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Export Strategy Design

Sector-Level Strategy Product Sectors

Guidelines for Strategy-Makers

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Acknowledgements

Members of the International Trade Centre's Executive Forum Team prepared theseguidelines. Substantive process and technical contributions were provided by Ms. Leonor vonLimburg (evtrade, Germany) and Professor Owen Skae (School of Accounting, University ofKwaZulu-Natal, South Africa) of the modicum coalition.

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1

Part A

Introduction

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2

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3

Introduction

Application of these Guidelines will result in the preparation of a realistic export developmentstrategy for a product or industry sector.

It is recommended that a team, comprising private and public sector representatives,

develops the strategy and that it completes the process within a maximum period of threemonths.

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4

Introduction

The strategy development process involves the completion of thirteen steps. Each step iscovered in detail in these Guidelines.

The Thirteen Steps of Sector Strategy Design and Management

1 Ensure Private Sector Leadership and Public Sector Support

Border-InBorderBorder-Out

ProcessFundamentals 2 Ensure Comprehensive Scope

Development

Benchmark the Sector's BusinessEnvironmentAssess CompetitorsReview Main Markets, CurrentPerformance and Capacity to Respond

3Start with a ThoroughAssessment of the Sector

Evaluate Current Approach to ExportDevelopmentAcquire Greater ValueRetain Greater ValueAdd ValueCreate Value

4Apply Value Chain Analysis,Identify Critical Success Factorsand Assess Value Options to:

Distribute ValueCurrent Participants in the Value ChainPotential Participants in the ValueChains

5Confirm Client Demands andNeeds

Aspiring Participants in the Value ChainCompetency Development

Trade InformationTrade FinanceExport Quality Management

6Review Essential Trade SupportServices

Other SupportFinanceInstitutionsProgrammes

7Assess Available Resourceswithin Public and Private Sectors

People

Analysis Where are WeNow?

8 Prepare a SWOT Analysis

9 Create a VisionStrategic Focus Where Do WeWant to Be? 10 Specify Priorities

Confirm Strategic ConsiderationsDetermine ObjectivesSpecify Performance Measures

11Establish the Framework forManaging and Monitoring theStrategy

Set TargetsSpecify InitiativesIdentify Responsible OrganizationsAllocate Resources

12 Formulate a Plan of Action

Set the Implementation Schedule

Formulation andManagement How Do We GetThere?

13 Maintain the Public-Private Partnership for Strategy Implementation

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5

Introduction

The Strategy Design and Management Framework

The thirteen-step process involves determining:

(i) where the sector currently stands with respect to its international competitivenessand performance,

(ii) where the sector should be with respect to competitiveness and performancewithin a period of 3 to 5 years, and

(iii) how the sector will reach this position within the specified timeframe.

Once the Strategy Team has been established and completed its analysis of where the sectorcurrently stands with respect to foreign competition, performance, market opportunities andcapacities to respond (i.e. completed Steps 1 to 8), it should begin the detailed design phaseof the process.

It is important that the Team determines the most effective approach to managing theimplementation of the strategy implementation, concurrently with preparing the strategys

detailed design.

To this end, it is recommended that the Strategy Team:

defines aVisionfor the medium-term development of the sector (i.e. where do wewant to be in 3 to 5 years' time);

takes into account the Perspectives of the various stakeholders in the sector (i.e.the Development Perspective, the Competitiveness Perspective, the ClientPerspective and Institutional Perspective);

confirms the priority Strategic Considerationsof each Stakeholder Perspective; determines what Objectives are to be achieved for each Stakeholder Perspective; agrees the Measures that will be used to determine the extent to which each

Objective is being achieved during implementation of the strategy; sets Targets against which these Measures will be benchmarked; specifies the Initiativesthat will be implemented to achieve each Objective; identifies those Organizations that will be responsible for implementing each

Initiative; realistically assesses and effectively allocates Resources to the implementing

Organizations; and

prepares a detailed Plan of Actionand a schedulefor implementing the Initiatives.

In addition, it is recommended that the Strategy Team should decide on which organization,or coalition of organizations, will assume responsibility for monitoring the strategysimplementation and impact

.

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6

Introduction

TheStrategyDesignandMan

agementFrameworkAnIllustration

TheDevelopmentPerspective

Toac

hieve

thev

ision,

howmus

tpo

liticians,

governmen

tdec

ision-ma

kers,

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are

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tegic

Cons

idera

tion

#1:

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lopmen

tGear

ofStra

tegy

TheClientPerspective

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ision,

howmus

tthesec

torscurren

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ten

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porters,

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dmanagemen

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#5:

Clien

tPriori

ties

#6:

Bus

iness

Compe

tency

#7:

Trad

eInforma

tion

#8:

Tra

de

Finance

#9:Q

ua

lity

Managemen

t#10:

Other

Support

TheCompetitivenessPerspective

Toac

hieve

thev

ision,

howmus

tsectorassoc

iationsan

da

dvocacygroups,p

oten

tialinves

tors

(domes

tican

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ign)

an

dprospec

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buyers

/importersperce

ive

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The

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fStra

tegy

#2:

The

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InGearo

fStra

tegy

#4:

The

Border-

Ou

tGearo

fStra

tegy

TheInstitutionalPerspective

Toac

hieve

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ision,

howmus

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horgan

iza

tionw

ithinthesec

tors

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twork,

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blican

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ision

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ies

?Wha

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trateg

ydes

ignan

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#11:

The

Stra

tegy

Suppo

rtNe

twork

#12:

The

Serv

ices

De

livery

Ne

twork

The

Vision

Weightingof

Perspectives

Priorities

Resources

Strateg

icConsideration#1

-Objectives

-Performancean

dImpac

tMeasures

-Targets

-Initiatives

Strateg

icConsideration#2-4

-Objectives

-Performancean

dImpac

tMeasures

-Targets

-Initiatives

Strateg

icConsideration#5-10

-Objectives

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dImpac

tMeasures

-Targets

-Initiatives

Strateg

icConsideration#11-12

-Objectives

-Performancean

dImpac

tMeasures

-Targets

-Initiatives

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7

Introduction

The Sector's Trade Support Network

Throughout the strategy design process, the Strategy Team should assess the implications ofeach decision and strategic option on the sectors trade support network. The trade support

network, in fact, involves two networks:

the export strategy support network which is responsible for ensuring that the sectorsbusiness and policy environment reinforces the sectors competitiveness (and thecompetitiveness of enterprises in the sector); and

the services delivery network, which comprises those public and private sectororganizations that provide export-related services to enterprises in the sector.

Environme ntal Groups

Ministry for Transport

Chamber of Commerce

Association of Exporters

and Importers

Board of Investment

Export / Competitiveness

Council

Statistical Agency

Ministries of Trade, Economy

and CommerceMinistr y of Education

and Research

Export Strategy

Support Network

Relevant Line Ministries

Ministry of Foreign

Affairs

Ministr y of Finance

Ministry of Communication

and Information Technology

Ministry of Labour

Research and Technology

Organizations

Banks / Financial Services

Organizations

Standards Organization

Vocational and

Training Centers

Universities

Border

Border-Out

Development

Sectoral Associations

Micro Finance Providers

Small Industry

Developm ent Organization

Regional

Developm ent Organizations

NGOs

Cooperatives

Trade Promotion Organizations

Investment Promotion Agency

Trade Information Organizations

Exporters' Associations

Forwarders/ Shippers

Insurers

Telecoms Organizations

National Customs Authority

Certification Bodies

Border-In

Services

Delivery Network

Clustering OrganizationsIndustrial, Technology Parks

& Business Centres

Women's Associations

Regional and Local

Governments

Ministry for Women's

AffairsEnvironment Protection

Agency

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8

Introduction

The Output of the Process - The Sector-Level Export Strategy Document

It is recommended that the Strategy Team prepare a written document that summarizes itsanalysis, conclusions, and recommendations for action. It is, in this regard, important that the

Team ensures that specific members are assigned responsibility for preparing the Documentat the outset of the strategy design process.

Recommended Outline of the Strategy Document

1. Introduction Rationale Principles of Analysis:

Scope of Strategy Framework for Strategy Design and Management Application of the Value Chain

2. Where Do We Want to Be? The Vision The Sectors Future Value Chain An Illustration

3. Where Are We Now? An Assessment Export Performance and Assessment of Overall Competitiveness The Sectors Current Value Chain An Illustration Performance against Critical Success Factors Government Policy and Strategy in Support of the Sector The Sectors Trade Support Network: Capacity, Competency and Coordination

4. The Resource Situation in the Public and Private Sectors (Current and Projected)5. SWOT Analysis of the Sector6. The Way Forward (over 3-5 years):

The Development Perspective Strategic Consideration # 1 Developmental Considerations and Priorities

The Competitiveness Perspective Strategic Consideration # 2 Border-In Issues and Priorities Strategic Consideration # 3 Border Issues and Priorities Strategic Consideration # 4 Border-Out Issues and Priorities

The Client Perspective Strategic Consideration # 5 Client Prioritization

Current Exporters and Other Current Participants in the Value Chain:Support Requirements and Response

Potential Exporters and Other Potential Participants in the Value Chain:Support Requirements and Response

Aspiring Exporters and Other Aspiring Participants in the Value Chain:Support Requirements and Response

Implications for Sector Support Services Strategic Consideration # 6 Business Competency Strategic Consideration # 7 Trade Information Strategic Consideration # 8 Trade Finance

Strategic Consideration # 9 Quality Management Strategic Consideration #10 Other Support Services

The Institutional Perspective Strategic Consideration # 11 Strengthening the Sectors Strategy Support

Network: Strategy Coordination and Management:

Structure Process (Strategy Monitoring)

Strategic Consideration # 12 The Sectors Services Delivery Network7. Weighting of the Stakeholder Perspectives and Summary of Strategic Objectives8. Resource Mobilization

Annex 1: Overview of the Sectors Global MarketAnnex 2: The Plan of ActionAnnex 3: The Strategys Balanced Scorecard

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9

Part B

Process Fundamentals

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10

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11


Steps 1 and 2 of the Strategy Design and Management Process

1 Ensure Private Sector Leadership and Public Sector Support

Border-InBorderBorder-Out

ProcessFundamentals

2 Ensure Comprehensive Scope

Development

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12


Step 1.Ensure Private Sector Leadership and Public Sector Support

ITC's experience suggests that the private sector has a better understanding (than the public

sector) of best business practices and market requirements in the target sector.Consequently, ITC recommends that the private sector should take the lead in designingsector-level strategy.

The ITC approach involves, therefore, the private sector determining priorities within eachtarget sector and developing strategy within the context of these priorities, while the publicsector maintains responsibility for determining priorities amongsectors.

To ensure that the design process is effectively managed, it is recommended that overallleadership be assigned to one member of the Strategy Team. Ideally this 'navigator' will befrom the sector association.

Strategy Team Membership

Team Navigator:

Name:Surname:Position:Organization / Company:E-mail Address:Telephone #:

Fax #:

Team Member 1:

Name:

Surname:Position:Organization / Company:E-mail Address:Telephone #:

Fax #:

Team Member 2:

Name:Surname:Position:Organization / Company:E-mail Address:

Telephone #:

Fax #:

Team Member 3:


Fax #:

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13

Process Definition


Strategy Team Membership (continued)

Team Member (4):


Fax #:

Team Member 5:

Name:Surname:

Position:Organization / Company:E-mail Address:Telephone #:

Fax #:

Team Member 6:


Fax #:Team Member 7:


Fax #:

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14



To facilitate management, and transparency, and to ensure that all interested parties are

engaged in the process, it is recommended that the Team work on the basis of a RACI matrix.

The RACI matrix assigns specific functions to each team member with respect to completionof individual tasks:

to be Responsible (R) for completing, or contributing to the completion, of aparticular task,

to be Accountable (A) for the completion of a task by an agreed time and to anagreed standard,

to beConsulted (C)while the task is being completed, or to beInformed (I)on progress.

It is advisable to routinely consult and inform all stakeholders, including those who are notTeam members. This ensures that there is universal support of the process. It will alsofacilitate information collection and analysis.

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15

ExampleofRACIMatrix

TheRACI

Matrix

TeamMember

.

Task

Responsible

Accountable

Consulte

d

Informed

Start

En

d

Step1:EnsurePrivateSectorLeaders

hipandPublicSectorSupport

Tas

k:EstablishSectorStrategyTeam

Navigator

Step2:EnsureComprehensiveScope

Tas

k:PrepareSummaryofStrategic

Consideration#1:

DevelopmentIssues

All

4

Week1

Wee

k2

Tas


Consideration#2:

Border-InIssues

All

2

Week1

Wee

k2

Tas


Consideration#3:

BorderIssues

All

5

Week1

Wee

k2

Tas


Consideration#4:

Border-OutIssues

All

7

Week1

Wee

k2

Step3:StartwithaThoroughAssessm

entoftheSector

Tas

k:BenchmarktheSector'sBusinessEnvironment

1,4

7

2,3,5,6

8,9

Week1

Wee

k3

Tas

k:AssessCompetitors

2,5

1

3,4,7,9

6,8

Week1

Wee

k3

Tas

k:ReviewMainMarkets,

Current

Performanceand

CapacitiestoRespond

3,7,

9

6

1,2,4,8

5

Week1

Wee

k3

Tas

k:ReviewCurrentApproachtoExportDevelopment

5,6

8

1,2,3,9

7,4

Week1

Wee

k3

Step4:ApplyValueChainAnalysis,Id

entifyCriticalSuccessFactors

andAssessValueOptions

Tas

k:MapandAnalyzetheValueCh

ain

All

Navigator

Week4

Wee

k4

Tas

k:AssessAbilitytoMeetCriticalSuccessFactors

All

Navigator

Tas

k:ReviewValueOptions

All

Navigator

Week4

Wee

k4

Tas

k:DevelopanInitialVersionofth

eFutureValueChain

All

Navigator

Week4

Wee

k4

Step5:ConfirmClientDemandsandN

eeds

Tas

k:AssessDemandsandNeedso

fClientCategories

All

Navigator

1,5,8

6

Week5

Wee

k5

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16

Step6:ReviewEssentialTradeSuppo

rtServices

Tas

k:AssessBusinessCompetency

DevelopmentServices

3,4,5,8

9

1,2,6,7

Week6

Wee

k7

Tas

k:AssessTradeInformationServ

ices

2,4,

6

3

1,5,7,8,9

Week6

Wee

k7

Tas

k:AssessTradeFinanceService

s

1,9

8

2,7

3,4,5,6

Week6

Wee

k7

Tas

k:AssessQualityManagementS

ervices

5,7

6

1,2,9

3,4,8

Week6

Wee

k7

Tas

k:AssessOtherTradeSupportS

ervices(Packaging)

2,5

4

7,8

1,3,6,9

Week6

Wee

k7

Step7:AssessAvailableResourcesw

ithinthePublicandPrivateSec

tors

Tas

k:AssessAvailableResources(S

trategySupport

Network)

All

(institution

specif

ic)

Navigator

Week5

Wee

k7

Tas


ervicesDelivery

Network)

All

(institution

specif

ic)

Navigator

Week5

Wee

k7

Tas

k:AssessAvailableResources(B

usinessSector)

2,4,

7

1

Week5

Wee

k7

Step8:PrepareaSWOTAnalysis

Tas

k:CompleteSector'sSWOT

All

Navigator

4,5,9

1,7,8

Week8

Wee

k8

Step9:CreateaVision

Tas

k:ReviewInitialVersionofFutureValueChain

All

Navigator

Week9

Wee

k9

Tas

k:DrafttheVision

All

Navigator

Week9

Wee

k9

Step10:SpecifyPriorities

Tas

k:PrepareLongListofPriorities

All

Navigator

Week9

Wee

k9

Tas

k:WeighttheStakeholderPerspectives

All

Navigator

Week9

Wee

k9

Tas

k:PrepareFinalListofPriorities

All

Navigator

Week9

Wee

k9

Step11:EstablishtheFrameworkforManagingandMonitoringtheStrategy

Tas

k:PreparetheObjectives/Measures/TargetsMatrix

All

Navigator

Week10

Week10

Step12:FormulateaPlanofAction

Tas

k:CompletetheObjectives/Initiat

ives/Organizations/

ResourcesMatrixandTimeframe

All

1

Week11

Week12

Step13:MaintainthePublic-PrivatePartnershipforStrategyImpleme

ntation

Tas

k:ReviewOptionsandDetermine

Structure/Approach

All

1

Week12

Week12

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17

TheStrategy

TeamsRACIMatrix

ItisrecommendedthattheStrategyTeamsnavigatorscompletethefollow

ingmatrixatthebeginningofthe

strategydesignprocess.

TheRACI

Matrix

TeamMember

.

Task

Responsible

Accountable

Consulte

d

Informed

Start

En

d

Step1:EnsurePrivateSectorLeaders

hipandPublicSectorSupport

Tas

k:EstablishSectorStrategyTeam

Step2:EnsureComprehensiveScope

Tas


Consideration#1:

DevelopmentIssues

Tas


Consideration#2:

Border-InIssues

Tas


Consideration#3:

BorderIssues

Tas


Consideration#4:

Border-OutIssues

Step3:StartwithaThoroughAssessm

entoftheSector

Tas

k:BenchmarktheSector'sBusinessEnvironment

Tas

k:AssessCompetitors

Tas

k:ReviewMainMarkets,

Current

Performanceand

CapacitiestoRespond

Tas

k:ReviewCurrentApproachtoExportDevelopment

Step4:ApplyValueChainAnalysis,Id

entifyCriticalSuccessFactors

andAssessValueOptions

Tas

k:MapandAnalyzetheValueCh

ain

Tas

k:AssessAbilitytoMeetCriticalSuccessFactors

Tas

k:ReviewValueOptions

Tas

k:DevelopanInitialVersionofth

eFutureValueChain

Step5:ConfirmClientDemandsandN

eeds

Tas

k:AssessDemandsandNeedso

fClientCategories

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18

Step6:ReviewEssentialTradeSuppo

rtServices

Tas

k:AssessBusinessCompetency

DevelopmentServices

Tas

k:AssessTradeInformationServ

ices

Tas

k:AssessTradeFinanceService

s

Tas

k:AssessQualityManagementS

ervices

Tas

k:AssessOtherTradeSupportS

ervices(Packaging)

Step7:AssessAvailableResourcesw

ithinthePublicandPrivateSec

tors

Tas


trategySupport

Network)

Tas


ervicesDelivery

Network)

Tas

k:AssessAvailableResources(B

usinessSector)

Step8:PrepareaSWOTAnalysis

Tas

k:CompleteSector'sSWOT

Step9:CreateaVision

Tas

k:ReviewInitialVersionofFuture

ValueChain

Tas

k:DrafttheVision

Step10:SpecifyPriorities

Tas

k:PrepareLongListofPriorities

Tas

k:WeighttheStakeholderPerspectives

Tas

k:PrepareFinalListofPriorities

Step11:EstablishtheFrameworkforManagingandMonitoringtheStrategy

Tas

k:PreparetheObjectives/Measures/TargetsMatrix

Step12:FormulateaPlanofAction

Tas

k:CompletetheObjectives/Initiat

ives/Organizations/

ResourcesMatrixandTimeframe

Step13:MaintainthePublic-PrivatePartnershipforStrategyImpleme

ntation

Tas

k:ReviewOptionsandDetermine

Structure/Approach

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Step 2.Ensure Comprehensive Scope

To be effective, sector-level strategy must be comprehensive, responding to all issues that

have an impact on the sectors international competitiveness.

As importantly, strategy must address the following key question: How will improvedcompetitiveness of the sector contribute directly to the wider concern of economic and socialdevelopment within the country as a whole? In other words, what is, and what should be thesectors contribution to national development.

To achieve this combination of competitiveness and developmental impact, the scope ofstrategy should comprise four 'gears':

the border-in gear the border gear the border-out gear the development gear

For strategy to be effective, each gear must mesh with (i.e. reinforce) the others.

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The tendency is for strategy-makers to concentrate on improving export performance by:

seeking increased access for exportable products into priority markets; and concentrating trade support on market development and promotional activities.

In short, strategy-makers are usually preoccupied with the border-out gear of strategy. Thispreoccupation is inadequate. While border-out activities represent an essential aspect ofstrategy, they do not address the key factors determining export competitiveness.

Export competitiveness is a function of the capacity to sell the product demanded in theinternational marketplace, at the quantity, quality, price and time required. The border-out gearof strategy does not address these issues.

Only through implementation of a strategy that is driven by the combined power of border-in,border and border-out gears, can long-term international competitiveness within the sector beachieved.

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The Border-In Gear of Sector-Level Export Strategy

Strategy must ensure that the sectors 'supply side' can effectively respond to opportunities inthe international marketplace. Strategy must therefore encompass initiatives to:

reinforce existing supply side capacities, develop new capacities, reinforce skill and technical competency and encourage entrepreneurship.

This, paradoxically, requires export strategy to have an inward-looking orientation.

Border-in issues can be divided into three categories:

Capacity Development

Capacity development issues relate to production capability with regard to productivity,volume, quality and value-addition. Enhancing capacity requires the combination of privatesector readiness to invest, and the availability of specialized skills and services within theprivate and public sectors.

The challenge for the strategist is twofold:

to establish an environment that facilitates skill acquisition, promotesentrepreneurship and stimulates private sector investment, and

to ensure that the export support services delivered to enterprises in the sectorencourage investment, increased productivity and export orientation.

Capacity Diversification

Capacity diversification involves:

producing new product lines (i.e broadening and adjusting the sectors currentvalue chain) and/or

producing new related products (i.e entering into new value chains associatedwith the sector).

Given that capacity diversification usually requires capital investment, sector-level strategyshould highlight and proactively support the investment decision.

Support to the development of enterprise clusters and joint ventures can be particularlyeffective in diversifying export capacity within a sector.

Human Capital Development

Strategy-makers must ensure that the strategy addresses directly the need to generate,and continuously upgrade, the sectors basic and specialized vocational, technical andshop-floor competencies.

Similarly, the strategy must foster the development of entrepreneurship within the sector.

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It is recommended that each team member completes the following chart and that the

designated RACI 'A' team member then prepares an overall summary of the Teams viewsand findings.

Issues

The Border-In Gear of Strategy

Capacity Development:

Capacity Diversification:

Human Capital Development:

Implications for Strategy

Objectives

On-Going/RequiredInitiatives

Organizations Concerned

Resource Implications

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The Border Gear of Export Strategy

Border issues have a significant influence on the sectors competitiveness. They define thesector's operating environment, and largely dictate the cost of the export transaction.

Analysis of the border gear of strategy is, therefore, of paramount importance to the strategydesign process. An initial review of border issues will assist the Strategy Team in identifyingwhat organizations should be closely involved in the process (i.e. the strategy support networkand the services delivery network).

The Strategy Team will have to consider objectively all border issues that affect the sectorsbusiness operating environment.

Infrastructure Issues

Probably the most obvious border issues to be addressed are bottlenecks in trade-related infrastructure (transport and handling problems in particular). These affect profitmargins and limit options for market development (border-out) and capacitydevelopment (border-in).

Trade Facilitation Issues

Perhaps the second most important border issue that the sector strategy must addressrelates to regulations, administrative procedures and documentation requirements thatgovern how business (importing, intermediary processing and exporting) is done in thesector. Often the streamlining of import and customs clearance procedures is at the topof the sector strategist's priority action list.

'Cost of Doing Business' Issues

The strategy must also seek to reduce the cost of doing business within the sector.Costs of company registration, ISO 9000/1200 certification, Internet access, port fees,inspection charges, insurance premiums, for example, must be minimized.

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Each team member should complete the following chart and the designated RACI 'A' team

member should then summarize the Teams views and conclusions.

Issues

The Border Gear of Strategy

Infrastructure:

Trade Facilitation:

Cost of Doing Business:


Objectives




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The Border-Out Gear of Export Strategy

The border-out gear of export strategy relates to:

Market Access

Tariffs, non-tariff barriers and related entry issues.

In-Market Support Services

Acquisition and dissemination of trade information, identification of commercialopportunities abroad, initiation of contact with potential buyers, and generation of interestamong prospective foreign direct investors and joint venture partners.

National Promotion

Building and reinforcing the sectors image and organizing promotional programmes (e.g.fairs and missions).

To achieve the greatest impact, the border-out gear of strategy should focus on export-readyfirms.

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Issues

The Border-Out Gear of Strategy:

Market Access:

In-Market Support Services:

National Promotion:

Implications for StrategyObjectives




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The Development Gear of Export Strategy

While the border-in, border and border-out gears of strategy directly influence the sector'scompetitiveness, the development gear of strategy reinforces the sector's contribution toeconomic and social development within the country.

The development gear addresses the key national issues of:

Employment generation Poverty alleviation Development of disadvantaged groups and backward regions Gender equality Environmental protection

To ensure widest stakeholder commitment, the strategy must highlight the developmentperspective.

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Issues

The Development Gear of Strategy

Employment generation:

Poverty alleviation:

Development of disadvantaged groups and backward regions:

Gender equality:

Environmental protection:

Other:


Objectives




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Part C

Analysis Where are We Now?

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Steps 3 to 8 of the Strategy Design and Management Process

Benchmark the Sector's BusinessEnvironmentAssess CompetitorsReview Main Markets, CurrentPerformance and Capacity to Respond

3Start with a ThoroughAssessment of the Sector

Evaluate Current Approach to ExportDevelopmentAcquire Greater ValueRetain Greater ValueAdd ValueCreate Value

4Apply Value Chain Analysis,Identify Critical Success Factorsand Assess Value Options to:

Distribute ValueCurrent Participants in the Value ChainPotential Participants in the Value

Chains5

Confirm Client Demands and

NeedsAspiring Participants in the Value ChainCompetency DevelopmentTrade InformationTrade FinanceExport Quality Management

6Review Essential Trade SupportServices

Other SupportFinanceInstitutionsProgrammes

7Assess Available Resourceswithin Public and Private Sectors

People

Analysis Where are WeNow?

8 Prepare a SWOT Analysis

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Step 3.Start with a Thorough Assessment of the Sector

To be in a position to identify and assess strategic options, the Strategy Team should first

determine where the sector currently stands, in terms of:

competitiveness, export performance, readiness to meet future market opportunities and challenges.

As a first step the Strategy Team should:

benchmark the sectors business environment, identify competitors, review main markets, current performance and capacity to respond to commercial

opportunities and demands,

evaluate the current approach to export development.

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Benchmark the Sector's Business Environment

It is suggested that each member of the Strategy Team completes the following and thencompares notes.

Competitiveness Indicators

A. Values and Behaviour1. My country has: (Y/N) Remarks

Social cohesion

A strong legal and institutional base

A system of values that encourages learning and innovation

A system of values that encourages entrepreneurship

Mechanisms to encourage cooperation between the private and public sectors

Confidence in the integrity of public institutions and officials

B. Macroeconomic Environment

1. My country has a predictable macroeconomic environment for enterprisedevelopment characterized by:

(Y/N) Remarks

Low budget deficits

Tight inflation control

Competitive and stable exchange rates

Intense local competition (including in the target sector)

Competition in the banking system

A high level of private business investment (as percentage of GDP)

A high level of foreign direct investment

Openness to trade (import and export policies)

2. The current approach to the sector's development is: (Y/N) Remarks

Export-oriented

Supportive of business initiatives

Supportive of investment in research and development

Reinforced by full protection of property rights, including intellectual property

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Analysis Where are We Now?Step 3. Start with a Thorough Assessment of the Sector

Competitiveness Indicators (continued)

C. Private Sector Support Environment (Y/N) Remarks

1. Compared to foreign competitors, the sector has a competitive advantage:2. The competitive advantage of the sector is due to:

Sustained investment in human capital

Access to a sizeable pool of suitably-trained personnel (basic level)

Access to a sizeable pool of suitably-trained personnel (technical and managerial )

Assistance from industry associations

Availability of affordable local business counselling and management consulting

Availability of technological support (including agricultural extension services)

Existence of business incubators

Existence of business parks

Proactive support to enterprise clustering

Tax incentives for training

Tax incentives for research and development

3. Enterprise competitiveness in the sector is supported by: (Y/N) Remarks

Adequate, efficient and competitively priced air cargo transport facilities

Adequate, efficient and competitively priced sea cargo facilities

Adequate and efficient roads and rail networks

Efficient and transparent customs procedures

Adequate and efficient warehousing facilities

Effective and competitively priced telecommunications

Effective and competitively priced water utilities (including irrigation)

Effective and competitively priced electricity utilities

4. Enterprises in the sector enjoy: (Y/N) Remarks

Export incentives

Tax incentives

Access to cost competitive finance

Access to training and competency development services

D. Business Attitudes (in the sector)

1. Compared with foreign competitors, enterprises in the sector seek to: (Y/N) Remarks

Continuously improve efficiency

Continuously raise quality performance

Continuously innovate

Continuously upgrade their technology absorption capacity

Pursue realistic business strategies

Enter alliances and cooperation schemes with other local firmsAchieve effective advocacy through business associations

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Benchmark the Sector's Business Environment

The RACI 'A' team member concerned with the task of benchmarking the sectorscompetitiveness should summarize the Teams analysis and conclusions.

The Sectors Competitive Environment Overall Conclusions

Values and Behaviour:

Macroeconomic Environment:

Private Sector Support Environment:

Business Attitudes:


Objectives




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AnalysisW

hereareWeNow?

Step3.

StartwithaThoroug

hAssessmentoftheSector

Assess

Competitors

Itisrecommendedthattwotothreemem

bersoftheStrategyTeamassum

eresponsibilityforcompletingthisassessment.

SectorCo

mpetitiveness

MainCompetitors

CurrentCompetitivenessSituation

LikelyFutureSituation(inabsenceofnewstrateg

y)

More(M),

Equally(E

)

orLess(L

)

Competitiv

e

Why?

More(M),

Equally(E)or

Less

Competitive

Why?

Coun

try1

Coun

try2

Coun

try3

Coun

try4

Coun

try5

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Assess Competitors

Based on the previous analysis, the RACI 'A' team member should complete the following.

Assessment of Competitors to the Sector Overall Conclusions

Main Competitors:

Sectors Current Competitive Position:

Sectors Forecast Competitive Position (3-5 Years):

Key Issues:

Strategic Options:


Objectives




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Review Main Markets, Current Performance and Capacities to Respond to CommercialOpportunities and Demands

Market diversification may be a relevant strategic option for the sector. It is, therefore,important to examine not only current destinations for the sectors exports, but also thesituation and trends in any non-traditional market with potential.

In addition, the Strategy Team should endeavour to identify market opportunities for newproduct lines (and related products) that the sector could potentially produce.

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39

AnalysisWhereareWeNow?

Step3.

StartwithaThoroughAssessmentoftheSector

Review

MainMarkets,CurrentPerform

anceandCapacitiestoRespon

dtoMarketOpportunitiesandDemands

Itisrecommendedthattwotothreemem

bersoftheStrategyTeamassum

eresponsibilityforcompletingthisassessment.

Part1:

MainMarkets(TraditionalandNewMarkets)

Cou

ntry

ProductLinesExportedto

Country

TotalExports

toCountry

(Vol./Value)

Sector'sMarket

Shareas%of

CountrysTotal

Importsof

ProductGroup

ProspectsforIncreasingand/orDiversifyingExportstoCountry

(Remarks)

Recommended

a

sTargetMarket

inFuture

Strategy?

(Yes/No)

1.

/

2.

/

3.

/

4.

/

5.

/

6.

/

Part2:

SectorCapacityandExportPerformance

Sub-

sector

(Produc

t

Line)

Average

Annual

Output

(past3

years)

Capacity

Utilization

(as%of

possible/

installed

production

capacity)

Averag

e

Annua

l

Exports

(past3

years)

Trend

(past3

years)

Growth

Decline

Neutral

Value

Addition

High

Medium

Low

CapacitytoImprove

Per

formancein

TraditionalMarkets

High

Medium

Low

NewMarket/s

withExport

Opportunities

(Specify

Countries)

CapacitytoEnter

theseNewMarkets

High

Medium

Low

KeyFactors

Influencing

Capacityand

Export

Performance

Prioritytobe

Attachedto

ProductLine

High

Medium

Low

1.

2.

3.

4.

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Main Markets, Current Performance and Capacities to Respond

Following the Teams assessment of main markets, performance and capacities to respondthe designated RACI 'A' team member should complete the following summary.

Main Markets, Current Performance and Capacities to Respond - Conclusions

Main and Prospective Markets:

Current Performance:

Sectors Capacity to Improve on Performance:

Scope for Diversification (Markets and Product Lines):


Objectives




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Evaluate Current Approach to Export Development in the Sector

It is important for the Strategy Team to review the initiatives underway to address the issuesthat influence the sectors export competitiveness and prospects for greater value retention,value addition and value creation.

The objective is to identify on-going programmes that are having a positive impact on thesectors export performance and to build on these within the context of an enhanced sector-level strategy.

Likewise, programmes of limited utility, or those which have a negative impact on the sector'sexport performance, should be identified with a view to phasing them out under a futurestrategy.

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Analysis Where are We Now?Step 3. Start with a Thorough Assessment of the Sector

Evaluate Current Approach to Export Development in the Sector

Designated members of the Strategy Team should complete the following assessment.

Assessment Current Approach to Export Development in the Sector

Status Y/N Remarks1. An export strategy exists

for the sector2. Scope and emphasis of strategy

Border-In:

Border

Border-Out3. The strategy is led by

the private sector

4. The strategy specifiespriorities5. The strategy is under

implementation6. The strategy is being

managed and monitored7. The strategys objectives are

8. The principal initiatives of thestrategy are

9. These initiatives areunder implementation

10. The key organizations concernedwith strategy implementation andmanagement are

11. Resource constraints mainly are

financial

institutional

personnel12. The more effective

initiatives/programmes include

13. The public-privatepartnership in strategydesign andmanagement is effective

14. Areas where the strategy is failinginclude

15. New initiatives are required in thefollowing areas

16. Overall the strategy isworking

17. The major lessons learned are

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Current Approach to Export Development in the Sector

The following should be completed by the designated RACI 'A' team member.

Current Approach and Strategy for Export Development in the Sector Conclusions

Key Aspects of Current Strategy:

Level of Effectiveness:

Major Achievements:

Major Shortcomings:

Lessons Learned:


Objectives




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Based on the analysis to date, the Strategy Team may wish to organize a group consultationto prepare preliminary conclusions.

Initial Strategic SummaryAn Assessment of the Sector Where are We Now?

The Sector Business Environment:

Preferred Strategic Option

Competitors:


Main Markets, Current Performance and Capacity to Respond:


Current Approach to Export Development:





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Step 4.Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value

Options

The value chain for any product sector extends from pre-production research anddevelopment, through raw material supply and all activities of production, through handlingand delivery of the product to a foreign buyer, to sale to the final consumer, and finally, todisposal and recycling of the product.

The analysis of the sector's value chain provides the basis for determining the focus of sector-level strategy. The analysis is based on the following premises:

While it is the consumer who determines the ultimate value of the product (in so muchas he or she is, or is not, ready to pay the price for acquiring the product), from thestandpoint of the exporter, it is the international buyer who determines the final valueof the product (i.e. it is the international buyer who determines the price and, in mostcases at least, the exporter is a 'price-taker', not a 'price-maker').

The buyer, international or domestic, largely determines the value of the product ateach stage of value addition (i.e. at each link in the value chain).

The final value of the product (i.e. the price he is prepared to pay), and the valueallocated to each link in the value chain, reflects the buyers preferences withrespect to level of processing, volume and quality of the product, level and nature ofpackaging, the speed of delivery, etc.

Critical success factorsare those buyer preferences and market conditions(suchas market access and market perceptions) that will determine the sectors ability tocompete and the value optionsopen to the Strategy Team.

The value options relate to the ultimate goals of achieving greater value retention,value addition and value creation.

These value-related goals should be the drivers of the sectors future Vision.

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Step4.

ApplyValueChainAnalysis,IdentifyCritical

SuccessFactorsandAssessV

alueOptions

AGene

ricSectorValueChainAnIllu

strationofanAgro-Processed

Product

N

ationa

lComponen

to

fthe

Valu

eCha

in

Ma

inM

arke

t#3

Tools

Supplier

Technology/

Know-How

Supplier

Seed

Supplier

Grower

P

esticide

Supplier

International

Transporter

Importer/

Wholesaler

Disposal/

Recycler

Fertilizer

Supplier

Va

lue

Industrial

Consumer

Ma

inM

arke

t#1

Importer/

Distributor

Re-Packer

Retailer

Consumer

Disposal/

Recycler

Ma

inM

arke

t#2

Importer/

Retailer

Disposal/

Recycler

Consumer

P

rocessor/

Manufacturer

M

achinery

Supplier

Buyer/

Collector/

Transporter

Packaging

Materials

Supplier

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Options

Value chain analysis is a systemic approach to identifying and assessing options.

In addition to ensuring that the strategy effectively addresses issues that influence thesectors current competitiveness (i.e. critical success factors), the value chain approachprovides a framework within which to identify opportunities to:

acquire value by improving efficiency within the national component of the valuechain (and thereby enhancing the sectors competitiveness),

retain greater value by reducing leakage from the national component of the valuechain,

add value by developing new product lines and/or extending the national componentof the value chain,

create value by expanding production of current or new product lines, or by enteringthe value chains of related sectors,

distribute value within the economy by increasing the sectors direct contribution tosuch national development goals as employment generation, poverty reduction, ruraland regional development, gender equality and sustainability of the environment.

The analysis involves:

A. Mapping the sectors value chain

B. Identifying the critical success factorsC. Assessing value optionsD. Developing the initial version of the sectors future value chain that will enable the

Team to identify those linkages in the new chain upon which strategy should focus(i.e. prioritize), and to decide what key initiatives are called for.

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Options

A. Map the Sectors Value Chain

Objective

The objective is to obtain a comprehensive understanding of the sectors current value chainand its dynamics. Specifically:

What are the links in the value chain? Which of the links contribute the most, and the least, value Where in the national component of the chain is value lost (e.g. through inefficiency,

waste or leakage)? Where do unexploited opportunities to retain greater value, add value or create value

exist?

Outputs

The outputs of the exercise are:

A map of the current value chain for the sector, including a detailed map of thenational component of the chain;

An assessment of each links contribution to final value (as determined by the buyer); The identification of opportunities to retain greater value, add value and create value.

How to Proceed

Identify the main links in the international value chain by completing the Assessment -Value Chain Analysis.

It is suggested that the Strategy Team begins with the final consumer, and movesbackwards to the raw material inputs or original intellectual property (i.e. identifying thelinks between consumer, importer, wholesaler and retailer, international handling andshipping, exporting, production, sourcing raw materials, and technical know-how,including R&D).

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Step 4.Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

Example of Value Chain Map and Analysis Chilled Fish Fillets

VALUE CHAIN LINKS ApproximateOnward Selling

Price$US/kg fillets

Approximate Cost

$US/kg fillets

ValueRetained

Analysis

SUPERMARKET $23.00 / kg fillet $15.00 $8 Highest valueaddition

IMPORTER, of which

Handling and repackagingExporter

$15.00 / kg fillet $10.00 =

$ 0.50 +$ 9.50

$5 High value addition

TRANSPORTER $1.50 $1.50 Leakage (non-national carrier)

Freight forwarder $0.50 $0.50 Value additionEXPORTER

, of which

Cost of filletFreight forwardingTransport (cold chain)

$9.50 / kg fillet $7.50 =

$5.50 +$0.50 +$1.50

$2.00 Significant valueaddition

PROCESSOR(filleting, chilling andbulk packing)

$5.50 / kg fillet $4.55 / kg fillet =

$4.25 for whole fish(2.25 kg of whole fish at$1.70 / kg required toproduce 1 kg of fillet i.e.60% wastage)

$0.20 processing cost / kgfillet$0.10 packing material /kg fillet

$0.95 Value addition

Opportunity forvalue creation fromwastage

Packing material supplier(foreign)

$0.10 / kg fillet Leakage

BUYING AGENT $1.70 / kg whole fishchilled

$1.40 / kg whole fish =

$1.30 / kg whole fish$0.10 ice / kg whole fish


Ice supplier $0.10 / kg whole fish $0.10 Value additionARTISANAL FISHERMAN $1.30 / kg whole fish

landed$1.10 / kg whole fishlanded =

boat and tackleamortization


Boat supplier(local) Value additionTackle supplier (imported) Leakage

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50


Step 4.Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

Assessment - Value Chain Analysis

ValueChain Link

ApproximateSelling Price

ApproximateCost

ApproximateValue

Addition

Level ofInfluence

in theValueChain

(High,Medium.

Low)

Linkwith

NationalValueChain

(Yes,No)

Analysis Type ofTrade

SupportServiceInvolved

1. FinalConsumer

- - No

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

How to Complete this Assessment:

Enter the links in the value chain, beginning with the final consumer, and movingbackwards to the raw material inputs (or original intellectual property).

Estimate the cost and the selling price at each link.

The difference between the selling price from one link to the next can be used as a roughestimate of the value created at that link and the level of the link's influence over the entirechain. Precise figures are not necessary. What is necessary, however, is to reachconsensus on where the most value is created. The Strategy Team should determine if,and how, these links can be incorporated into the national component of the value chain(thereby retaining, adding and creating maximum value within the sector).

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Options

B. Assess Ability to Meet Critical Success Factors in Specific Target Markets

Objectives

The objectives are to:

identify the critical success factors within the sector as determined by marketconditions and international buyer preferences,

determine the extent to which the sector complies with these critical success factors, confirm if action is required within the strategy.

Outputs

The outputs will be:

an assessment of the compliance of the sector (i.e. the national component of thevalue chain) to each critical success factor,

the identification of those success factors upon which strategy should focus.

How to Proceed

i) For each geographic market identified earlier (Step 3), the concerned team membersshould assess the sectors competitive position with regard to the following marketconditions:

market access,

technical barriers to trade, other market conditions (e.g. consumer preferences).

Assess which market conditions represent critical success factors and therefore mayneed to be addressed under the sector strategy.

ii) Using the Assessment - Ability to Meet Buyer Preferences establish what the key buyerpreferences are in each target market:

list buyers overall preferences, indicate the relative importance of each preference, indicate how well the sector (i.e. the national component of the value chain) responds

to each preference,

indicate how well international competitors respond to each preference, identify which preferences represent critical success factors.

iii) From the analyses of market conditions and buyer preferences:

confirm the list of critical success factors (general and market specific) that must beaddressed within the sectors future export strategy (to sustain or increasecompetitiveness and to ensure greater value retention, value addition and valuecreation),

determine the initiatives that should be taken at appropriate links in the chain.

Record the results in the Assessment Matrix - Critical Success Factors.

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AnalysisW

hereareWeNow?

Step4.

ApplyVa

lueChainAnalysis,IdentifyCriticalSuccessFactorsandAsse

ssValueOptions

Theconcernedteammembersshouldco

mpletethefollowingmatrix.

ThedesignatedRACI'A'teammembershouldthensummarizethefindingsinthematrix

'Assess

mentCriticalSuccessFactors'.

AssessmentT

argetMarketConditions

Geographic

Market

MarketAccess

(Compe

titive

Advan

tage,

Disa

dvan

tage,

Neu

tra

l)

CSF

(Yes

/No

)

ActionRequired?

(Rec

ommen

da

tion

)

TechnicalBarriers

toTrade

(Compe

titive

Advan

tage,

Disa

dvan

tage,

Neu

tra

l)

CSF

(Y

es

/No

)

ActionRequired?

(Recommen

da

tion

)

OtherM

arket

Conditions

(e.g.

con

sumer

pre

ferences

/biases

)

Competitive

Position

(Advan

tage,

Disa

dvan

tage,

Neu

tra

l)

CSF

(Yes

/No

)

Action

Required?

(Recommendation)

1.

2.

3.

4.

5.

6.

7.

8.

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Options

To be completed by the designated RACI 'A' team member.

Assessment - Critical Success Factors

CriticalSuccessFactor(CSF)

TargetMarket

Specificor

General

Sector's Positionvis--vis

Competitors(Advantageous,

Disadvantageous,Neutral)

Root Causeof the Gap(Basis for

Advantage)

Relevant Link(s)in the Value

Chain

Implications forSector Strategy /Action Required

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

Note:In column 2, indicate whether the CSF is a factor that is relevant to all markets or if it is limitedto a specific market or markets. In the latter case, specify which markets.

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Options

Ability to Meet Buyer Preferences - Example (Coffee)Target Market: (Germany)

1 2 3 4Sector Performance Rating (R)

(1-10)Competitiveness (IxR)Buyer Preference Relative

Importance(I)

(%) National Competitor National CompetitorPrice (ExchangeRisk)

10% 8 7 .80 .70

Volume (For all EUOutlets)

5% 7 8 .35 .40

Quality (EU SPSand HASAAP)

5% 9 8 .45 .40

Moisture Content(EU Standards)

5% 7 7 .35 .35

Packaging (RetailShelf Ready)

5% 8 8 .40 .40

Defects (98%on time and in fullwithin 48 hours ofpicking

25% 3 9 .75 2.25

Roast Appearance 5% 9 6 .45 .30Total 100%CompetitivenessIndex (sum)

5.65 8.10

In this example, we note that the national suppliers have a competitiveness index score of5.65, compared to 8.10, for the highest performing competitor. The analysis shows clearlythat the sector rates poorly vis--vis competitors on the key buyer preferences with respect tosupply consistency and delivery reliability (i.e. those with high relative importance). Meetingthese key buyer preferences is fundamental to the ability of the sector to compete in thisinternational market, and these therefore represent critical success factors.

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Options

To be completed by the relevant members of the Strategy Team for each target market andthe results to be incorporated into the Assessment Critical Success Factors by thedesignated RACI 'A' team member.

Assessment - Ability to Meet Buyer Preferences

Country/Market: (Complete the matrix for each target market)BuyerPreference

RelativeImportance(%)

(I)

Sector PerformanceRating (1 lowest, 10highest)

(R)

Competitiveness

(I x R)

CriticalSuccessFactor(Yes/No)

National Competitors National CompetitorsA.

B.

C.

D.

E.

F.

G.

Total 100% - - - -

The 'Assessment - Ability to Meet Buyer Preferences'above is a decision supporttool that identifies a sectors ability to respond to specific buyer preferences comparedto that of competitors. This matrix can be completed either qualitatively, using aconsensus approach, or by using actual quantitative data.

How to Complete this Matrix

Select the target country/market. List the buyer preferences in column 1. In column 2, using percentages, indicate the relative importance of each preference

to the buyer. In column 3, indicate on a scale of 1 to 10, how well the sector rates on each buyer

preference. Do the same for the three major competitors. In column 4, Competitiveness, multiply the rating (R) (in column 3) by the percentage

Relative Importance (column 2) to obtain a competitiveness score for the sector andfor major competitors (I x R).

In column 5, indicate whether the buyer preference is a Critical Success Factor.Carry-over those buyer preferences deemed to be critical success factors to theAssessment matrix entitled 'Critical Success Factors' (page 51). Specify if the critical

success factor is specific to the market or is general to all potential markets.

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AnalysisW

hereareWeNow?

Step4.

ApplyVa


ssValueOptions

CriticalSuccess

FactorsExample(Fish)

CriticalSuccess

Factor

Phytosa

nitary

Cert

ifica

tion

Consum

er

Pre

ference

Market

SectorPosition

vis--visCompetition

(Advan

tageous,

Disa

dvan

tageous,

Neu

tra

l)

Root

CauseoftheGap

(Bas

isforAdvantage)

RelevantLink(s)in

Valu

eChain

ImplicationsforSectorStrategy

Phytosa

nitary

Cert

ifica

tion

All

Disa

dvan

tageous

Re

lianceon

fore

ign

inspec

tors

Processor

link

Accre

dita

tiono

floca

linspec

tors

Consum

er

Pre

ference

France

Advan

tageous

(Consumer

Prem

ium

for

'Nile

Perc

h'des

igna

tion

)

Exporter

Re

inforce

'bran

d'

Cons

isten

tVo

lumeo

f

Supp

ly

All

Advan

tageous

(abun

dantsupp

ly)

Fishermanan

d

processor

links

Ma

intainsuperiorsu

pp

lycapac

ity

De

livery

France

Sw

itzerlan

d

Disa

dvan

tageous

Infrequenta

irtransport

totarge

t

marke

t

Frequentd

isrup

tions

inco

ldc

ha

in

Transporter

link

Han

dling

link

Chartering

Additiona

lre

frigerat

ioncapac

ity

(mo

bilean

da

ta

irpo

rt)

Price

France

Sw

itzerlan

d

Un

ite

dKing

dom

Neu

tra

l

(advan

tage

ouscos

to

ffilleto

ffse

t

by

disa

dvan

tageouscos

to

fa

ir

fre

ighttohighpriori

tytarge

t

marke

ts)

Transporter

link

Renego

tia

tecargora

tes

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Options

C. Assess Value Options

Objective

The objective is to identify options for reinforcing, adjusting or extending the nationalcomponent of the sector's value chain to maximize value retention, addition and creation.

Output

The intended output is confirmation of possibilities for:

acquiring value by improving efficiency within the national component of the valuechain (and thereby enhancing the sectors competitiveness),

retaining greater value by reducing leakage from the national component of the valuechain,

adding value by developing new product lines and/or extending the nationalcomponent of the value chain,

creating value by increasing production of existing or new product lines or by enteringthe value chains of related sectors,

distributing value within the economy by increasing the sectors direct contribution tosuch national development goals as employment generation, poverty reduction, rural

and regional development, gender equality and sustainability of the environment.

How to Proceed

The Strategy Team should review the sectors current value chain in the context of each ofthe five future scenarios indicated above.

Based on the analysis of these options, the Team should decide, on a preliminary basis,which option, or combination of options, should ideally form the basis of the sectors futurevalue chain and export development strategy.

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Options

C. Assess Value Options How to Proceed (continued)

Value Option I: Acquire value by improving competitiveness

Identify:

dysfunctions within the existing national component of the value chain, and how theycan be overcome,

links, and linkages, within the existing value chain where performance could beimproved, and how,

synergies to be exploited through linkages with other sectors' (or sub-sectors') valuechains, and how

the implications for the enterprises in the sector the implications for trade support services and their providers (i.e. which support

services need to be provided, or improved, to increase the sectors efficiency), andhow.

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59

AnalysisW

hereareWeNow?

Step4.

ApplyVa


ssValueOptions

ValueOptionI:AcquireGreaterValuebyImprovingEfficie

ncy

Na

tiona

lComponen

to

fthe

Va

lue

Cha

in

Ma

inMarke

t#3

Tools

Supplier

Technology

/

Know-How

Supplier

Seed

Supplier

Grower

Pesticide

Supplier

International

Transpo

rter

Importer/

Wholesaler

Disp

osal/

Rec

ycler

Fertilizer

Supplier

Va

lue

Industrial

Consumer

Ma

inMarke

t#1

Importer/

Distributor

Re-Packer

Re

tailer

Consumer

Disp

osal/

Rec

ycler

Ma

inMarke

t#2

Importer/

Retailer

Disp

osal/

Rec

ycler

Consumer

Processor/

Manufacturer

Machinery

Supplier

Buyer/

Collector/

Transporter

Packaging

Materials

Supplier

Be

ttercoo

rdina

tion

Re

duc

tiono

fwas

te

Be

ttercommun

ica

tion

Improve

dimportopera

tionsIm

prove

dimportopera

tions

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60



Options

To be completed by relevant members of the Strategy Team and the findings summarized bythe designated RACI 'A' team member.

Value Option IAcquire Greater Value by Improving Efficiency

Assessment

Correct dysfunctions within the existing national component of the value chain:

Improve linkages within the existing value chain that could be improved:

Maximize synergies through linkages with other sectors' (or sub-sectors') valuechains:


Objectives




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Options


Value Option II: Retain greater value by reducing leakage in the national component ofthe chain

Determine:

the prospects that may exist for local enterprises to secure production inputs andservices locally, rather than from imported sources,

the possibilities for maximizing the involvement of local personnel (and particularlymanagerial personnel) in the operations of foreign-owned firms in the sector,

the scope for encouraging foreign-owned firms to re-invest profits in the nationaleconomy, rather than repatriating them,

what are the implications for the enterprises in the sector (i.e. what they themselvescan do to improve efficiency),

what are the implications for trade support services and their providers (i.e. whichsupport services need to be provided, or improved, to minimize leakages).

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AnalysisW

hereareWeNow?

Step4.

ApplyVa


ssValueOptions

ValueOptionII:RetainGreate

rValuethroughMinimizingLea

kages

NationalComponentoftheValueChain

MainMarket#3

Too

ls

Supp

lier

Tec

hno

logy

/

Know-How

Supp

lier

See

d

Supp

lier

Grower

Pes

tic

ide

Supp

lier

Interna

tional

Transporter

Importer

/

Who

lesa

ler

Disposal

/

Recycler

Fert

ilizer

Supp

lier

Va

lue

Indus

trial

Consumer

MainMarket#1

Importer

/

Distribu

tor

Re-Pac

ker

Re

tailer

Consumer

Disposal

/

Recycler

MainMarket#2

Importer

/

Re

tailer

Disposal

/

Recycler

Consumer

Processor

/

Manu

fac

turer

Mac

hinery

Supp

lier

Buyer

/

Co

llec

tor

/

Transporter

Pac

kag

ing

Ma

teria

ls

Supp

lier

Pac

kag

ing

Ma

teria

ls

Supp

lier

Tools

Supp

lier

Reducedleakage

aslocalsuppliers

replaceimporters

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63



Options


Value Option IIRetain Greater Value by Reducing Leakage in the National Component of the Chain

Assessment

Prospects for local enterprises to secure production inputs and services locally:

Possibilities for maximizing the involvement of local personnel in the operations offoreign-owned firms:

Scope for foreign-owned firms to reinvest profits in the national economy:


Objectives




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Options


Value Option III. Add value by reinforcing and extending the national component of thevalue chain

Confirm if:

the sector can add value by promoting a distinct attribute that differentiates theproduct and enhances its value

the sector can capitalize on certain buyer preferences (e.g. certification) that enhancethe products value,

scope exists for extending the national value chain for existing product lines, production capabilities, buyer preferences and market conditions are consistent with

developing new, higher-value added product lines, there are specific implications for the enterprises in the sector (i.e. what they

themselves can do to add greater value), there are implications for trade support services and their providers (i.e. what key

support services need to be improved to effective promote value addition).

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65


Step4.

ApplyValueChainAnalysis,IdentifyCritical

SuccessFactorsandAssessV

alueOptions

ValueOptionIII:AddValuebyReinforcingandExtendingtheNationalComponentoftheValueChain

NationalComponentoftheValueChain

Main

Market#3

Too

ls

Supp

lier

Tec

hno

logy

/

Know-How

Supp

lier

See

d

Supp

lier

Grower

Pes

tic

ide

Supp

lier

Interna

tional

Transporter

Importer

/

Who

lesa

ler

Disposal

/

Recycler

Fert

ilizer

Supp

lier

Va

lue

Indus

trial

Consumer

MainMarket#1

Importer

/

Distribu

tor

Re-Pac

ker

Re

tailer

Consumer

Disposal

/

Recycler

Main

Market#2

Importer

/

Re

tailer

Disposal

/

Recycler

Consumer

Processor

/

Manu

fac

turer

(prem

ium

high

va

luepro

duc

t

line

)

Mac

hinery

Supp

lier

Buyer

/

Co

llec

tor

/

Transporter

Re-Pac

ker

Pac

kag

ing

Ma

teria

ls

Supp

lier

Valueadded

through

reinforcingand

extendingnational

componentof

chain

Qua

lity

Cert

ifica

tion

Differen

tiating

Attri

bu

te

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Options


Value Option IIIAdd Value by Reinforcing or Extending the National Component of the Value Chain -

Assessment

Scope for promoting a distinct attribute that differentiates the product:

Scope for capitalizing on certain buyer preferences (e.g. certification):

Scope for extending the national value chain for existing product lines:

Scope for developing new, higher-value added product lines:


Objectives




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Options


Value Option IV: Create value by expanding production and/or entering new valuechains within the sector, or related sectors

Determine if:

market and local conditions are consistent with expanding output and capacity, the sector can expand into value chains in associated sectors, and if so, how, there are particular implications for enterprises in the sector (i.e. what they

themselves can do to enter new value chains), there are implications for trade support services and their providers (i.e. what key

support services need to be improved to be able to enter new value chains).

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68

AnalysisW

hereareWeNow?

Step4.

ApplyVa


ssValueOptions

ValueOption

IV:CreateValuethroughExpandingProductionand/orEnteringNewValueChains

Main

Market#3

Too

ls

Supp

lier

Tec

hno

logy

/

Know-How

Supp

lier

See

d

Supp

lier

Grower

Pes

tic

ide

Supp

lier

Interna

tional

Transporter

Importer

/

Who

lesa

ler

Disposal

/

Recycler

Fert

ilizer

Supp

lier

Va

lue

Indus

trial

Consumer

MainMarket#1

Importer

/

Distribu

tor

Re-Pac

ker

Re

tailer

Consumer

Disposal

/

Recycler

Main

Market#2

Importer

/

Re

tailer

Disposal

/

Recycler

Consumer

Processor

/

Manu

fac

turer

Mac

hinery

Supp

lier

Buyer

/

Co

llec

tor

/

Transporter

Pac

kag

ing

Ma

teria

ls

Supp

lier

Growero

f

Organ

ics

Exporter

Exporter

Main

Market#1

Importer

/

Who

lesa

ler

Consumer

Re

tailer

Interna

tional

Transporter

NationalComponentofNewVa

lueChains

Processor

/

Pac

ker

InternationalComponentofNewValueChains

Pac

ker

Interna

tional

Transporter

Pac

kag

ing

Ma

teria

ls

Supp

lier

Valuecreated

through

increased

productionand

creationofnew

valuechains

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Options


Value Option IVCreate Value by Expanding Production and/or Entering New Value Chains

Assessment

Scope for expanding output and capacity:

Scope for expanding into value chains in associated sectors:


Objectives




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Options


Value Option V: Distribute Value by Maximizing the Developmental Impact of theSectors Value Chain

Determine:

the links in the national component of the value chain that are most important fromthe perspective of the sectors overall contribution to economic and socialdevelopment (e.g. poverty alleviation, employment generation, geographicdiversification of productive capacity and gender equality),

if the value options assessed previously are consistent with national developmentobjectives,

what are the implications for enterprises in the sector, what are the implications are for trade support services and the trade support network

overall.

5/28/2018 Product-Sectors_200921859527

Documents

Product-Sectors_20092185952781