Murano Glass Cluster

1. Murano Glass Cluster MICROECONOMICS OF COMPETITIVENESS CHACON, Eduardo DRAKE, Emily MAIOR, Daniel ROBINSON, Diane TREMBINSKI, Kristen MBA 2011 Under the Supervision of Professor Ingo Böbel, PhD

2. Italy • Total Area: 301,333 km² • Neighbors: France, Switzerland, Austria, Slovenia • Languages: Italian (primary), German, French, Slovenian • Religion: 90% Roman Catholic • Population: 61 million • Median age: 43.5 years • Population growth rate (2011): 0.42% • Birth Rate: 9.18 births/1000 people (lowest in Europe) • Main Exports: machinery, transport equipment, chemicals, clothing and wine • Government: democratic republic 2 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

3. Veneto • Total Area: 18,399 km² • Population: 4,931,430 • 8th largest region in Italy (out of 20) • 3rd wealthiest • One of the most developed and industrialized • Most visited: 60 million tourists/year • Most productive agricultural sector in Italy • One of Italy’s most important wine growing areas • Strong fashion industry • Independent state: Venetian Republic • One of the greatest immigrant-receiving regions in the country • 454,453 foreigners (2010) – mainly Romanian & Moroccan 3 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

4. Italian Economy • GDP: 1.782 trillion USD (2010) • GDP per capita: $30,700 USD (2010) • Labour force: 24.97 million people • Unemployment: 8.4% (2010) Trade: U.S & other EU countries 4 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

5. Venetian Economy GDP: €121,113 million 24,000 companies (metal & mechanics) Capital Goods: hide tanning, marble & granite GDP per capita: €30,038 Agriculture and food industry Consumer Goods: Clothing, footwear, eyewear (80% of all Italian eyewear manufacturers), furniture, art of goldsmith Major contributor to GDP of Italy 132,500 artisan companies 3.5% unemployment rate (2008) Metalworking, building, fashion, glassware, artistic ceramics Tourism = +€10mi to Venetian annual income 5 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

6. Murano Glass Cluster • Factories and family owned/operated studios • Pride in heritage >>> Rivalry • Century-old technique (lampworking) • Main purchasers • Tourists • Architects and interior designers • Museums • Restaurants • Large corporations • Cheap knockoffs (China) • Low-cost/good quality products • Historical focus on neighbours as competitors # OF GLASSBLOWERS 6 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

7. Mission • To promote Murano trademark worldwide • +50 glass producers consortium (1985) • Trademark (1994 law) • MuseoVetraio • Murano Glass art schools • Craftsmanship from generations • Short-term courses 7 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

8. Factor Conditions 8 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

9. Demand Conditions Country of origin (fashion, design) +60% of Murano glass products 9 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

10. Historical Evolution of the Cluster • 15th & 16th centuries • Cristallo: process of making clear glass • 20th & 21st centuries • Great production • Worldwide recognition • The Glass Museum • 8th century: • Venice as prominent glass-manufacturing center • 1200’s: • Trade association • Glassmakers Guild • Importation law • Murano as a premier glassmaker • 17th century • Slow decline: competition from England, Bohemia and France • 1854 • Antonio Salviati • School for glassmakers • Archive’s exhibition • 18th & 19th centuries • Increasing competition with new techniques • Worsening political climate • New laws: more expensive importation and exportation All furnaces used for glassmaking were required to be moved from Venice to Murano: - Risk of fire or secret protection? 10 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

11. Cluster (under)Performance World renowned brand in decorative glass Competition led to stagnation Trade domination Domination built only on monopoly of know-how: instability Geographical integrity Isolation and island size limitations Intensive touristic activity Tourism as a vulnerable industry Open integration (Vitrino Artistic Murano) No cooperation among the companies; calcified ideas Glass school “The only way to learn is through apprentice” 11 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

12. Cluster Competitiveness Veneto: 3rd most wealthiest region in Italy (GDP €139bi) 45 recognised clusters and mega-clusters Exports increased 150% in the last four years Veneto Development Model Strong social cohesion: political and economical Incentive to wider use of communication technologies – 2000 Veneto Net Goal 2006: Net Globe and E-Cluster Exports decreased 25% in 2009 Relocation of factories to Eastern Europe (high costs) Small size of Venetian companies: innovation and R&D Establishment of SME’s Traditional products/methods and technology Globalization and adaptability to changing markets 12 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

13. Recommendations 1. Apprentice programs in the glass schools 2. Articulated aspiration to quality and rigorous marketing 3. More strict monitoring of standard and sales venues 4. Increase cooperation among companies 13 MURANO GLASS CLUSTER | INTERNATIONAL UNIVERSITY OF MONACO – MBA 2011

14. echacon@monaco.edu • edrake@monaco.edu • dmaior@monaco.edu • drobinson@monaco.edu • ktrembinski@monaco.edu CHACON, Eduardo DRAKE, Emily MAIOR, Daniel ROBINSON, Diane TREMBINSKI, Kristen MBA 2011 Q&A Thank you.