Value Chain Glossary: Competitiveness Strategy
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Competitiveness Strategy
A detailed plan for improving and maintaining firm and/or value chain competitiveness over a long period of time. This involves identifying where and how to compete in target markets, in three areas:
- End market competitiveness
- Upgrading requirements
- Plan for sustaining competitiveness
A competitiveness strategy provides a road map for moving an industry toward higher, sustained rates of growth—it is not just a plan for helping individual firms become more profitable. However, implementing a competitiveness strategy could require working first with a limited number of firms that are willing to invest in order to create a demonstration effect for other firms. This was the case with the Growth-oriented Microenterprise Development (GMED) project in India where initially one wholesaler was willing to buy from smallholders and enter into a partnership with the project. Other buyers eventually followed suit. In the case of Cambodia, improved competitiveness depended on better use of inputs, but suppliers were unwilling to work with poor farmers. However, once they realized that training farmers could lead to a substantial increase in sales for their businesses, input suppliers were eager to improve farmer (and, therefore, value chain) productivity. The challenges to developing a coherent strategy—one that stakeholders are willing to buy into—can be met by forging a shared vision of a competitive industry and developing a plan that benefits everyone, including MSEs.
The design of a competitiveness strategy should follow the selection and analysis of those value chains having the greatest potential to contribute to sustainable economic growth. Value chain analysis is a crucial step in the project design process that identifies end-market opportunities and the constraints that affect industry competitiveness. The competitiveness strategy includes a prioritization of constraints to taking advantage of selected opportunities. Based on this exercise, a plan is developed to address these constraints.
