collaborating to compete – the value of trust and inter-firm cooperation ruth campbell, acdi/voca...
TRANSCRIPT
COLLABORATING TO COMPETE –THE VALUE OF TRUST AND INTER-FIRM COOPERATION
Ruth Campbell, ACDI/VOCARob Henning, OTF Group September 4, 2008
Global Enabling Environment
National Enabling Environment
Financial (cross cutting)
Input Suppliers
Sector specific providers
Cross-cutting providers
Producers
WholesalersExporters
National Retailers
Processors/Traders
Global Retailers
Processors/Traders
Global Retailers
National Retailers
Input Suppliers
Producers
WholesalersExporters
Financial (cross cutting)
Sector specific providers
Cross-cutting providers
Producers
THE USAID VALUE CHAIN FRAMEWORK
4
WHY INTER-FIRM RELATIONSHIPS MATTER
Enable firms to respond to market demand– aggregate product
– achieve economies of scale
– address shared constraints
– marketing, lobbying
Facilitate transfer of information, skills and services– buyers
– suppliers
– peers COOPERATION
5
WHY INTER-FIRM RELATIONSHIPS MATTER
Enable firms to respond to market demand– aggregate product
– achieve economies of scale
– address shared constraints
– marketing, lobbying
Facilitate transfer of information, skills and services– buyers
– suppliers
– peers COMPETITION
6
WHY INTER-FIRM RELATIONSHIPS MATTER
Provide incentives for upgrading:– increase price-efficiency
– improve quality
– introduce innovation
COMPETITION
7
WHY INTER-FIRM RELATIONSHIPS MATTER
Too little cooperation:– Industry unable to grow
– Dominated by integrated firms
Too little competition:– Non-responsive to customers
– Lose market share
LOW PRICES LEAD TO LOW WAGES
Context: Burundi Coffee Communications Campaign
• OTF Group hired to design a communications campaign to support the reform of coffee industry.
• Burundi’s coffee sells at a steep discount to next door Rwanda
• A key constraint to competitiveness: lack of cooperation and common vision among stakeholders.
4 MENTAL MODELS SEGMENTS
• Comparative Advantage: – short-term focus, government economic leadership, and reliance on
natural endowments.
• Competitive Advantage: – long-term focus, private sector leads the economy, free market
creates prosperity.
• Cautious Followers: – long-term focus, but government leads the economy.
• Need Change Now: – short-term focus, private sector leads the economy.
SEGMENTATION OF ATTITUDES AND BELIEFS
Source: OTF Group Survey of Burundi’s Coffee Value Chain, May & June 2007, n=262.
Coffee Growers
Association Members
Washing Stations
Coffee Board
Exporters
Others
Need for Change
Urgent
Not Urgent
-4
-3
-2
-1
0
1
2
3
4
-5 -4 -3 -2 -1 0 1 2 3 4 5
= 20% of respondents
Competitive AdvantageComparative
Advantage Cautious Followers
Source of AdvantageComparative Competitive
Need Change Now
THE 4 FACES OF BURUNDI’S COFFEE SECTOR
Ludoviko, Coffee Grower
Comparative Advantage
« I want the government to stay involved in the sector because I don’t think the private sector will help us…»
Salvator, Coffee Board
Cautious Follower
« Liberalization and privatization will be a good thing for the country, but we should go slowly … »
Fidélité, Washing Station
Need Change Now
« OCIBU (the coffee board) needs to get out of the coffee business. It is making the entire sector inefficient. »
Frédérique, Private Investor
Competitive Advantage
« Everyone will win with the reform of the sector. Private investors can’t win in the specialty market with sharing revenues with the producers… »
COMMUNICATIONS STRATEGY OBJECTIVES
• Create a common vision – of a competitive Burundian coffee sector.
• Promote cooperation vertically – coffee growers, washing stations, exporters
• Reinforce horizontal competition – to encourage innovation and continuous quality
improvements.
COMMUNICATIONS STRATEGY – COFFEE GROWERS
Pu
shP
ull
Positive Attitudes Constraints
Quality begins with you and leads to
higher prices.
Regulation by the government will
ensure everyone’s best interests.
The private sector cannot win without a
partnership with coffee growers.
Key Messages
Liberalization is effective and
privatization is certain.
INCREASING COOPERATION
• Support transparency – transparent pricing
– explicit contracts
– objective quality standards
INCREASING COOPERATION
• Support transparency
• Reduce risk– guarantees
– risk-sharing mechanisms
– create a “safe space”
INCREASING COMPETITION
• Encourage non price-based competition
• Strengthen multiple relationships – among MSEs
– between MSEs and input suppliers or service providers
– between MSEs and multiple buyers
INCREASING COMPETITION
• Encourage non price-based competition
• Strengthen multiple relationships
• Make MSEs attractive– development of associations
– product improvement
– branding
– alternative financing
22
COOPERATION AND COMPETITION
Sufficient cooperation:– Industry able to grow
– MSEs able to contribute and benefit
Sufficient competition:– Responsive to consumer demand
– Innovate to increase market share