Transcript Project work Feb 29

Exhibit 1: Brazilian share of export by sector in 2007:
Agricultural Products
Metal Mining and Manufacturing
Automotive
Oil and Gas Products
Business Services
Chemical Products
Aerospace Vehicles and Defense
Hospitality and Tourism
Forest Products
Heavy Machinery
Transportation and Logistics
Speciality
footw ear
5%
Motor Driven Products
Production Technology
Footw ear parts
5%
Plastics
Furniture
Communications Equipment
Footw ear
90%
Leather and Related Products
Tobacco
Footwear
Source – Institute for strategy & competitiveness http://data.isc.hbs.edu/iccp/
Construction Materials
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
At 2 billion USD exports the Brazilian leather footwear itself is small in relative terms to rest of country exports
More importantly it remains a giant vital kingpin to the Brazilian economy because it is served & feeds many
other related supporting sector industries in a complex & integrated relationship
(1) Integrated backward & forward business linkages contribute to 100 times its own overall GDP value
(2) The volume of people employed in related industries supporting the leather footwear sector is
phenomenal & an empowering trait to closing the poverty gap particularly in a developing country
where the role of small businesses can play a big role
Exhibit 2: Footwear Cluster Export Value by Nation, 2007
Brazil is the world’s 6th largest footwear exporter at 2.5% contribution
($2 billion value) of overall global footwear exports
Source – Institute for strategy & competitiveness http://data.isc.hbs.edu/iccp/
Exhibit 4: Location of the ‘Sinos valley’ leather footwear cluster within Brazil
‘Sinos valley’
leather footwear cluster
http://www.brazilintl.com/maps/mapbrregions/mapbrregions.htm
Exhibit 3: Integrated Cluster map Sinos valley leather footwear
Cattle
ranching
Livestock
Backward supply
Shoe
designers
Technical
consultants
Financial
consultants
Transporters
Specialized
tools
Labor
Slaughterhouse
Tannery
Processed
leather
480 leather footwear
manufacturers in the
Sinos cluster (ex. few)
Novo Hamburgo
Campo Bom
Parobé
Igrejinha
Sapiranga
Domestic market
Other apparel
 Retailers
& leather
 Distributors
 Wholesalers related shops
 Vendors
 Schools
Advocates & marketing
 Charities
support
Demand & forward linkages
Branding services
Software
& supporting
Admin services
Chemical
& glue
Rubber
Institutional linkages
Universities/colleges
Government institutions
Component
Industry suppliers
Machinery
Industry suppliers
National industrial
training school (SENAI)
Shoe trade fair
organization (FENAC)
National industrial
training school (SENAI)
Foreign export markets
Private technology centre
(CTCCA)
 Export/ forwarding agents
 Export companies
Small business centers
(SEBRAE)
 Big direct retail companies
(Walmart / Carefour)
Business professional
associations (ACI)
Trade magazines
Industry newspapers
Technical services
Source: Interpreted from multiple sources & adapted by RKC project team
Strengths in creating an environment for
sustaining foreign global position
Firm strategy
& rivalry
Factor
conditions
Related &
supporting
industries
Demand
conditions
Government
Weaknesses in infrastructure & local
conditions to develop global position
Vertical integration & co operation of competing
companies well documented
 Balance of power initially with seller due to
low cost production costs as main asset
Diffusion & erosion of the systemic cluster
contribution & development
Companies put own goals before local strategic
cluster plan
Balance of power eventually shifted to buyer
Strong presence of local manufacturers
Abundance of raw materials
Available cheap labor
Local density of suppliers & support mechanisms
Low overall production costs
Little strategic view as to which elements of the
marketing mix would be harnessed long term
to grow market share & improve margin
(price, promotion, product or place)
High connection between related industries
Vertical integration & co operation of
High record of efficiency between suppliers
& manufacturers
Slow independent evolution of sellers to big
global customers undermined the cluster perf.
Local mechanization at production stage did
support improved costs
Strength in volume of manufacturers to cluster
development
Cluster did not move from supply model to
marketing & design export
Lack of information on a strategic or collective
nature can impede future cluster synergies
Did not reasonably intervene or deter cluster
development
Horizontal cooperation between private
sector & government did not really develop
 Little government recognition or support
Source: Facts from World leather market @ http://www.factbook.net/leather_components.php
& then adapted by RKC project team
High intrinsic
value
High end tailored product
High design factor
High level of technology
Strategic marketing element
Product differentiation
Some defined USP
Italy
Germany Belgium
Spain
Low intrinsic
value
Brazil
China
Price sensitive
Mass market appeal
Low production costs
drive end offer
Low barrier to entry
Is this position sustainable?
Is this a strong position to fill ?
Is this a clearly defined position?
Final product still decided by
some economies of scale
Government policy
Access to distribution
High barrier to entry