ࡱ> PRO J7bjbj 4BhhJ/nn;#peeee@@@"""""""$U%':"@@@@@"ee"@Fee"@"r!T!e|x$h!" #0;#v!1( 1(!!1(z",@@@@@@@""@@@;#@@@@1(@@@@@@@@@n w: Value Chain Analysis: A Strategy to Increase Export Earnings  HYPERLINK "http://www.forumdecomercio.org/news/fullstory.php/aid/481/An_E1lisis_de_la_cadena_de_valor:_C_F3mo_aumentar_el_ingreso_por_exportaciones.html" Espaol  HYPERLINK "http://www.forumducommerce.org/news/fullstory.php/aid/488/Analyser_la_cha_EEne_de_valeur:_Une_strat_E9gie_pour_augmenter_les_gains__E0_l_exportation.html" Franais By ITC staff International Trade Centre, International Trade Forum - Issue 1/2003 An innovative, sector-based approach to competitiveness focuses on getting more value from goods and services produced for export. Value chain analysis can help developing countries make the most of their exports. From the perspective of exporters, a national export strategy may seem irrelevant. How, concretely, will a national strategy help the firm grow its business? The most likely area of interest for exporters will be in national programmes that help the sector in which they perform. Strategy-makers must respond to this sector-centric preoccupation, for two reasons. First, exporters need to buy in if the strategy is to be successful. Second, without a sector-specific orientation, the strategy wont address key competitiveness issues that ultimately dictate national export performance. Sector-level strategy means more than identifying market opportunities and organizing related support programmes. Best practice requires deeper analysis, and a wider audience than the exporter. Value chain defined Value chain analysis, in this context, is an innovative tool that developing countries should consider. The value chain approach analyses, at the sector level, each link in the chain of activity from the time when the product or service is only an idea to the time when it is disposed of after use. A value chain for any product or service extends from research and development, through raw materials supply and production, through delivery to international buyers, and beyond that to disposal and recycling. By mapping this process from start to finish, strategy-makers can better determine where they can capture greater value within the national component of the global value chain. Newcomers to value chain analysis should note that international buyers determine value. Quality, dependability, volume, traceability and speed of delivery are among the elements that buyers take into account. Buyers requirements, together with market conditions such as market access, standards and regulations, and consumer preferences determine whether firms from a given country can compete effectively. Thus, a successful sector-based strategy to capture more export earnings needs to reflect market conditions, buyers requirements and the processes required to deliver a product to the market. This rather obvious conclusion has a less than obvious implication. Designing sector-level strategy requires full participation of the private sector. Only the private sector has the breadth of market knowledge to construct a model of the sectors global value chain with sufficient detail for a sound analysis. An example fresh vegetables chain Twenty years ago, small exporters in Kenya would normally buy green beans in local wholesale markets or directly from smallholders, pack them in boxes or sacks and send them to importers in the United Kingdom, who would sell them through national wholesale markets. They would then be bought by a variety of retailers (large and small). Since then, the business has been completely transformed, notes John Humphrey of the Institute of Development Studies, University of Sussex. Fresh vegetables are now mainly sold through large supermarkets. Five supermarket chains account for over 70% of all fresh food retail sales in the UK. Cash-rich but time-poor consumers buy products that are easy-to-use ready-trimmed, washed and mixed with other ingredients. They are much more likely to be wrapped in trays or cellophane packs than presented loose. Product freshness and shelf life have been enhanced by speedier passage through the supply chain. Levels of quality, continuity of supply and consistency of quality across the whole year have become the objectives. Food safety requirements and standards are much stricter, particularly with regard to pesticides and minimum residue levels fixed by the European Union. Traceability now goes from the supermarket shelf to a growers field (literally). Suppliers are monitored and regularly audited. Specialized logistics systems are used to transport fresh vegetables from Kenya to supermarket shelves in the UK within 48 hours. Processing and packaging takes place almost entirely in Kenya with mostly imported materials. Seed companies, exporters, importers and retailers work together to develop new product promotions, new varieties and increased growing seasons. None of the new requirements for the value chain could have been obtained through continued reliance on independent smallholders and wholesale markets. Now a few large exporters dominate the industry. They are linked in exclusive relationships to UK importers, and the import business is consolidating rapidly. Thus the emphasis has switched from finding new markets to improving the efficiency of imported materials. Prof. Humphrey notes, Increasingly, supplying the global market today seems to involve making parts of a product, often to specifications given by an international buyer, or defined in partnership with a buyer. He adds In extreme cases, buyers or traders will provide the raw materials, specify what is to be produced and how, and arrange the logistics. In other cases, the buyer will specify what is required in terms of performance, assess the capabilities of the supplier and then contract with a supplier to provide a product that meets the desired specifications. Lessons for strategy What exporters should note about this and other value chain examples is: Production is only one of a number of value-adding links; import, supply, fiscal, transport and export policies and business support services must be aligned to support sector performance. Mapping the flow of inputs and outputs goods and services in the production chain allows each firm to determine who elses behaviour plays an important role in its success. Upgrading the performance of individual firms may have little impact if the bigger picture is not taken into account through a strategy that facilitates performance for the entire sector. Four upgrade options for firms Exporters can retain or capture more earnings through value chain analysis by evaluating performance gaps, noting where value could be added at each link in the chain, noting the needs for business support and upgrading their activities. Firms can concentrate on one or more of the following: Process. Increase efficiency and effectiveness of internal processes so that these are significantly better than those of rivals, both within individual links in the chain (for example, increased inventory turns, lower scrap) and between the links in the chain (for example, quicker processing of trade documentation). Product. Introduce new products or improve old products more quickly than rivals. This involves changing new product development processes both within individual links in the value chain and in the relationship between different chain links. Functional. Increase value-added by changing the mix of activities conducted within the firm (for example, taking responsibility for, or outsourcing, logistics or design functions) or moving the locus of activities to different links in the value chain (for example, from manufacturing to design). Chain. Move to a new value chain (for example, Taiwanese firms switched from the manufacture of transistor radios to calculators, to televisions, to computer monitors, to laptops and now to wireless application protocol, or WAP, phones). For strategy-makers, too What is innovative about value chain research during the Executive Forum process of the past year is that it provides options for national strategy-makers, not just individual firms. (Most value chain research has focused on improving performance of the firm, rather than using it as a tool for trade development at the national level.) For those looking to boost export performance from a national perspective, the value chain provides an analytical framework with three strategic perspectives. Increases efficiencies within the existing national component of the value chain. Mapping the structure of a national value chain and the value contributed by each link is the first step. Assessing performance and dynamics between linkages is the next step. Such an analysis helps the strategy-maker to determine what type of trade support services should be provided by which institution and where. A commitment to greater efficiency, using a public-private sector approach, could also attract more foreign buyers and investors interested in sourcing from the country, thereby increasing the overall export performance of the sector. Extends the national value chain. A map of the global value chain will identify opportunities to capture greater value by extending the components of the chain undertaken by companies from a given country. For example, one could develop local suppliers who would eventually replace foreign suppliers for inputs required by the sector. Steps could be taken to create value-addition links, such as grading, product finishing or consumer packaging. Builds new value chains. A new value chain can be associated with an existing chain, thereby creating a new export opportunity. For example, in the freshwater fisheries sector in an African country, wastage from the fish processing link in the national chain was turned into fertilizer exports entering a completely different global value chain. From a single product, two sector-level value chains emerge, with each contributing to the national economy. A tool for development The value chain approach helps strategy-makers gain a better understanding of how sectors can contribute to national socioeconomic development by using exports as a tool for development. It gives an overview of how the sector is addressing the issues of employment creation, skills development, geographic diversification of industry and other development issues. This can feed into the strategy design process, helping the strategy team determine priorities, both in terms of action for the sector under review and for the sectors relevance to national export strategy. By helping to explain the distribution of benefits, particularly income, to those participating in the global economy, value chain analysis makes it easier to identify the policies that can be implemented for individual producers and countries to increase their share of these gains. Debate around globalization tends to be polarized between two views globalization is good for the poor or globalization is harmful for the poor, notes Mike Morris of the University of Natal, South Africa. This is much too simplistic a perspective. It is less a matter of globalization being intrinsically good or bad, than how producers and countries insert themselves in the global economy. The key policy issue is not whether to participate in global markets, but how to do so in a way that provides for sustainable income growth. ITC staff Ian Sayers, Natalie Domeisen and Brian Barclay, and ITC consultant Peter Hulm contributed to this article. For more information about value chain analysis, see the Executive Forum web site ( HYPERLINK "http://www.intracen.org/execforum" http://www.intracen.org/execforum) and ITCs Secrets of Strategy Template. John Humphrey of the Institute of Development Studies, University of Sussex, United Kingdom, can be contacted at  HYPERLINK "mailto:j.humphrey@ids.ac.uk" j.humphrey@ids.ac.uk and Mike Morris of the University of Natal, South Africa, at  HYPERLINK "mailto:morrism@nu.ac.za" morrism@nu.ac.za  HYPERLINK "javascript:HaloScan('529');" \t "_self"  >? nv2Uw!!""#$$$&&' ')b)++N-f-/ذذqqqqqqq,ho{ho{56CJOJPJQJ\]aJ&ho{ho{5CJOJPJQJ\aJ&ho{ho{6CJOJPJQJ]aJ+ho{ho{;<B*CJ OJPJQJph#ho{ho{<CJOJPJQJaJ,jho{ho{<CJOJPJQJUaJ ho{ho{CJOJPJQJaJ,>  92V4ddd-D9DM [$\$gdo{$d-D@9DM 9ga$gdo{d-D9DM gdo{4{ I w!!" & Fddd-D9DM [$\$^gdo{ddd-D9DM [$\$gdo{ & Fddd-D9DM [$\$^gdo{"#$&'!')+N-/1/m12455J7 & Fddd-D9DM [$\$^gdo{ddd-D9DM [$\$gdo{ & Fddd-D9DM [$\$^gdo{/0/4l5m55555Z6[6666666667777F7I7J7ǯǯǯǯǯǯ}i}eh\m&ho{ho{5CJOJPJQJ\aJ/jho{ho{5CJOJPJQJU\aJ2ho{ho{6>*B*CJOJPJQJ]aJph/jho{ho{6CJOJPJQJU]aJ&ho{ho{6CJOJPJQJ]aJ ho{ho{CJOJPJQJaJ&ho{ho{5CJOJPJQJ\aJ21h:p\m/ =!"#$% WDd,  c DA Bc_3cH?c\D6c;j-cccS"r $0postCount('529'); type="text/javascript"b!X󆡑NBDnX󆡑NBPNG  IHDRfsRGB@}0PLTE{bIDATE!0Eq^uM&VUp\ &C|)"3.8̴(6 jPtsʄ&)NU- \^w& ^eyƾ_c|_^9IENDB`j 666666666vvvvvvvvv666666>6666666666666666666666666666666666666666666666666hH6666666666666666666666666666666666666666666666666666666666666666662 0@P`p2( 0@P`p 0@P`p 0@P`p 0@P`p 0@P`p 0@P`p8XV~ OJPJQJ_HmH nH sH tH J`J \mNormal dCJ_HaJmH sH tH DA`D Default Paragraph FontRi@R 0 Table Normal4 l4a (k ( 0No List 4U`4 o{0 Hyperlink >*ph`^ ` o{0 Normal (Web)ddd[$\$CJOJPJQJ^JaJ$o$ o{paramn$/!$ o{paramvR/2R o{fancyddd[$\$CJOJPJQJ^JaJRBR C860 Balloon Text dCJOJQJ^JaJN/QN C860Balloon Text CharCJOJQJ^JaJPK![Content_Types].xmlj0Eжr(΢Iw},-j4 wP-t#bΙ{UTU^hd}㨫)*1P' ^W0)T9<l#$yi};~@(Hu* Dנz/0ǰ $ X3aZ,D0j~3߶b~i>3\`?/[G\!-Rk.sԻ..a濭?PK!֧6 _rels/.relsj0 }Q%v/C/}(h"O = C?hv=Ʌ%[xp{۵_Pѣ<1H0ORBdJE4b$q_6LR7`0̞O,En7Lib/SeеPK!kytheme/theme/themeManager.xml M @}w7c(EbˮCAǠҟ7՛K Y, e.|,H,lxɴIsQ}#Ր ֵ+!,^$j=GW)E+& 8PK!Ptheme/theme/theme1.xmlYOo6w toc'vuر-MniP@I}úama[إ4:lЯGRX^6؊>$ !)O^rC$y@/yH*񄴽)޵߻UDb`}"qۋJחX^)I`nEp)liV[]1M<OP6r=zgbIguSebORD۫qu gZo~ٺlAplxpT0+[}`jzAV2Fi@qv֬5\|ʜ̭NleXdsjcs7f W+Ն7`g ȘJj|h(KD- dXiJ؇(x$( :;˹! 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