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1 Journal of Fundamental and Applied Sciences ISSN Research Article Special Issue Available online at CLUSTERING OF INDUSTRY IN A REGION BY MEANS OF SOURCING MODELS APPLICATION I. I. Farkhoutdinov *, A. G. Isavnin Kazan Federal University, Naberezhnye Chelny institute Published online: 15 February 2017 ABSTRACT The cluster approach for building a regional industry is a modern and effective tool for development of a country's economy. To date, this approach is dominant abroad, while in Russia, with the exception of some regions, cluster technologies are less popular. One of the possible reasons for low rate of distribution of cluster technologies in the domestic economy is the fact that Russian industry has its own characteristics, mainly due to the principles of industrialization of our country during the Soviet period. Obviously, these features should be taken into account when developing tools for building and developing clusters. To achieve the goal, tools of the modern direction in the economic science, the economy of sourcing, were used. In particular, models of restructuring outsourcing and hybrid sourcing models were applied. The authors have developed some possible scenarios for clustering a regional industry through the use of restructuring outsourcing, co-sourcing and models of Sourcing s maneuver. The results of this work can be useful for the formation of new and development of existing industrial clusters, and the restructuring tools noted in the article may be of interest to the management of large machine-building enterprises in Russia. The proposed scenarios and considered sourcing models are an integral part of complex tools for cluster formation or cluster policy. Keywords: restructuring outsourcing, co-sourcing, models of Sourcing s maneuver, cluster theory. Author Correspondence, ilnour1986@inbox.ru doi: Journal of Fundamental and Applied Sciences is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. Libraries Resource Directory. We are listed under Research Associations category.

2 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), INTRODUCTION The cluster approach to building a regional industry is a modern and effective tool for development of a regional economy and the economy of a country as a whole. Moreover, today this approach is dominant h abroad [1, p.21], while both in Russia, with the exception of some regions, such as the Republics of Tatarstan, the Republic of Bashkortostan, Samara Region, and other entities [2, p.32], cluster technologies are less popular [1, p.25]. One of the possible reasons for the low rate of distribution of cluster technologies in the domestic economy is the fact that Russian industry has its own characteristics mainly stemming from the principles of industrialization of our country during the Soviet period. Obviously, these features should be taken into account when developing tools for building and developing clusters. To solve this problem, we turn to the modern direction in economic science - the economy of sourcing. The work objective is to develop possible scenarios for clustering a regional industry through the use of sourcing models. MATERIALS AND METHODS Scenarios and tools for clustering the region To date, three main scenarios for the creation and development of clusters are singled out in scientific and practical literature (Figure 1). Fig.1. Scenarios for creation and development of clusters

3 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), The majority of clusters known in Russia and abroad were formed on a bottom-up basis [3], for example, the Kamsky innovative territorial production cluster operating on the territory of the Republic of Tatarstan was initially created at the initiative of the enterprises of PJSC KAMAZ, the petrochemical complex of PJSC Tatneft, LLC "Ford Sollers Holding" and PJSC "Nizhnekamskneftekhim".These enterprises independently developed a network of local suppliers, including competing ones, through the restructuring of production facilities and the use of outsourcing. The "mixed" scenario is also a fairly widespread one for the formation of industrial clusters, for example, when coming back to the Kamsky Innovative Cluster, the Kamsky Industrial Park "Master" which is an integral part of the cluster, was created with the interaction of the Cabinet of Ministers of the Republic of Tatarstan and the leadership of PJSC "KAMAZ" on the production areas of the subsidiary company JSC "Remdizel" allocated by the enterprise. In recent years, the top-down scenario began to gain popularity due to the obvious positive impact of cluster technologies on the regional economy [3]. In this respect, the experience of clustering a region of some foreign countries, for example, the Netherlands, as well as some regions of the Russian Federation, for example, the Republic of Tatarstan is of interest. As for region clustering tools, today in the scientific and practical literature there is a large number of approaches and activities for the creation and development of clusters, which, firstly, are complex, and secondly, depend on the chosen scenario, as well as the forms and types of state support. Also various programs for the development of cluster technologies were prepared at the level of the regional leadership in the Russian Federation. Among the most effective tools for clustering a region there are the following: 1. The implementation of public-private partnership (PPP) at various levels [4, p.12-14]. 2. The application of economic and mathematical methods for modeling clustering processes [5; 6]. 3. Creation of an infrastructure platform for cluster cooperation [3]. It should be noted that clusters are formed in different ways, that is, the creation of a certain cluster is a unique process, since there is no single universal model for clustering a region [7]. Nevertheless, proceeding from the basic principles of the cluster theory, when a cluster is understood as a group of geographically neighboring interrelated companies and related organizations operating in a certain sphere and which are mutually complementary [8; 9; 10], we can make the assumption that the general basis for the formation of clusters is sourcing technology. However, today clusters use a narrow range of various models of sourcing which

4 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), is usually limited to insourcing, single-sourcing, multi-sourcing, [11] and some models of Sourcing s maneuver. In this connection, the need to expand the possibilities of sourcing models for clustering industry in the region is relevant and promising, taking into account the experience of formation of Russian industrial clusters, in particular, the example of the Kamsky Innovative Territorial Production Cluster, and the dynamic development of a new direction in economic science in the scientific literature - the economy of sourcing. Restructuring outsourcing Restructuring outsourcing implies allocation of non-core assets to subsidiaries with different "distance" from the parent company or sale of these assets to other companies and further interaction with them within the framework of outsourcing. The following types of restructuring outsourcing are distinguished in the scientific and practical literature [12]: Fig.2. Types of restructuring outsourcing As a rule, restructuring outsourcing is a tool for the transition of large industrial enterprises from the "production" strategy to the "entrepreneurial" strategy [13, p.33-35]:

5 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), Fig.3. Possible script for transition of industrial enterprises to "enterprise" strategy Minimal outsourcing is the withdrawal of non-core assets, such as procuring, auxiliary, and servicing units, to a third party. Effective outsourcing, in addition to getting rid of non-core assets, implies the emergence of new business functions already within the outsourced activities. In the case of radical outsourcing, assembly of finished goods concerns to non-core assets, i.e. process of manufacture is completely transferred to outsourcing. The consequence of the application of restructuring outsourcing in large industrial enterprises is the emergence and development of a network of local outsourcers. An example is the restructuring of the car manufacturing enterprise PJSC "KAMAZ", as a result of which numerous supply companies were established in the city of Naberezhnye Chelny, as well as joint ventures of CJSC Cummins KAMAZ, LLC "CF KAMA", "Knorr-Bremse KAMA" ", LLC "Federal Mogul Naberezhnye Chelny" and others [13, p ] were established on restructured production facilities. All the companies established are included in the cluster of the Republic of Tatarstan. Hybrid models of sourcing Hybrid sourcing models, such as co-sourcing, noosourcing, and Sourcing s maneuver models, imply the parallel application of two or more sourcing models. For example, co-sourcing involves combining the resources of an enterprise (insourcing) with outsourced resources

6 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), (outsourcing), noosourcing involves the organization of expert network communities that occupy an intermediate place between crowdsourcing and outsourcing technologies, and the Sourcing s maneuver models have a more complex structure and can combine more than two sourcing models. Since the purpose of this work is to develop possible scenarios for clustering industry in a region, then we will consider the production forms of co-sourcing and models of Sourcing s maneuver. Co-sourcing Co-sourcing is a product of integration of outsourcing and insourcing. This hybrid model can be represented in the form of an Euler-Venn diagram (Figure 4) [13, p.100]. Fig.4. Outsourcing, insourcing and co-sourcing models From the diagram, it is clear that the customer (outsourcing) and outsourcer are engaged in the production of the component C. Co-operation within the framework of co-sourcing can be realized in two main directions [14]: 1. The production of the entire component or the process associated with the production of the component is transferred into the process of co-sourcing. For example, a customer is unable to perform an internal function due to lack of necessary competencies that the supplier has. By combining their efforts, they solve joint problems in the production of the component.

7 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), Within the framework of co-sourcing, customers and suppliers can share their resources. For example, a co-sourcer may divide its staff or lease specialized tools or equipment to its customer. To date, the following types of industrial co-sourcing can be distinguished: Fig.5. Types of production co-sourcing If a co-operation within the framework of co-sourcing is carried out in the first direction, that is, the full cycle of production of the component is transferred in the co-sourcing, then the ratio of insourcing to outsourcing is defined as the ratio between the volumes of own component production and purchases from the supplier in a given period of time. And in the case of cooperation in the second direction, that is, when the co-sourcer performs a certain process or function associated with the production of the component and / or leases specialized equipment to the customer, the ratio of insourcing to outsourcing is defined as the ratio between the costs of own component production and payment to the supplier for the process performed and / or the equipment provided per unit of output. Sourcing s maneuver models Sourcing s maneuver is an optimal combination of sourcing models with the purpose of effective restructuring of a company and obtaining maximum profit, as well as with the purpose of flexible response to market changes and internal changes of the company [13, p. 70]. To date, there is a fairly large number of Sourcing s maneuver models, among which it is

8 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), possible to distinguish the following models associated with the restructuring of large industrial enterprises [13, p.71-79]: - Localization of components of third-party products; - Localization of components of the sold unit's products; - Creation of a joint venture on the basis of a subsidiary; - Localization of the components of the joint venture's products. Let's consider the models of "creation of a joint venture on the basis of a subsidiary" (Figure 6) and "localization of the components of the joint venture's products" (Figure 7). Fig.6. Creation of a joint venture on the basis of a subsidiary The essence of this model lies in the fact that the outsourcing company creates a joint venture with its partner (outsourcer) on the basis of its subsidiary company and hands over to the enterprise the assembly production of the final product. The product components are delivered to the outsourcer from the customer company and the partner, as well as the subsidiary on the basis of which the outsourcer is created, localizes some parts for the final product. An example of application of the model "Creation of a joint venture on the basis of a subsidiary" is the creation of a joint venture between PJSC "KAMAZ" and "Marcopolo SA" on the basis of a subsidiary of PJSC "NEFAZ" which is engaged in production of small-class buses "Marcopolo" on the basis of KAMAZ chassis [13, p.76-77].

9 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), Fig.7. Localization of joint venture production components The essence of this model is that the outsourcing company allocates a part of its units to create a joint venture with the partner company (outsourcer), then it transfers to the enterprise the production of a certain component, while maintaining a certain level of localization of production of the component parts in the customer's areas. The model "Localization of the components of the joint venture's products" was applied at the Russian automotive enterprise of PJSC "KAMAZ", as a result of which the following joint ventures were established: CJSC "Cummins KAMAZ", LLC "CF KAMA", "Knorr-Bremse KAMA", LLC "Federal Mogul Naberezhnye Chelny" [13, p ]. The companies created within the framework of Sourcing s maneuver models "Creation of a joint venture on the basis of a subsidiary" and "Localization of components of joint venture products" are included in the cluster of the Republic of Tatarstan. RESULTS AND THEIR DISCUSSION The sourcing types and models considered above do not exhaust the whole variety, moreover there are many different modifications of these models in the scientific and practical literature. There are also more complex sourcing models which are a combination of the above considered models. For example, the Sourcing s maneuver model "Localization of the components of the joint venture's products" was applied in the course of the restructuring of production facilities with the help of minimal outsourcing at PJSC "KAMAZ", as a result of which joint ventures were created. In this connection, it is advisable to present the many sourcing models used for clustering the industry in the region, in the form of an Euler-Venn diagram (Figure 8).

10 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), Fig.8. Set of sourcing models applied to the region clustering, where O set of models and modifications of restructuring outsourcing; K - set of models and modifications of cosourcing; S - set of models and modifications of Sourcing s maneuver. Figure 8 shows that the tools for cluster formation are many sourcing models O K S. Taking into account the different levels of cooperation quality within the framework of the sourcing models belonging to the set O K S O K S and models belonging to, it is necessary to introduce some conditional gradation of clustering of the regional industry. In this case, we can distinguish three main scenarios: 1) Forming a cluster using a set of sourcing models x 1,...,x n belonging to the set O K S, i.e. O K S, where i 1, n x i (Figure 9). 2) Forming a cluster using a set of sourcing models x 1,...,x n belonging to the set (( O K) \ S) (( O S) \ K) (( K S) \ O), i.e.

11 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), x i (( O K) \ S) (( O S) \ K) (( K S) \ O) where i 1, n (Figure 10). 3) Forming a cluster using a set of sourcing models x 1,...,x n belonging to the set O K S, i.e. O K S, where i 1, n x i (Figure 11). Fig.9. First scenario of clustering of a regional industry

12 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), Fig.10. Second scenario of clustering of a regional industry Fig.11. Third scenario of clustering of a regional industry

13 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), When forming a cluster, it is possible to use both one of the scenarios presented above, and several scenarios sequentially and / or in parallel. CONCLUSIONS The scenarios of regional industry clustering presented in the paper through the use of restructuring outsourcing, co-sourcing, and models of Sourcing s maneuver do not exhaust the whole variety of sourcing models suitable for this task. Also, the proposed scenarios and the considered sourcing models are not universal and self-sufficient; they should be an integral part of complex tools for cluster formation or cluster policy. ACKNOWLEDGEMENTS The work is performed according to the Russian Government Program of Competitive Growth of Kazan Federal University. LITERATURE 1) Korolyov V.I. Innovative territorial clusters: foreign experience and Russian conditions / V.I. Korolyov // Russian External Economic Bulletin No p ) Bortnik I.M., Zemtsov S.P., Ivanova O.V., Kutsenko E.S., Pavlov P.N., Sorokina A.V. Formation of innovative clusters in Russia: the results of the first years of support // Innovations P URL: 3) Khachaturova M.S. Tools for the development of clusters in the regional economy // Bulletin of the Adyghe State University. Series 5: The Economy (131). URL: 4) Volkov V., Malitskaya E. Cluster as a tool for increasing competitiveness and innovative activity of regions // Self-management Oct. Pp ) Bagrinovsky K.A. Simulation modeling of the influence of investment policy on technological development / K.A. Bagrinovsky M.K. Isaeva // Microeconomic preconditions for economic growth: Collected works / Ed. by G.B. Kleiner. Issue Moscow: CEMI of RAS, 2003.

14 I. I. Farkhoutdinov et al. J Fundam Appl Sci. 2017, 9(1S), ) Oldenderfer, M.S. Cluster Analysis / «Factorial, Discriminant and Cluster Analysis» [Text]: Transl. from English / M.S. Oldenderfer, R.K. Blashfid / Under the Edit. of I.S. Enukov. М.: Finance and Statistics, p. 7) Neustroeva N.A. Mechanisms of formation of industrial clusters // Journal of Russian Entrepreneurship Vol. 1 (183). pp ) Porter M. [Competition]. The lane with English M.: Williams publishing house, with. 9) Porter M.E. [The Competitive Advantage of Nations]. Svobodnaja pressa = Free Press, New York, ) Porter M.E. [On Competition]. Boston: Harvard Business School, ) Chris Ford, Alistair Maughan and Scott Stevenson. [Outsourcing Handbook]. Morrison & Foerster LLP, Practical Law Company, ) Nikolaeva A.N. Increase of competitiveness of an enterprise due to application of strategy of outsourcing // Student's club "Alternative". Collection of scientific works of students of Russia. URL: 13) Isavnin A.G., Farkhoutdinov I.I. Features of application of production outsourcing at the Russian automobile building enterprise, LAP LAMBERT Academic Publishing, AV Akademikerverlag GmbH & Co. KG, 2013, Saarbrücken, Germany, ISBN , 188 p 14) Clinton, B. D. and S. C. Del Vecchio Co-sourcing in manufacturing // Journal of Cost Management (sentyabr'/oktyabr') Available at: How to cite this article: Farkhoutdinov I I, Isavnin A G. Clustering of industry in a region by means of sourcing models application. J. Fundam. Appl. Sci., 2017, 9(1S),