Presentation on theme: "Local Competitive Advantage in Kundasale. Structure of this presentation What is “local competitive advantage”? What is the diagnostic of Kundasale? What."— Presentation transcript:
Local competitive advantage: The success of companies depends on: their own effort strong 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 competitiveness: Michael Porter‘s „Diamond“ Supporting institutions Main companies and rivalry Demand conditions Related and supporting 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? 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
General observations: Strong points and opportunities Located close to major market = Kandy Manpower with traditional skills Good competitiveness of a small number of local companies –certified to ISO 9000 or preparing for certification Many untapped business opportunities Availability of supporting industries (transport, communication etc.) Availability of supporting institutions and business development services
General observations: Weaknesses The majority of companies –uses poor, very outdated technology, and do not even use it efficiently –are not very competent in management, accounting etc.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 companies in Kundesale Low quality Medium quality High quality High efficiency = low cost Medium efficiency = high cost Low efficiency = very high cost Where companies want to be Where most companies in Kundasale are
3. What are the proposals to promote competitiveness and growth in Kundasale?
Wood products industry Challenges: –not very efficient (e.g. much waste of materials) –inefficient government regulations cutting transport
Wood products industry Proposal #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 industry Proposal #2: Regulations ESSP documents problems with regulations –ESSP produces a brief document describing the inefficiency of existing regulations ESSP 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 producers Proposal #1: Market access Association collects recipes Association prepares a collection of 15 recipes Association has recipes printed: –leaflets in A8 format (7.4 x 5.2 cm) 1 Recipe included in each package
Mushroom producers Proposal #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 producers Proposal #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 2003 After this visit, ESSP offers to facilitate training course on pest management
Mushroom producers Proposal #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 industry Challenges: –not very efficient (e.g. high energy cost) –access to market
Brassware industry Proposal #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 training address Mr. Rupasinghe (SEEDS) or Mr. Rattanayake (ESSP)
Brassware industry Proposal #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 products address Mr. Rattanayake (ESSP)
Brassware industry Proposal #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 producers Challenges: –not very efficient, very traditional technology –access to market
Lime producers Proposal #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 entrepreneurs Challenges: –improve skills –improve market access
Women entrepreneurs Proposal #1: Skills A Nucleus for Beauty Culture will start working in January 2003 Opportunities: –find sponsors for fact-finding trips abroad, e.g. India A Nucleus for Cutfoliage & Plant Nursery started already
Supporting institutions Challenges: –banks are not very responsive to the demand of small business –many institutions are not business- and customer-oriented
Supporting institutions Proposal #1: Banks CCICP, Women’s Chamber organise quarterly forum with entrepreneurs and financial service providers, sponsored by banks –to inform entrepreneurs about available financial services CCICP, Women’s Chamber organise information seminars on new financial instruments as they become available (e.g. factoring)
Supporting institutions Announcement #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 institutions Announcement #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!
Kundasale as a location for investment Export companies in the BOI Industrial Park come to Kundasale –because they don’t find cheap labour in Colombo –because government won’t give them tax breaks in Colombo What are the advantages of Kundasale as a location for investment? –the climate –and nothing else! –Kundesale has no particular advantage!