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Competitive advantage is not created within a single firm alone. Efficiency in internal operations is essential but not necessarily sufficient to compete globally. Factors external to the business are increasingly important. Each firm is inherently part of a “cluster” of activities made up of firms along the value chain as well as related and supporting organizations e.g. research and development, finance, worker skills, infrastructure. In general, clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions in particular fields that compete but also cooperate. A cluster may include industries that share similar workforce, input, or infrastructure needs. In addition, a cluster may have more to do with the output of the cluster industries. Clusters may also be defined by complementary or interdependent industries: one may produce what another needs. It has been demonstrated throughout the world that strong clusters ensure sustainable competitive advantage and that this strength has managed to help countries improve drastically on their global competitiveness.

One region that is currently developing a very attractive multimedia cluster is San Francisco, California. The cluster is constantly evolving as telecommunications and computer technologies combine in a rapid fashion. Defined broadly, the multimedia cluster is the creators, producers, and distributors of software and hardware that integrate video, sound, text, and graphics. This integration is all done in a digital medium to produce a multimedia product or service. Currently there is an estimated 2000 multimedia or multimedia-related industry firms concentrated in the San Francisco area.

The major components of the multimedia industry s potential cluster in San Francisco are categorized as follows:

Supplier Sector

Technology providers – These are the producers of the enabling technology and include firms in computer hardware and software, consumer electronics, and digital communications. Examples include: Apple, Creative Labs

Multimedia developers – These are the integrators and developers of the “media” itself and include artists, writers, programmers, animators, interface designers, and others. Examples include: Broderbund, Crystal Dynamics

Content providers – These are the providers of information presented through multimedia and include film, TV and video entertainment companies, print publishers, news organizations, and information systems service providers. Examples include: LucasArts Entertainment, HBO

Community Infrastructure

These are the shared resources that contribute to and benefit from the multimedia potential cluster. This infrastructure is comprised of research labs, universities, training organizations, investors, associations, accountants, and other professional services providers that either contribute to the development of the product or engage in using the product. Examples include: DesignLink, Pacific Bell

Final Product Sector

Education – An increasing number of schools and training programs are developing and employing multimedia technologies at all instructional levels. In addition, the combination of multimedia and telecommunications technologies has enabled the expansion of the classroom to include remote locations miles away and has offered new interactive learning opportunities for students. Distance learning relies heavily on video conferencing capabilities, and is therefore reliant on the development of multimedia software.

Business communications – The business market has several areas where multimedia technology is applied. Video conferencing and document sharing, training, and sales presentations are potentially significant applications of multimedia.

Entertainment – The entertainment market is driving the development of new multimedia and related technology, especially computer-generated graphics. As can be clearly seen today, most motion pictures use multimedia applications in some form or another to amplify an effect or to create an imaginary concept.

San Francisco s potential multimedia cluster has the capacity for success due to numerous reasons. The multimedia and related industry workforce present in San Francisco has a large technical and creative labor pool, with the presence of innovative individuals that adapt pretty well to the fast paced advances in this field. Also, the level of multimedia technology in San Francisco is considered one of the most advanced in the world, with new technologies in multimedia being created through the research facilities and universities present in the geographical area, which are funded mostly by capital ventures from large firms and to a smaller extent through government funding. This research is facilitated by the fact that there is an abundance of multimedia professional organizations, events, and publications that introduce, study, and promote such emerging technologies in San Francisco. In addition, there is a strong network of several active industry organizations that ensure the usability and functionality of these technologies in today s market.

One of the most important factors in increasing the chances of success for this potential cluster in San Francisco are the actions of local and federal government in relation to the cluster. For the cluster to grow and expand, government should organize joint industry-government sessions to inform potential investors about the cluster, and at the same time promote the cluster s potential for success to attract more investors. At the same time regulatory and taxes policies should be relatively altered to a certain extent to help in the growth of the cluster. Another method that government can follow to help the expansion of the cluster is to assign capable government members to the specific industry cluster. These representatives keep the cluster informed about state policies, collect industry information the state uses for analysis, and promote state and local policies that help strengthen the cluster.

The firms that are present in the cluster can also take certain procedures to ensure the efficient growth of their cluster. One important action should be to integrate the labor skills of the workforce in the cluster to ensure effective use of these skills throughout the cluster. In addition, all the firms should standardize the technology they use to avoid compatibility problems or conflicts in software or hardware. This will ease movement of inputs, outputs, and processes inside the cluster, hence increasing its efficiency. Also, the firms should participate in the government organized informational sessions to ensure that consumer awareness of this cluster will increase.

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