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10 Types of Business Cluster

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A business cluster is a geographical area that enjoys a sustained competitive advantage in an industry. The following are examples.


A region that is able to attract and retain talented professionals who are in demand on a global basis. For example, Silicon Valley attracts large numbers of software developers. This has lead to a nerdy local culture whereby conversations about technology flourish and local knowledge becomes a competitive advantage.


Large-scale manufacturing regions such as the Pearl River Delta in China that attract a large number of workers. Suppliers are close to each other and local knowledge allows for advantages such as effective price negotiations. Manufacturing techniques and industry knowledge quickly spread between firms.


Financial capitals such as London, New York, Singapore, Hong Kong and Tokyo. Based on factors such as reputation, institutions, infrastructure and quality of life that allows a city to attract top talent and firms.


Clusters of similar retail shops that attract shoppers who find the proximity of many shops to be convenient and stimulating. For example, the Ginza luxury shopping district of Tokyo.


A region that wins a reputation for superior quality for a particular good. For example, the Champagne wine region of France has a reputation for wine production that dates back to the Middle Ages.


A city with a reputation, creative climate and institutions that support a thriving fashion industry such as Paris, New York and Tokyo.


A city with a rich culture that gives it an enduring advantage for tourism such as Paris, Amsterdam and Kyoto.

Night Economy

An area such as New York City's Theater District that offers performance arts, dining and bars that lead to a lively atmosphere at night.


An area such as Hollywood with a cluster of firms and creative climate for producing commercially successful entertainment.


A cluster of wholesalers such as Antwerp's diamond district that handles a high percentage of the world's rough diamond sales.
Overview: Business Cluster
An area with a sustained competitive advantage in an industry based on factors such as local knowledge, reputation, institutions, infrastructure, creative climate, culture and quality of life and economies of scale.
Related Concepts

Competitive Advantage

This is the complete list of articles we have written about competitive advantage.
Absolute Advantage
Bargaining Power
Barriers To Entry
Business Cluster
Business Scale
Business Strengths
Competitive Differentiation
Competitive Parity
Competitive Pressure
Cost Advantage
Cost Innovation
Cost Strategy
Critical Mass
Customer Satisfaction
Digital Maturity
Distinctive Capability
Economic Advantage
Economies Of Density
Economies Of Scale
Economies Of Scope
Experience Economy
Information Advantage
Information Asymmetry
Market Position
Market Power
More With Less
Network Effect
Organizational Culture
Price Leadership
Product Development
Relational Capital
Relative Advantage
Risk Management
Strategic Advantage
Switching Barriers
Switching Costs
Trade Secrets
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