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The Dutch Flower Cluster

Solution Id Length Case Author Case Publisher
2783 2040 Words (8 Pages) Michael E. Porter, Jorge Ramirez Vallejo, Fred van Eenennaam Harvard Business School : 711507
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The worldwide cut flower business has historically favoured the Netherlands, and the Netherlands exports 60% of cut flowers worldwide. In 2009, two major Dutch flower auctions were Flora Holland, the largest cut flower sale. The cut flower industry's auctions are where researchers, growers, exporters, wholesalers, and retailers work together. The Dutch Flower Cluster has faced severe issues recently. Emulation, technology advances, logistics challenges, government policy changes, and more have compelled the Dutch to innovate and compete fairly in the global flower market. Stakeholders wanted the Dutch flower business to keep functioning worldwide, move away from the auction model, not increase tariffs and trade obstacles to competition, and not reduce government restrictions. Dutch flowers are a global leader despite rising costs and competition, and they must grow internationally to be competitive and profitable. For the same reason, the Dutch should not raise tariffs and trade obstacles to international, competitive flower farmers. The Dutch should also use new technologies and abandon tralatitious auctions, which can simplify purchases, improve retailer loyalty and even attract new businesses.

Following questions are answered in this case study solution:

  1. Who are the main actors in the cluster? What are the key institutions for collaboration, and what role did they play in the development of the cluster?

  2. How did the Netherlands build the most competitive flowers cluster in the world in a country with a cold and cloudy climate?

  3. How has the Dutch cluster sustained its leadership position for so long? What changes took place? What were the main innovations developed by the cluster? What role did government play in achieving this cluster leadership? 

  4. Why had flower production internationalized over the last few decades? How are the flower clusters in various countries connected? How do they compete?

  5. What are the challenges facing the Dutch cluster in 2011? In terms of cost, how does it compare with other clusters? Is the Chinese flower cluster an opportunity or a threat to the Dutch flower cluster?

  6. What recommendations would you make to FloraHolland? To the Dutch government? To a major grower?

Case Study Questions Answers

1. Who are the main actors in the cluster? What are the key institutions for collaboration, and what role did they play in the development of the cluster?

The Dutch Flower Cluster is dominated by the Association of Wholesale Trade in Agricultural Products (VGB) and the Aalsmeer Bloom Auction (VBA). The VGB contains all cluster components, including growers, auctions, and consumers. This agency, which works with producers, safeguards flower quality through government-mandated labour agreements and technological improvements. Marketing and logistics are being enhanced, and as a result, they helped to enhance the auction process. The VGB also assists dealers and customers in gaining a better understanding of the products they buy. Furthermore, VBA is an essential actor inside the cluster and is also an important institution for the cluster as a whole.

Even though the auction is the only step in which the items take part, it is still in charge of bringing everything together. Even before it united with Flora Holland and claimed that designation for itself, it had a reputation for being the centre of the Dutch Flower Cluster. Although producers are not obligated to participate in the auction process, most of their blooms are sold. Flowers cultivated in the Dutch Cluster and flowers grown in other clusters from other nations make their way through the auction. As a consequence, these flowers are distributed globally. The auction mechanism contributed significantly to the cluster's growth by permitting its spread into global markets.

2. How did the Netherlands build the most competitive flower cluster in the world in a country with a cold and cloudy climate?

The Dutch have a long tradition of growing flowers, dating back to the 17th century when they began importing tulip bulbs from Turkey. This marked the beginning of the country's flower gardening industry. Since then, the flower business in this nation has bloomed and become one of the most significant and most competitive globally. Through its export industry, the Netherlands sends millions of flowers and plants to countries worldwide each year. These destinations include both developed and developing nations. Several aspects have led to the flower industry in the Netherlands becoming as successful as it is at present. These aspects include: One of the most important considerations is the nation's location within Europe; due to its central position. Flowers may be delivered to marketplaces located all across the continent with a great deal of ease. Additionally, the Netherlands is home to a highly developed infrastructure, which makes it possible for the country to provide flowers to both local and international markets in a timely and effective manner. This is made possible by the country's well-developed ports, airports, and roadways.

Compared to the weather in other regions of Europe, this nation's climate, although gloomy and frigid, is somewhat agreeable. The use of greenhouses, in conjunction with the Netherlands' generally mild temperature, has made it possible for the country to raise a wide variety of flowers throughout the year. The Netherlands' flower business employs many people, including growers, breeders, merchants, and specialists in logistics. The labour force in the Netherlands is substantial and highly skilled. The flower sector in the Netherlands has long profited from the country's long-standing culture of innovation and entrepreneurialism, which brings them to the last point. Companies operating in this industry are consistently looking for innovative approaches to enhance both their level of performance and their degree of competitiveness in the market. Because of this, the Netherlands has been able to keep its place at the forefront of innovation in the floricultural business, which places it at the top of the global rankings.

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