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Deniz Eylem Yoruk
School of Slavonic and East European Studies University College London d.yoruk@ssees.ac.uk Science and Technology Policy Research Unit University of Sussex d.e.yoruk@sussex.ac.uk

Abstract The growth of firms has been dealt with in many ways. Today the clothing firms in developing countries have not much choice than to become involved in the international production networks (IPNs) that have accelerated in the last two decades. However, these networks have provided the supplier firms with considerable knowledge transfer. The extent of assimilation of knowledge by the suppliers has determined the success of these firms in upgrading and even catching up. The Romanian clothing company Braiconf SA is a success story in its own right. This paper examines the network development and level of upgrading of Braiconf SA in the context of its external knowledge acquisition and assimilation. The case study does not provide any substantiating evidence for network alignment in the Romanian clothing industry. By and large, Braiconf has been growing in the last five to six years at a relatively slow pace but with stability.

February 2002
This paper has been prepared within the project ‘The Emerging Industrial Architecture of the Wider Europe; the Coevolution of Industrial and Political Structures’ funded by the ESRC programme ‘One Europe or Several?’

*The author is grateful to the marketing director Mr. Dan Savescu and production manager Ing. Mariana Blesneac in Braila who were interviewed and provided valuable information during the fieldwork in Romania (April - May and October - November 2001).

namely a joint venture with an Italian company. such as Romania. is a success story in its own right. The Romanian clothing company. The extent of assimilation of this knowledge by the suppliers has determined the success of these firms in upgrading and even catching up. Section 2 looks at one of the channels used by Braiconf to access external knowledge.but with stability. By and large. This phenomenon is not isolated from other elements of growth. This paper examines the network development and level of upgrading of the firm in the context of its external knowledge acquisition and assimilation. Today the clothing firms of developing countries have little choice than to join the international networks that have accelerated in the last two decades. However. Braiconf SA. The first section provides a profile of Braiconf SA. Braiconf has been growing in the last five to six years at a relatively slow pace . these networks have contributed to the supplier firms in terms of considerable knowledge transfer. There has been discussion that firms in East European countries. The success of most firms has been due to their quick response to the changing economic environment. The case study does not provide any substantiating evidence for network alignment in the Romanian clothing industry.Introduction The growth of firms has been dealt with in many ways. The degree and pace of transformation of existing resources and capabilities in the CEE firm become determinants of whether it will succeed in growingmore quickly than other firms. the quicker the firm becomes successful/a leader in its industry. The third section examines the development of technological capabilities by Braiconf through acquisition and assimilation 2 . The earlier restructuring takes place. There is much evidence to corroborate this thesis. however there are also exceptions. After the 1990s. firm restructuring has become the focal point of the research in the transition economies. have been lagging behind in undertaking necessary restructuring when compared to Central European countries.

2 Original Brand Manufacturing (OBM) is the manufacturing and marketing of own brands of the firms with their own technological and design capabilities. 4 The upgrading pattern for CEE clothing companies suggested by Yoruk (2001) is OEM -OBM in the domestic market. the paper offers some insights regarding Braiconf’s development in the Romanian market through its recent emphasis on regional sales and distribution system. It could be considered as being at the beginning of development in its domestic market. the company was listed on the RASDAQ (Romanian Stock Exchange) and 27% of the 60% of publicly owned shares were up bought by the British Investment Funds. particularly in making it a leader in its specialised market. Then the local firm is called Original Equipment Manufacturer.ODM and OBM in the foreign market. 1 In very general terms. Original Equipment Manufacturing (OEM) is a specific form of subcontracting where the local firm provides a product according to the specifications the foreign (customer) firm requires. 3 . 40% of its shares were allocated to its employees through the Association of Employees. It definitely needs more time to further extend its activities to foreign markets. to be sold under the brand of foreign customer firm. and 60% of the shares were distributed to the Romanian public. with little or no assistance from the foreign customer. the Romanian Reconstruction Capital (located in Douglas Isle of Man) and Porto Romania Impex Tortola Insulele Virgine SA (located in the Virgin Isles). Before concluding. In January 1997. The conclusion demonstrates how Braiconf has upgraded to original design manufacturer (ODM)3 status in the foreign market and has become an original brand manufacturer (OBM) in the domestic market4. The current total number of shareholders is 7252 (RASDAQ 2001). It became a trading company in 1991 and was privatised in February 1996 under the mass privatisation in Romania. This section discusses the positive influences of the foreign linkages as well as how they are translated into its business in the domestic market. Company Profile: Braiconf SA Braiconf SA was founded in 1950 as a state-owned clothing enterprise. 3 Original Design Manufacturing (ODM) is the design and manufacturing of domestic firms. in line with the rules of the mass privatisation.of external knowledge in the context of foreign-based Original Equipment Manufacturing (OEM)1 and domestic-based Original Brand Manufacturing (OBM)2 .

The management of Braiconf aims to retain its majority during the process of abolition of the Employees Association. Secondly. rather than getting bank loans with extortionate interest rates. First of all. Not all companies were lucky enough to be able to raise finance through their own resources and were trapped into debt financing. The main concern of Braiconf is to prevent the Investment funds from becoming majority shareholders and having the right to govern the company. At the time of transition. New departments such as design. Mrs. expanding sales and opening new markets. Braiconf’s new departments have added much to its success in becoming an own brand manufacturer (OBM-domestic) in Romania and an original equipment manufacturer (OEM) in Europe for West European customers. Braiconf was able to finance itself from its own resources. she left Braiconf. they realised that their productivity affected the end of year dividends. privatisation radically changed the organisational approach of employees to the company. There is a human resource department composed of eight people who are 4 . Early development of these activities in Braiconf helps to explain the success of the companyalong with several other reasons. but returned in 1993 as a result of changes in management.The shareholder structure is to change in 2004 when the Association of Employees is to be abolished. which hindered their growth. In 2001 the number of employees involved only in manufacturing was 2751. The president of Braiconf. The organisational restructuring within Braiconf occurred mainly during the 1991-1993 period. was part of the management of the company before 1989. When employees became shareholders. Anica Nisioi. through establishment of a joint venture with an Italian company. Employees The total number of employees has stayed around 3500. marketing and sales were all founded in this period and gained momentum after 1993.

There is also a laboratory inside the quality control office. was very important and their regular participation in production decisions was valued. arranging training courses. The design unit is supported by two technicians 5 . Braiconf has people in the prototype development department who have taken university design courses . Quality control The quality control mechanism is highly developed in Braiconf. Braiconf established its own design unit alongside the marketing and human resources departments. especially over technical matters. At every stage of production quality control is conducted by five people in the quality control unit. Design capabilities In the early 1990s. one experienced and a 1989 graduate of the most specialised university on textiles and clothing. Interlining parameters are determined for each fabric used that might need specific temperature and pressure. despite the fact that the company does not have an ISO certificate. the University of Iasi and one young designer. Before 1990. starting with the entry of fabrics and ending in the warehouse. made up of both management and production workers. Braiconf has sent the employees on courses and financially supported their trainings since the transition. Braiconf has had a tradition of co-operation between departments. etc and who collaborate with a private organisation called CEDRU to apply human resource management in the company. The everyday routine testing of the fabrics with foreign and Romanian equipments is carried out by one employee. which they have tried to further improve after transition.responsible for recruitment. which conducts tests on resistance and physical mechanical experiments on thermo-adhesive fabrics. consulting the workers. The design unit focuses on style development and employs two designers. They have benefited from the designs of foreign customers in terms of following contemporary fashion. As well as its designers. This tradition was translated after the transition into specific rights and obligations of employees through a private association of employees.

Chambers of Commerce and so on. 6 . Saitt. such as Romanian Embassies abroad. A team comprising the commercial manager. and terminated in October 2001. The JV terminated with the sale of Braiconf’s shares to Saitt. The financial turmoil in Braiconf as well as the difficulty in maintaining market share in the early 1990s led the company to seek this cooperation. This department has been influential in expanding its foreign customer base and achieving own brand recognition in Romania. Doria Confezione. Joint Venture with Italian Partner Saitt: External Knowledge Channel In 1991. The JV seemed to be the right legal solution for both partners for 10 years as by law it was exempt from tax on profits for 5 years for all its production and the foreign partner was exempt from taxes if the JV continued for more than 5 years. Braiconf established a joint venture. The marketing manager is a young manager who works at developing networks with public organisations. Saitt was looking to invest in Romania through greenfield investment. Marketing The marketing and sales department was established as early as 1991-2 and consists of 19 people including the staff in Braiconf’s own shops. Braiconf had some empty space in its factory at that time due to under-utilisation of its capacity. But the marketing manager attends international fairs to introduce the company to potential customers. with the Italian men’s shirt producer. the marketing manager and the members of the design team take the final decisions regarding the collections. Braiconf does not enter its collections in fashion exhibitions in national or international fairs.who prepare prototypes of the designs drawn by the designers. that potentially could help in developing the foreign customer base through effective and costless advertising of the company abroad. when most of other companies were suffering from lack of finance. The joint venture was contracted for ten years between 1991-2001. but was having difficulty in finding something suitable.

A 30:70 joint venture between Braiconf and Saitt resulted in the establishment of Doria Confezione. It brought state-of-the-art machines and the skills for producing shirts to the production facilities of Doria Confezione. Advances in the Technological Capability of Braiconf: Knowledge Acquisition and Assimilation in the context of OEM and OBM of Braiconf Braiconf specialises in the light garments segment of the clothing industry. dresses without linings. At the end of the day. and blouses for women. However. it helped to inject money into and develop the business for the production of shirts for the Italian market. As the JV (Doria Confezione) hired workers from Braiconf. 7 . Saitt also determined the production technology to be used. The annual capacity of the company is almost at around 3-4 million products. for European markets. Men’s shirts. and the rest accounts for women’s wear. and whose production was solely for export to Italy. It also maintained the machines in the production units and changed them every two years. account for 72% of the production capacity. however. where it moved its production materials. which was managed by Saitt. being the main production line. Braiconf saw the JV relationship with Saitt as a solution to its financial problems at the time. It produces shirts for men for the Romanian market and shirts for men and women as well as skirts. Braiconf benefited from this relationship in terms of a know-how transfer: It has learned how to make better shirts and how to organise the production line more efficiently. The application of the joint venture was not ideal as Saitt was predominant in the relationship. Saitt bought two other companies in Braila prior to the termination of the JV with Braiconf. the JV with the Italian company was little help financially to Braiconf. as well as renting space. Saitt was professional in men’s shirt production.

October 2001.2001. It accounts for 95% of its total production with own brand manufacturing being only 5%. their contribution to total income differs significantly over the years. the income of Braiconf from exports has shown a decreasing trend since 1997 whereas that of own brand manufacturing has been increasing each year. Braiconf has the potential to grow through learning by interacting. Yet the interaction is limited to foreign production networks where Braiconf plays the role of supplier. There is no doubt that OEM becomes unprofitable compared to OBM in the domestic market and thus has led Braiconf and other competent clothing companies.6% 28. 8 .3% 18.5% *Interview with Braiconf SA. Share of Exports (OEM) and OBM in turnover of Braiconf.8% 2000 71.4% 2001 (JanSept)* 81. The firm has turned this role to its advantage with successful assimilation of the knowledge it has acquired through these interactions.8% 74. The ‘assimilation’ categories are borrowed from (Bell 1997) (see Table 2).2% 26. (%).5% OBM 31. 1997 . Table 1.The bulk of Braiconf’s production consists of OEM for foreign customers (processing exports to European markets).2% 25. Thus.7% This paper examines the knowledge acquisition and assimilation of Braiconf in the light of its foreign linkages. Share in turnover 1997 1998 (%) Exports (OEM) 68. Although there has not been much change in the share of these two types of production by volume. to increase their share in Romanian market through reviving their own brands. Table 1 shows the share of exports and own brand manufacturing within the total income of Braiconf between 1997-2001. Compared to many clothing firms in Romania. Source: (RASDAQ 2001) 1999 73. It can be seen that Braiconf has gone through the first three categories of assimilation as a result of the learning opportunities it has grasped via integration into the international production networks of global brand manufacturers.

such as are incorporated in new ‘generations’ or ‘vintages’ of product or process. Degrees and definitions of ‘assimilation’ in Bell (1997) Degrees of assimilation Definition of assimilation type by (Bell 1997) the acquisition of technology in the form of designs. Twothree years ago. which it sees as a means to improve the quality of processing. This year. Operational Replicative Adaptive Innovative Source: Bell. and so forth. and so forth. blouses are more complex than shirts with regard to the fabric used and relatively different designs. Braiconf has invested in special sewing machines. an effort to upgrade the machines in the factory led to improvement of each stage of garment processing through acquisition of new additional machinery every year. processes and production organisation. Science and Technology Policies for Transition Countries.Table 2. specifications. Budapest: CEU Press. the investments were mainly targeted towards changes to sewing and pressing machines to state-of-the-art machines. Dyker. the cutting room is to be centralised through the purchase of 9 . equipment. Braiconf has prepared an investment plan to cover machinery acquisition. Thus. In terms of finishing. Technology Transfer to transition countries: are there lessons from the experience of the post-war industrializing countries? In The Technology of Transition. The once manual operation of ironing is now done mechanically by a machine that has replaced 7-8 people. It was imperative to develop and strengthen its relationships in the European market. Apart from the finishing unit. components. Machinery acquisition associated with operational assimilation After transformation. which combine two consecutive operations in one. M. their finishing units are separate and require special equipment. developing and acquiring the knowledge and capabilities needed to make more substantial developments in the technology. In 2003. together with the skills and know-how needed to use and operate the technology at its design level of performance. improvement and re-design of the initially acquired products. the production process for shirts and blouses is the same. 1997. going beyond replication to acquire or develop the capabilities needed for incremental adaptation. edited by D. subassemblies. the investment in special machinery used in finishing of shirts has renewed the finishing line. going beyond the static use of given technologies and acquiring or developing knowledge and capabilities needed to reproduce (elements of) the technology either for repeated investment in similar facilities or in order to diffuse specifications and know-how to local suppliers of materials. As well as ordinary sewing machines.

According to Pavitt’s (1984) taxonomy of sectors. Integration into Global Production Networks associated with Replicative Assimilation Being fashion producers. The shift of production facilities to low cost countries has reinforced the institutional change in the production process of the clothing industry. the design skills of the global brand manufacturers have located them at the focal point of the industry. Braiconf acquired a CAD system relatively late in 1999 for the pre-assembly stage of production for design. brands and marketing (Pavitt 1984). It has also changed the trend of the relationship of Braiconf with foreign customers positively towards ODM.automatic cutting machine. which is explained by Bell (Bell 1997) as shown in Table 2. This results from the characteristics of the clothing industry. In this sense. The acquisition of new machines that aimed at decreasing production costs through rationalisation has also added to productivity improvement. innovations come from suppliers of equipment and materials. marking patterns and markers in the technical department. Braiconf falls into the category of “operational assimilation”. Thus the performance of clothing companies hinges upon the extent of their capability to develop the latter skills and activities which are strongly supported by the use of advanced technology but do not totally rely on it. then. the clothing industry is categorised as supplier-dominated. design capabilities. these international production networks have become organisational learning processes for the subcontractor 10 . In supplier-dominated sectors. It is understandable. which are directed towards process innovations. grading. which has included domestic clothing firms as subcontractors (Original Equipment Manufacturers) of the global Original Brand Manufacturers. As extensively discussed in the literature in the context of the apparel and electronics industries. The activities of supplier-dominated firms are not based on technological advantage but on professional skill. This acquisition was a direct result of interaction with its foreign customers. why the competitive edge of the clothing industry has shifted to fashion design in recent decades.

Some customers do 11 . After transition. They all made a 1-2 day visit to Braiconf prior to going into business with Braiconf. and leave the rest to Braiconf to cut. adaptive and innovative assimilation (Bell 1997) in accordance with the upgrading patterns in the clothing industry (Yoruk 2001). Most of them however do not now exist or have changed their subcontractors since transition. Some customers supply all the materials related to production and requires only sewing and finishing (cut-make) from Braiconf. Braiconf needed to find new foreign customers. These companies have continued their relationship with Braiconf mostly because of its reliability. Some customers provide only the fabric and some accessories. had worked with them for 26 years. Recently Braiconf has worked with some very well known and important West European brands. and in general the suppliers are not very aware of in which tier of this network they position. subcontractor companies might display other assimilation categories. the company aims at developing long lasting trust relationships with its customers in order not to suffer shake out in the crisis periods. in which case assembly is the main task. One such customer. As a strategy. 1994). Gereffi 1994. The result is that Braiconf is just one of the suppliers within an international supplier network of these global brand manufacturers. which all adds to the development of its technological capabilities needed in its relationships with them. the marketing manager regularly attends international fairs in order to find new foreign customers. Before 1989. The relationships it established in 1991-92 still continue over the last 8-10 years. which diversified its production among the CEE countries.clothing companies (Gee and Kuo 1998. and in its own brand development at home. Braiconf engages in different types of OEM relationships with its foreign customers. replicative. Seidensticker. Hobday 1995. to sew and to finish (cut-make-trim). At the product development level. experience and flexibility. Braiconf had relationships with foreign customers from West European countries. Thus.

some customers choose from Braiconf’s collections for sale under their own brands. before production can begin. which have struggled for a long time to offset the bad image of low quality production in the market. Metro. such as Migros. service firms. This ability might result in emergence of linkage capabilities5 (Lall 1992) in Braiconf provided that these linkages are not confined to simple commercial relationships. These are mainly the multi-purpose international retailers. These kinds of improvements in the level of relationships with customers are very important in the case of Romanian clothing companies. component or raw material suppliers. This extra effort has a significant influence on Braiconf’s ability to develop linkages as it is expected to buy materials from foreign as well as Romanian suppliers. so Braiconf deals with the purchase of fabrics. Apparently. This leads Braiconf to function as Original Design Manufacturer (ODM) in the foreign and domestic market. These changes appear to be a result of successful replicative assimilation (see Table 2) by Braiconf of its relationships with foreigners. and the like. and technology institutions. Finally. the upgrading pattern of Braiconf is shaped by its focus on the ODM type of relationships in the foreign market as well as its enhanced position as an OBM in the domestic market. The appearance of other East European countries with lower labour costs and poorer quality sewing capabilities like Ukraine and 5 Lall (Lall 1992) defines linkage capabilities as the skills needed to transmit information. whereas today ‘Made in Romania’ isincluded. etc. Braiconf has had experience as an ODM in the foreign market through its Swiss customer and aims at enhancing its position in the European market as an ODM.not bother with the purchase of the materials used in the production. trims. as a result of improvements in the design capabilities of Braiconf. foreign customers never mentioned the location of production on their labels. and receive them from. skills and technology to. 12 . This kind of diversified relationships with the export market shows not only that Braiconf is capable of responding to differing demands from foreign customers but also that there have been changes in the reliance of foreign customers on the technological capabilities of Braiconf. subcontractors. consultants. Since 1999. In the early 1990s.

The meetings with the foreign customers before the start of production on a particular garment might end up with an ad hoc idea in regard to sewing or finishing technique. Ernst. The domestic firms receive recommendations and information free of charge about the rapidly changing fashions.Mytelka 1998).Moldova has relatively upgraded the position of Romania in foreign markets. T. However. New specialised machines that companies bring along to apply a new sewing technique are ready technology for the domestic company. the foreign customers. and L. which thread or interlining to use with a particular fabric. For instance. it is still difficult for them to compete with Asian countries and Turkey where high quality products are produced at low cost. have laboratory facilities to make tests on which type of fabric is appropriate for which style of garment.Ganiatsos. and the like. both the JV with the Italian firm and foreign customers have provided knowledge in efficient organisation of the production line and in new techniques in garment processing. as well as in 13 . The literature discusses the advantages of OEM relationships for domestic companies in developing their capabilities through learning (Gereffi 1994. which have developed a supplier network instead of undertaking their own production. there is extensive external knowledge transfer to the domestic companies. Gee and Kuo 1998). new sewing techniques. The main reason for the competitiveness of Asian countries and Turkey against Central and East European countries comes from their strong domestic textile industry which supports the clothing industry (Duruiz and Yenturk Coban 1988. and so forth. in the case of Braiconf. how many stitches are needed or what kind of machine to use for a specific stitch. In some cases. the quality foreign fabric suppliers. Braiconf has successfully managed to assimilate this external knowledge in a replicative way. The results and benefits of this in-house research by foreign customers are directly transferred to Braiconf in order to achieve the quality they seek for their designs and collections. sequence of the processing. the new machine provided by Benetton which produces a hand-stitched effect. for example. Moreover.

These different working habits add to the knowledge of the domestic companies with respect to how the organisation of business matters to the smooth running and success of other operations like production. textile machinery and equipment. to which the domestic companies need to adjust as quickly as possible. Braiconf therefore learns from every foreign customer. Braiconf’s engineers are Romanians who have graduated from Iasi. in spite of its dominance in the development of technological capabilities within Braiconf. Braiconf satisfies its consultancy requirements through interaction with the Faculty of Textile Engineering at the University of Iasi. such as how many machines are needed in a production line for a specific product. machine and marketing capabilities. marketing and so on. The marketing director of Braiconf has mentioned that the relationships with foreign customers give Braiconf a significant advantage in aquiring design. The university organises casual meetings and seminars as well as providing technical advice. techniques. and the fashion industries. or how many workers would efficiently increase the quantity of products at low cost (seeking productivity). Yet. The company extensively uses international fairs in textiles. Each customer has its own way of working. learning in Braiconf is not confined to its relationships with foreign customers.regard to marketing and organisation. 14 . It accumulates the knowledge it gains from each customer and successfully uses it in its relationships with other foreign customers. which is the only university in Romania with a strong tradition in the textile and clothing industry dating back to communist times. Knowledge integration within the company takes place in every unit from design to production to marketing.

in the last six years. Sergio’s production reflects the Western type of shirts that fall between formal business and casual style. First it diversified the Braiconf brand into five lines: classic. Braiconf is not an exporter of own brand products. Braiconf has been a trademark in the Romanian market. casual and sport with 30-40 styles in each line associated with different types of fabric. since 1950. The unstable economic conditions in the internal market prevent Braiconf from feeling secure enough to divert its main activity completely to own brand manufacturing. and which have become popular within the OEM orders of foreign customer. it has strengthened its presence in the domestic market with new brands and new own designs which target a new group customers. in 1996 Braiconf launched the new Italian sounding brand. to meet the demand arising out of the changing trend in business life.Own Brand Manufacturing in Domestic Market associated with Adaptive Assimilation Following the intensive integration into international production networks of global brand manufacturers. In recent years. However. Every year it tries to increase the production capacity of its own brands by developing new styles and collection. the company needed a new image to take off in the Romanian market. For this reason. A team to deal with design and marketing of this new brand has been established within Braiconf. particularly amongst the younger generation. with efforts to improve brand recognition in the internal market. the firm tries to balance its activities in the external and internal markets. fashion. So. Market research in Romania 15 . It was a question of refreshing the image in the internal market in a similar way to what was needed in the foreign market. namely young businessmen who want to be seen as professional and to look smart as well as feeling comfortable. Braiconf has enhanced its own brand and developed a new brand for the Romanian market. standing for good quality. business. Sergio.

This has also had a significant impact on the rising domestic market share of Braiconf in the last few years. Germany and the UK. which is a deficiency in the organisation of the state enterprises of the communist regimes. Yet the price is positively correlated with the quality level and in terms of flexibility in response to small and large orders. which makes the market profitable and open to change.e. for example non-iron and easy-care finish materials. and has been registered as a brand in Italy. Sales and distribution This department has given priority to developing the distribution system of Braiconf. It has its own shops in Braila (its home town). foreign suppliers are much better than Romanian suppliers. i. This has helped the progress of the company in rapidly establishing its market position in Romania. Moreover. The fabrics used in the new shirt designs of Braiconf were totally new to the Romanian market. As a consequence of successful adaptive assimilation of designs introduced to the company by foreign customers and of fabrics by foreign suppliers. It also owns shops-within-shops (a stand for Braiconf brand products in a shop) in Constanta (tourism centre 16 . Braiconf has introduced its new (adapted) designs that are produced with new fabrics imported into Romania. young businessmen. The use of foreign production materials in producing own brand products is commonly seen in Central and East European countries. Bucharest (the capital and a big market) and Iasi (the main textile centre in the country). Foreign materials bring other advantages to Braiconf in the domestic market. Sergio has been designed with the aim of bringing opportunities to export. Braiconf mostly uses foreign fabrics and trims as it considers foreign supplies to be of high quality compared to Romanian supplies. These materials have been appreciated by the target group of Braiconf clients.in the mid-1990s has shown that there is a gap in the Romanian market for such a new style of shirt.

This has increased the domestic market share of Braiconf considerably. and to OBM-domestic in the domestic market. and so on. Conclusion Braiconf is a Romanian clothing company that has benefited from being involved in international production networks. Braiconf distributes its own brand shirts to wholesalers and to privately owned shops (individual retailers). helps Braiconf to take appropriate steps/action in its design development and marketing strategy. it sells and distributes only through its own shops. what kind of fabrics are preferred by consumers. Braiconf had no means to find out the final destinations of its products. To offset the lack of information with respect to its market. Compared to its Polish counterparts. Previously wholesalers collected the shirts from the factory and distributed them to retailers. Braiconf is going to open an own and a shops-within-shops soon. Braiconf has developed a consolidated regional system of sales and distribution. Learning from these relationships and integrating this learning into company strategies have allowed the company to grow in the last few years. The case study of Braiconf has shown how the networks of a company. In addition. This system enables Braiconf to have close contact with the domestic sellers who are in direct relationship with the consumer.on the Black Sea coast). Braiconf may consider opening common shops with this tie producer. Braiconf’s 17 . This kind of assimilation of knowledge within firm is a step in its upgrading from assembly to OEM and to ODM in the foreign market. Since 2000. In 2001. confined to foreign production links. Recently Braiconf has established a strategic distribution partnership with a domestic tie producer. Ties and shirts are promoted together in the Braiconf shops and the shops of the tie producer. can help its growth provided that the company assimilates the knowledge it gathers from these relationships. Depending on the extent of their cooperation. and Brasov and Cluj (the main cities in the South and North respectively). Feedback from retailers about what is in fashion. brands of Braiconf account for half of the men’s shirt market in Romania.

It pursues generic expansion in the light of its foreign production links. it has grown at a steady rate in the last five to six years. it is hard to think in terms of any possible network alignment other than successful network development (see Summary Table 3).growth has been slow and has been focused on the further development of its foreign links as a way to locate itself in a more profitable segment.e. It is neither aware of other types of network that might be beneficial for its growth nor does it have a supporting institutional environment in the Romanian economy. ODM. specifications. processes and production organisation OBM Braiconf has a substantial market share in the Romanian market. So. Table 3. 18 . As it does not have financial constraints. it is still at the beginning of its upgrading patterns. then to development of design capabilities. i. improvement and redesign of the initially acquired products. equipment. Summary Table of the case study of Braiconf Ways to acquire external knowledge by Braiconf Foreign equipment and machinery supplier Integration into global production networks as supplier Types of assimilation observed in Braiconf Definition of assimilation type by (Bell 1997) What is assimilated by Braiconf Integrated in which upgrading stage of Braiconf Operational Replicative the acquisition of technology in the form of designs. However. Special emphasis was given first to improvements in the quality of the products through enhancement of the machinery and equipment. and so forth … … acquiring or developing knowledge and capabilities needed to reproduce (elements of) the technology … Use of machinery Use of CAD system Efficient organisation of production line New techniques in production stages Ad hoc ideas emerged from conversations with foreign customers Results of in-house researches of foreign customers Designs of foreign customers Fabrics of foreign suppliers OEM and OBM OEM and OBM Foreign OEM customers and foreign raw material supplier Adaptive to acquire or develop the capabilities needed for incremental adaptation. which have fostered upgrading to original design manufacturer status in the foreign market and original brand manufacturer status in the Romanian market.

Yoruk. D. Pavitt. Yenturk Coban. edited by D. Development and Change vol 25 (1994): 333-361. University College London. Export-led Technology Development in the Four Dragons: The Case of Electronics. Patterns of Upgrading in the Clothing Industry in Poland and Romania: prepared within the project 'The emerging industrial architecture of the wider Europe: the co-evolution of political and economic structures' coordinated by Dr. T. Gee. ———.7.Mytelka.. Kuo. Science and Technology Policies for Transition Countries. Export success and technological capability. edited by G.1171-1193. Braiconf. Societatea de Bursa RASDAQ 2001 [cited 19 Sept 2001]. S.Korzeniewicz. Istanbul: Turkish Social Science Association. eds. Budapest: CEU Press.Ernst. 1994. D.. London and New York: Routledge: published for and on behalf of the United Nations (UNCTAD). 1995.23.Ganiatsos.E. Technological Capabilities and Industrialization. pp. Lall. In Commodity Chains and Global Capitalism. and N. Technological Capabilities and Export Success in Asia.asp?Q=BRCR. M. 1988. T. 2001. REFERENCES Bell. L. K. a. Braiconf seeks to grow further through development of its own distribution system within Romania. Westport: Praeger. and L.In the long term. S.. Available from www. RASDAQ.Dyker. Gereffi. World Development 20 (2): 165186. 1998. The Organisation of Buyer-Driven Commodity Chains: How US Retailers shape Overseas Production Networks. no. 1994. World Development vol. edited by D. 1997. 19 . Technological and Structural Change in the Turkish Clothing Industry. Ernst. 1984. In Technological Capabilities and Export Success in Asia. Hobday. Research Policy 13 (1984): 343-373. M.ro/scripts/Issues/issues. 1998. London and New York: Routledge: Published for and on behalf of the United Nations (UNCTAD). Ganiatsos and L. M. G. 19 Sept 2001..Mytelka. Slavo Radosevic at School of Slavonic and East European Studies. Sectoral patterns of technical change: Towards a taxonomy and a theory. Duruiz.rasd. 1992. Technology Transfer to transition countries: are there lessons from the experience of the post-war industrializing countries? In The Technology of Transition. and W. G. East Asian Latecomer Firms: Learning the Technology of Electronics.

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