British HI-FI Industry Cluster Case Study

8/13/2019 British HI-FI Industry Cluster Case Study

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MarwaNesmaRamyTamer


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British Manufacturer Survived and Prospered in this Market

Key Feature of successProviding a HI-FI Equipment that provide the best

possible sound qualityWhy?

HI-FI Market Segment relay on Quality more thanCost

How?Embraced innovation in order to maintain their

position in the market place


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Large # of HI-FI company in UK (not less than 45 basedon May et al. 2001)


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They are relatively small (25 employee or less) Concentrated in South East of England being clustered in

an arc that stretches from Cambridge through Londonand into Kent, Sussex, and Hampshire

Unlike the Japanese Manufacture, British specialized inHi-Fi Products: Compact Audio System Amplifier Specialist Audio Product CD Players Loud speaker System


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Some British Manufacturers switched toHome Theater and Loudspeakers Systems Key Features was High End Audio Equipmentrather than paying attention to the Modern

display aids In spite of its small size, British Manufacturersare Very Active in their Innovations Significant Innovation such as Stereo Sound,

Small book Shelf Speakers, andflat-Panel Loud Speakers wereIntroduced by Small British Companies


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1992/1993 and 1996/1997 European Imagesand Sound association ranked the BritishCompanies on The Second Place after TheJapanese Companies (according to May et al. 2001) in Terms of # of Awards Granted

1994/1995 and 1995/1997 Small BritishCompanies received awarded approx. equalto what European Companies were granted

Large Japanese Companies (such as Sony,Philips, Canon, etc.) Hired British firms as aConsultant

Home Theater Award 2012/2013 earned byBowers & Wilkins

Audio Award 2012/2013 earned by Audiolab,

DALI EPICON, KEF, etc.


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Flat Panel Loud Speaker Technology that Usedby Japanese Companies were Developedby British Firm NXT

Home Cinema Speaker System Used by Canon wasDeveloped by Meridian


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Phonograph invented by Tomas Edison (American) 1877

Disk Phonograph , Vinyl Record Player Came From America

When Marconi (Pioneer of Radio) Moved to Britain inthe Early part of the Twentieth Century, BritishCompanies gained some Interest in Audio technology

Marconi Established his company Wireless andTelegraphy company at Chelmsford Near London


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A.D. Blumlein developed a Two Channel in Single Diskand Produce Stereo Recording

Alan Dower Blumlein (29 June 1903 7 June 1942) was an English electronics engineer , notable for his many inventions in

telecommunications , sound recording , stereo , television and radar . Hereceived 128 patents and was considered as one of the most significantengineers and inventors of his time

D.T.N Williamson and Harold Leak developed the Amplifier
http://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Electronicshttp://en.wikipedia.org/wiki/Engineerhttp://en.wikipedia.org/wiki/Telecommunicationhttp://en.wikipedia.org/wiki/Sound_recordinghttp://en.wikipedia.org/wiki/Stereophonic_soundhttp://en.wikipedia.org/wiki/Televisionhttp://en.wikipedia.org/wiki/Radarhttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Radarhttp://en.wikipedia.org/wiki/Televisionhttp://en.wikipedia.org/wiki/Stereophonic_soundhttp://en.wikipedia.org/wiki/Sound_recordinghttp://en.wikipedia.org/wiki/Telecommunicationhttp://en.wikipedia.org/wiki/Engineerhttp://en.wikipedia.org/wiki/Electronicshttp://en.wikipedia.org/wiki/England


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This Collaboration Produced and Engineers how was trainedin Armed Forces

Some Of These Engineers developed Civilian Audio Product Ex. John Bowers and Ray Wilkins Have Founded B & W

Loud Speakers in 1960s

1970s new companies were boosted as mass marketconsumer electronics firms (Thorn, EMI, GEC, Rank,etc.)

AS some of these companies rationalized their activities inorder to face the competition with Japan. Engineered and

employee start spin off and start their new companiestargeting new product and new services.


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Q1: What is the Evidence for suggesting that the BritishHi-Fi industry constitutes a cluster?

Concentrated in SouthEast of England being

clustered in an arc thatstretches from Cambridgethrough London and intoKent, Sussex, and

Hampshire

Cambridge

Kent

London

Sussex

Hampshir e


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Q2: How did British Hi-Fi cluster originate?

Formation of BBC (1920s) Setting up National Grid (1926s)

Withdraw interest to radio Provide trained engineer Open Market for wireless sets

These Two Publicly Funded Scheme developed a thriving Amateur Radio Community During the Interwar years andafter

1930s Many Small Hi-Fi Manufacturers were Established

In1960s, Cluster of Small Companies Specialist in Hi-Fimanufacturers established a South East of England Government Invested Largely in Research in Radio and

Associated Electronic Technology During the WW2 This Research was along with Research on Development

of Radars


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Q3: What are spin-off companies and what part did theyplay in the development of Britain`s hi-fi cluster?

Setting up new firms/ own business focusing on a specialistfield decided by employees of existing companies whichspotted market niches for new products/services.Increasing the Spin off Companies, Developing a range ofinnovations in the fields, increase competition, Increase theDevelopment of Britain`s hi-fi cluster


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Q4: What similarities, if any, are there between SiliconValley and Britain`s hi-fi cluster in terms of the partplayed by public institutions in the development of thecluster?No similarities,

Silicon Valley : From the 1890s, Stanford University's leaders saw its mission asservice to the West and shaped the school accordingly. At the same time, thefirms focus on building self-sufficient indigenous local industry. Thus, regionalismhelped align Stanford's interests with those of the area's high-tech firms for theSilicon Valley's development.

Britain`s hi-fi cluster : The formation of the BBC in the 1920s not only fostered

interest in radio, but also provided trained engineers. Similarly, anothergovernment initiative, the setting up of a the national gird in 1926, helped to openthe market for wireless sets, by extending the provision of electricity to all partsof the UK and ensuring a common standard for electrical supply. Both of thesepublicly funded schemes contributed to the development of a thriving amateurradio community in Britain in the interwar years and after.


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Q5: Which of Markusen`s (1996) four types of clustermost appropriately applies to the British hi-fi industry inyour view and why?

Based on the role of different cluster members and theinteraction between them, Markusen (Markusen, 1996), hasdefined four models of clusters.1. Marshallian cluster model2. Hub-and-Spoke cluster model3. Satellite Platform cluster model4. State centered cluster modelBritish hi-fi industry follows the Marshallian cluster model , in

which the cluster is rather homogenous, comprising small firmsthat collaborate with each other, are in direct competition or in asupplier-producer relation. In this model, none of the firms hasthe size and the force to control directly the cluster and only thecommon market and the cluster dynamic define its shape and

development.


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Q6 What evidence is there that innovation is a feature of this cluster?

Despite the late start Britian has in recent years it has been responsible for severalmajor innovations in the field of audio technology.the phonograph was originally invented in US by Thomas Edisson in 1877 and alsolater improvements such as disc phonograph and forerunner of the vinyl-recordplayer were also initiated in America however when Marconi the pioneer of radiomoved to Britian in the early twentieth century he established the wireless andtelegraphy company at Chelmsford near London. A.D Blumlein pioneered the early development of two channels on a single disc toproduce stereo recording, DTN Williamson and Harlod Leak were responsible for thedevelopment of amplifiers .The setting up of the National Grid in 1926 helped to open the market for wireless

sets.

According to May et al.(2001) the amateur input to the industry in which a strongesprit de crops results from the hobbyist and amateur input to the industryIn the second world war has been a big investment by the government in researchinto the radio and associated electronic technology. Much of this was connected with

the development of Radar ,Designed to check the threat posed by Germany U-boatsand aerial bombing by the luftwaffle


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Q7 What evidence is there to suggest that the success of the hi-fi cluster isbased on what Marshall (1890) terms agglomeration economies?

For an industry, the benefits of locating in a densely peopled and highly industrializedsituation. The market is large, but concentrated in a relatively small area. Transportcosts are therefore low, so that many specialized industries can evolve, since localdemand is sufficiently high. Further benefits arise because of functional linkages, andthrough external economies.; international links with other research institutions (MIT,

for example); the research and development which can spin off from these; the highlevels of skills in information technology; the infrastructure supplied by governmentsand utilities; and the brand name : Cambridge. This combination gives the city apowerful competitive advantage.

Though the intensive competition from Japan , these large concerns rationalized so

that skilled engineers left and set up their own businesses focusing on a specialistfield of audio equipment which was pioneered by hi-fi clusters . the process of ever-more specialized companies being spun-off in this way throughout 1980-1990 asemployees of existing companies spotted market niches for new products andservices and decided to set-up on their own, May et al. give the example of Myriad ,manufacturer of amplifiers and tuners spun off from Ad electronics (which was itselfestablished in the 1970 a manufacturer of similar products but aiming for a more


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Q8: If the British hi-fi industry cluster stretches from

Cambridge to Hampshire (120 miles), is it feasible todescribe this as an industrial agglomeration?

Cambridge

Kent

London

Sussex

Hampshire

Concentrated in South east of

England,Specialized in hi-fi industry,Easier mobilityLower transportation andcommunication cost


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Q9: How valid is Martin and Sunley s (2003) critique of

the cluster concept in this instance?

Martin and Sunley critique of the clusters:No rules on how strong linkage needed to be

among industries, and the geographicalconcentration that a cluster require.

Here, the linkage of the hi-fi companies are verystrong, and its geographical concentration in thesouth east of England makes it a best describe fora cluster


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Q10: Martin and Sunley (2003) suggest that one of the

weaknesses of the cluster concept is the extent towhich policy-makers have uncritically endorsed theconcept how valid is that criticism in this instance?

Specializing in hi-fi industry, andGeographical concentration, as well asThe global competition of these companies, andlocal needs for them (Radio and BBC,..etc) makesthis cluster as essential to success in the globaland local economy.

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British HI-FI Industry Cluster Case Study

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