Local Competitive Advantage Local Competitive Advantage in Kundasalein Kundasale

Structure of this presentationStructure of this presentation

What is “local competitive advantage”?What is the diagnostic of Kundasale?What are the proposals to promote

competitiveness and growth in Kundasale?

1.1.What is “local competitive What is “local competitive advantage”?advantage”?

Local competitive advantage: The Local competitive advantage: The success of companies depends on:success of companies depends on:

their own effortstrong interaction with other companies

(suppliers, customers, other companies)strong interaction with supporting institutions

(training, technology, information, finance, etc.)

many of them are in close proximity it is easier to work with companies and institutions

nearby intense, constructive interaction between local

companies and institutions improves competitiveness

Understanding local Understanding local competitiveness:competitiveness:Michael Porter‘s „Diamond“Michael Porter‘s „Diamond“

Supporting institutions

Main companies and rivalry

Demandconditions

Related andsupporting industries

* A local context that encourages appropriate forms of investment and sustained upgrading* Vigorous competition among locally based rivals

* A core group of sophisticated and demanding local customers* Unusual local demand in specia- lized segments that can be served globally* Customers whose needs anticipate those elsewhere

* A critical mass of capable local suppliers* Clusters instead of isolated industries

Factor (input)conditions* training* technology* finance* infrastructure

What is LOCA?What is LOCA?

An initiative– to conduct a quick diagnostic of a local

economy (in this case: Kundasale)– to formulate practical proposals how to

improve the competitiveness of companies– to launch practical activities which quickly

improve the competitiveness of companies

2.2.What is the diagnostic of Kundasale?What is the diagnostic of Kundasale?

General observations:General observations:Strong points and opportunitiesStrong points and opportunities

Located close to major market = KandyManpower with traditional skillsGood competitiveness of a small number of local

companies– certified to ISO 9000 or preparing for

certificationMany untapped business opportunitiesAvailability of supporting industries (transport,

communication etc.)Availability of supporting institutions and

business development services

General observations:General observations:WeaknessesWeaknesses

The majority of companies– uses poor, very outdated technology, and do not

even use it efficiently– are not very competent in management,

accounting etc. – overestimate their product quality– are production-oriented instead of market- and

customer-oriented • know little about the preferences of

consumers

– are not really competitive!

The main problem of most The main problem of most companies in Kundesalecompanies in Kundesale

Lowquality

Medium quality

Highquality

High efficiency= low cost

Medium efficiency= high cost

Low efficiency= very high cost

Wherecompanies want

to be

Where mostcompanies in Kundasale are

3.3.What are the proposals to promote What are the proposals to promote competitiveness and growth in competitiveness and growth in Kundasale?Kundasale?

Wood products industryWood products industry

Challenges:– not very efficient (e.g. much waste of

materials)– inefficient government regulations

• cutting• transport

Wood products industryWood products industryProposal #1: Non-product outputProposal #1: Non-product output

Purpose: improve efficiency of production process

Proposal– ESSP offers to make specialist on production

process improvements (reduction of non-product output and wastage) available

– if the wood nucleus explicitly states its willingness to accept this offer

Wood products industryWood products industryProposal #2: RegulationsProposal #2: Regulations

ESSP documents problems with regulations– ESSP produces a brief document describing

the inefficiency of existing regulationsESSP facilitates a workshop with businesses and

regulatory bodies to brainstorm on options for more efficient regulation

ESSP makes proposal for more efficient regulation to national government

Mushroom producersMushroom producers

Challenges:– market access– pests and diseases – not enough seeds

Mushroom producersMushroom producersProposal #1: Market accessProposal #1: Market access

Association collects recipesAssociation prepares a collection of 15 recipesAssociation has recipes printed:

– leaflets in A8 format (7.4 x 5.2 cm)1 Recipe included in each package

Mushroom producersMushroom producersProposal #2: Market accessProposal #2: Market access

There is a market opportunity for dried mushrooms

ESSP can facilitate access to mushroom drying companies

Association may request such facilitation from ESSP – address Mr. Kumaragamage or Mr. Attayanake

before end of January 2003

Mushroom producersMushroom producersProposal #3: Pests and diseasesProposal #3: Pests and diseases

ESSP offers to organise visit to a mushroom producer with outstanding performance– address Mr. Kumaragamage or Mr. Attayanake

before end of January 2003After this visit, ESSP offers to facilitate training

course on pest management

Mushroom producersMushroom producersProposal #4: Not enough seedsProposal #4: Not enough seeds

This is a business opportunity!– there is demand for larger quantities of seeds– there is demand for more varied seeds

Why isn’t there a business-minded person who takes up this opportunity?

Brassware industryBrassware industry

Challenges:– not very efficient (e.g. high energy cost)– access to market

Brassware industryBrassware industryProposal #1: EfficiencyProposal #1: Efficiency

SEEDS and ESSP are willing to organise a meeting with brassware producers to define specific demands

Possible options: – accountancy / bookkeeping / cost calculation

training– process efficiency / non-product output

trainingaddress Mr. Rupasinghe (SEEDS) or Mr.

Rattanayake (ESSP)

Brassware industryBrassware industryProposal #2: EfficiencyProposal #2: Efficiency

ESSP offers to organise visit of Kalapurea brassware producers to Udunwera brassware producers – to get first-hand information on new

production process: seamless productsaddress Mr. Rattanayake (ESSP)

Brassware industryBrassware industryProposal #3: Market accessProposal #3: Market access

ESSP offers to facilitate contact between brassware producers and tourist guides, hotels and tour operators to have tourists visit production sites– which are an attraction for foreign tourists

(very traditional production method)– where tourists can buy products

Brassware companies in Kundasale should contact ESSP to make appointment to co-ordinate this

Lime producersLime producers

Challenges:– not very efficient, very traditional technology– access to market

Lime producersLime producersProposal #1: EfficiencyProposal #1: Efficiency

ESSP offers to make lime production specialist available to group of companies

Group of at least 8 companies should express interest with ESSP by 03 January 2003– address Mr. Rattanayake

Women entrepreneursWomen entrepreneurs

Challenges: – improve skills– improve market access

Women entrepreneursWomen entrepreneursProposal #1: SkillsProposal #1: Skills

A Nucleus for Beauty Culture will start working in January 2003

Opportunities: – find sponsors for fact-finding trips abroad, e.g.

IndiaA Nucleus for Cutfoliage & Plant Nursery started

already

Supporting institutionsSupporting institutions

Challenges: – banks are not very responsive to the demand

of small business – many institutions are not business- and

customer-oriented

Supporting institutionsSupporting institutionsProposal #1: BanksProposal #1: Banks

CCICP, Women’s Chamber organise quarterly forum with entrepreneurs and financial service providers, sponsored by banks– to inform entrepreneurs about available

financial servicesCCICP, Women’s Chamber organise information

seminars on new financial instruments as they become available (e.g. factoring)

Supporting institutionsSupporting institutionsAnnouncement #1Announcement #1

In January, there will be an Open Day at the Faculty of Engineering and the Engineering Design Centre– to inform about the services offered by the

Faculty and the EDC– to strengthen the ties with the private sector

Observe announcement of date in the media!

Supporting institutionsSupporting institutionsAnnouncement #2Announcement #2

In the first quarter of 2003, ESSP will launch a Central Regional Business Development Service Registry– watch out for the announcements for the

launch event!

Thank your for your attention!Thank your for your attention!

This presentation was elaborated byThis presentation was elaborated by

Dr J Meyer-Stamer (PACA/LOCA consultant)Ms S Lehmann (ESSP)Mr D Rattanayake (ESSP)Mr J Rupasinghe (SEEDS)Ms S Randeni (CPWCIC)Mr S Hingulwala (CICCP)