Concentration at specific sites
Consolidation of purchasing applies not only to commodity goods but also to high-value or scarce resources. Research and development skills are both high value and scarce. Therefore there is an incentive to locate at certain sites to tap into specific pools of such skills. Examples of this are ‘Silicon Valley’ in California and ‘Silicon Fen’ near Cambridge as centres of excellence in IT. Companies originally located in these areas to benefit from research undertaken in the nearby universities.