In analyzing the business problem, two problems have been identified from the scenario given in prior. The two problems are “the viability in locating the firm to London’s Canary Wharf and financial district” and “why financial institutions cluster around the financial district despite the high cost”.
These two problems comprises of risks involve in locating financial institutions in a financial district and factors that influences the institutions in making a decision to cluster within the same or related financial industry sector. It also comprises of advantages and disadvantages of clustering that also helps in the decision-making.
In the diagram above, the topic, financial cluster, has been analyzed and categorized into four categories: When, Where, What and Who. ‘When’ shows the time frame of journal articles and reports to use for the research. ‘Where’ includes places that are relevant that could help in better understanding of the topic. ‘What’ helps to identify the relevant information needed in finding the possible solutions to the research problem. ‘Who’ is to identify the relevant people or organizations that are involve in the topic.
With this, research questions can be formed so as to create a focus and to frame which direction this research will be taking. The three research questions are:
- Which important factors influence the firms most in choosing a financial cluster?
- How successful is clustering in creating finance innovation within the cluster?
- How reluctant are firms in relocating to less mature financial clusters or decentralizing?
There are various definitions of cluster due to different types of industrial cluster that has its own characteristics and sustainability potential. But a general definition that has been widely accepted is defined by as, “a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities”. The concept of cluster can be complex since it has been used in different ways for today’s business context
What causes financial firms to cluster? mentioned that the benefits that firms can gain attracts them into the cluster and that contributes to the growth in knowledge and valuable activities within the cluster. Clustering is used as a mean of local and regional development for England’s government and policymakers in regards to London’s Canary Wharf and financial district
Clustering creates several advantages and benefits for firms that are members of the cluster. Firms, especially new entries, are able to grow at a faster rate compared to outside the cluster. Clustering provides business and employment opportunities for local and foreign talents where valuable skills are needed to manage the ever-changing environment in the future Also, firm innovation can be created due to the close proximity of firms in the cluster. This is by the competition faced by firms in competing to attract customers and the...