism includes a number of academic subjects -- some argue that as a subject tourism is conceptually weak; difficult to establish strict boundaries around tourism both as a business and as an area of academic study; weak data sources which make comparisons between countries difficult.
Tourism is the one of economic and social activities that increasingly vital. Number of travellers domestic and international is increasing. In fact, several countries in present world develop tourism sectors as primary sector which generate national income. According to Salah Wahab and Cooper (2003). Tourism is also sector which involves role that mutually link between government, private sector and also public.