Sassuolo is an Italian industrial city that hosts a lot of ceramic tiles’ companies, due to the huge boom in ceramic demand after the Second World War. Consequently, supporting industries grew next to the ceramic tile’s factories.
Ceramic tiles are very well considered in Italy and around the Mediterranean, because of the warm weather; they provide more coolness than other materials, for example wood or carpets.
The ceramic tile industry has been present in Sassuolo since the 13th century, although just right after the Second World War, the demand grew. Because of this huge demand, the number of companies rose to a point where there were new industries being created every year. These companies had to compete among themselves in order to get deals with retailers, who were looking for high quality, low price and good aesthetics. The high competition among companies made the quality and originality of the tiles the main goal among producers. For this, they were improving their machines and techniques.
When the post Second World War boom started to diminish, the tile industry in Sassuolo felt that they were not selling as much as before. To solve this problem they looked for international markets, and started exporting. Their product was well welcomed, as it was original and presented a high quality. Soon, Italians were powerful competitors in the international tile industry.
Case Discussion Questions
1. To what extent does the theory of comparative advantage explain the rise of Italian tile firms to global pre-eminence in the tile industry?
2. To what extent does the Heckscher. Ohlin theory explain the rise of Italian tile firms to global pre-eminence in the tile industry?
3. Use Michael Porter’s diamond to analyse the rise to global pre- eminence of the industry. What does this analysis tell you about how firms gain a competitive advantage in the world economy?