RESIDENTIAL – Michel Porter on Corporate Strategy and Competitiveness, 2010

Team Members: David Valentyne, Riham Hwaidi, Sasa Cvijic, Sphelo Ntaka

Leather Footwear Industry BrazilRKC Team Project

Project Team & Work Distribution

Project Time Frame

Draft review with Prof. Duffill by 26 March

Project Rationale (1)

Brazil is the 5th largest economy on the planet with a population of 180m & occupies a diverse geographic position attracting foreign investment. It boasts the world's largest commercial cattle herd resulting in diverse chain of associated & allied industries. Brazil has been in the leather and footwear industry for over 100 years & boasts the most complete footwear cluster in the world, supported by 800 tanneries. The country cluster supports approx. 1,500 large, medium and small size footwear industries and more than 5,000 micro-companies and ateliers. The footwear chain further features 2 thousand industries of components for leather and footwear, and of industries that produce machineries and equipment. The industry generates 1 million direct & indirect jobs: 400 thousand in the footwear industry; 400 thousand in the footwear retail; and the rest is divided among tanneries, industries of components, and industries that produce machineries and equipment.

This is an industry cluster that can rightfully be considered a giant by any measure.

(1) Resource: http://www.brasil.gov.br/ingles/economy/Investments

Key Content

A. Overall economic performance & cluster composition of the country.

B. Assessment of business environment.

C. Leather footwear industry cluster analysis.

D. Strategies issues facing the leather footwear industry in Brazil.

E. Policy recommendations to all stakeholders in the leather footwear industry in Brazil.

Historical Overview

1) Country Background.

2) Economic Performance.

3) Brazil Business Environment.

4) Background on leather and shoe

industry in the region and the world.

5) Concentration on period 2000-2008.

Economic Performance of Brazil

MACRO-ECONOMIC OUTLOOK

Overview of the Four Major Emerging Markets (BRIC) Neighbouring Countries/Region Analysis of GDP Growth, Change in Employment and Inflation Rate National Efficiency Indicators Labour Mobility National Diamond

Business Environment

Cluster sizing & export dynamics:

At $2 bil,Brazilian leather footwear is small in relative terms to rest of exportsBut remains a giant in terms of industry relationship value to rest of economyFrame Brazils cluster size vs. rest of world Provide situational evidence of cluster dynamics

Brazilian share of export by sector in 2008 Comparison size of other countries leather footwear exports (bubble chart) Explore Brazils reason for size (Any impacting issues to growth) Ability to serve to customers (what are the inhibitors, trends, supply mechanisms & restrictions) How do allied industries play a role in its ability to sustain

Follow and support with Cluster map & supporting industries (horizontal and vertical ) (map)

Export size to world countries (bubble map)

Why these countries & is exposure blocked to other countries for any reason

What is the Return value to Brazil (monetary or otherwise)

How easy is it to achieve exports to these customers (who supports & who acts as adversary / explore why

What are the Trends & what does that means for the future exposure of Brazilian exports

Who are Brazil’s Global Customers:

Indicate who Brazil is trading with… Indicate how this is achieved…

Brazil Global Customers

Competition & Competitors

What are the competitor’s doing (better or worse)

What is their growth trend vs. industry trend

What does this mean in world leather footwear dynamics as as local country dynamics

Cluster Competitive SWOT (diagram)

(1) Context for strategy & rivalry (2) Factor conditions (3) Demand conditions (4) Related & supporting industries

Complete competitor analysis (SWOT)What position does this leave Brazil in….

Cluster Analysis

Historical development, size and performance of cluster

Companies Size and number of companies in the cluster relative to national average Ownership , Market segment and specialization, Suppliers Cluster diamond

Distribution Who are the distributors Difference national / for export What is the ‘Route to market’ (is this the best & most meaningful method)

Specialist education Institutes, universities, R&D Production process improvement

Effectiveness & performance, Application of knowledge