vc analysis

value-addingactivities

market consolidators

DISTRIBUTORS

BDS (NGOs) Capacity bldg for technology, organizational & enterprise devt

FIs/CPs Financing for trading, equipment,

working capital

ENSURE EQUITABLE DISTRIBUTION OF INDUSTRY/ENTERPRISE GAINS & BENEFITS

CONSUMERS

NGAs, LGUs, Academe, NGOs, Donors, Private Sector Policy support; Information; Technology; Communication

Value-Chain=Operational FrameworkValue-Chain=Operational FrameworkValue-Chain=Operational FrameworkValue-Chain=Operational Framework

FarmerFarmerss

FarmerFarmerss

Industry Industry AssociationAssociationIndustry Industry

AssociationAssociation

TradesTradesTradesTrades



SellsSellsSellsSells

“Value chain” means….

- the sequence of productive processes (functions) from the provision of specific inputs for a particular product to primary production, transformation, marketing and up to final consumption

The competitiveness of a value chain (i.e. its ability to conquer (distant) markets, depends to a large extent on the interplay of all chain operators and their performance.)

As the saying goes: “A chain is as strong as its weakest link“.

Why do Value Chain Analysis?

Reveals the value added at each chain function, the performance of the whole value chain, as well as the constraints and the opportunities to add / capture value.


The economic analysis of the value chain needs to be informed by empirical data on the VC functions, the respective operators and the final market.


VC Analysis helps the actors in a value chain to understand their role for the functioning of the whole chain, as well as to identify business opportunities to add value to the final product.


The use of chain analysis

The basic Value Chain map – Economic Analysis

Trade Final SaleSpecificInputs

Production Trans-formation

Seedlings (2 Php each)

Fertilizer (20 Php/kg)

Pesticide (37Php)

Small holders (10 Php / fruit)

Large Plantations (12 Php / fruit)

Pineapple processing (32 Php / liter)

Wholesaler 38 Php / liter)

Small Retail outlets(50 Php / bottle)

Grocery stores (49 Php / bottle)

RetailTrade

SpecificInputproviders

Farmers,(primaryproducers)

Packers,Agro-industry

Whole-salers

Price received

Trade Final SaleSpecificInputs

Production Trans-formation

The basic Value Chain map – Economic Analysis

4 Php 6 Php

RetailTrade

SpecificInputproviders

Farmers,(primaryproducers)

Packers,Agro-industry

Whole-salers

Value added

Share of Value

16 Php 9 Php 15 Php

8% 12% 32% 18% 30%

The upgrading goal builds … on market opportunities or … on a new business idea

Creating a Goal for the Industry

Goal : based on opportunities

Creating Strategies for the Industry

Strategy : based on the analysis of constraints

The strategy builds on the analysis of the constraints that are impeding the realization of the vision

Providers ofspecific inputs

Primaryproducers

TradersRetailers

Finalconsumers

Logisticcentres,Industry

A fundamental goal for upgrading

Specificinputs Production Processing Trade

Volume Price

Income

** increased value addition in all processes of the Value Chain

**The focus may be on volume, on prices or on both

Current Products New Products

Current Markets

New Markets

Market PenetrationStrategy

Product Development Strategy

Market DevelopmentStrategy

Diversification Strategy

product / market matrix

Classifying strategies

Identifying opportunities

Unique, high quality product

Low cost of production

… the competitive advantage of the value chain Proximity to market

… market situation Supply gaps at local market covered

by expensive imported products

Identifying opportunities

… proven technologies

… strong business organization(s)

… enterprises willing to invest

… labour force for quality improvement and/or processing

Identifying constraints

1. What are the reasons for a VC to stagnate?

2. Which gaps exist between the requirements of a VC derived from market demand and its current structure and performance?

3. Which constraints reduce the competitiveness of the producers and prevent their integration into a VC?

Opportunities and ConstraintsOpportunities Stages/Functions Constraints

Consumption

Trading

Transformation

Production

Inputs

.

.

ConstraintsOpportunities Functions

Inputs

Production

Marketing

FinalConsumers

Worldwide trend on the use of green

products

Need to improve

skills / designs

Lack of local consolidators

& local exporters

Lack of Market

information

Strong support of government

Opportunity to participate in

trade fairs

High Demand (Local Buyers & Exporters)

Availability of Gov’t

Programs

Availability of skilled

workers

Abundant Supply of Raw

Materials

Lack of database on

sources

Poor Quality of materials

Lack of formal organization of suppliers/producers

Raffia Sub sector

Lack of market focus

.

.

Constraints and StrategiesObjective: To increase goat population through the introduction of upgraded stocks by 2013

Constraints Strategies

Final consumers lack appreciation of goat meat

Market Development/Product

advocacy and promotion

Organized coops not yet capable to handle trading

Organizational Development- organize

/strengthen cooperatives

Insufficient supply of upgraded stocks

Supply development of upgraded stocks

Lack of capital/access to credit Networking/linkage with banks/financial institutions

VISION: By 2013, So. Cot. shall be an established supplier of world-class and eco-friendly fashion accessories to Cebu/Manila-based exporters and fashion accessories components to Cebu/Manila-based exporters.

Conduct RM treatment trainings

4th Qtr 2011DTI, DOST,LGU

LGU, DTI, private sector

Improvement of raw material quality and supply

Lobby for legislative support re gathering of RM

Conduct market analysis (European) thru tie-ups with EU chambers, other chambers and JETRO

Market development

EO June 2011

DTI. APFTI2nd Qtr 2011

STRATEGIES ACTIVITIES RESPONSIBLE AGENCY TIMELINE

Develop comprehensive product development program (designs, technology, skills)

4th Qtr 2011

Action Plan

Productdevelopment DTI, APFTI

Maraming Salamat Po!

vc analysis

Documents