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)