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Export Strategy Design Sector-Level Strategy Product Sectors

Guidelines for Strategy-Makers

Acknowledgements
Members of the International Trade Centre's Executive Forum Team prepared these guidelines. Substantive process and technical contributions were provided by Ms. Leonor von Limburg (evtrade, Germany) and Professor Owen Skae (School of Accounting, University of KwaZulu-Natal, South Africa) of the modicum coalition.

Part A

Introduction

Introduction
Application of these Guidelines will result in the preparation of a realistic export development strategy for a product or industry sector. It is recommended that a team, comprising private and public sector representatives, develops the strategy and that it completes the process within a maximum period of three months.

Introduction
The strategy development process involves the completion of thirteen steps. Each step is covered in detail in these Guidelines. The Thirteen Steps of Sector Strategy Design and Management 1 Process Fundamentals 2 Ensure Private Sector Leadership and Public Sector Support Ensure Comprehensive Scope Border-In Border Border-Out Development Benchmark the Sector's Business Environment Assess Competitors Review Main Markets, Current Performance and Capacity to Respond Evaluate Current Approach to Export Development Acquire Greater Value Retain Greater Value Add Value Create Value Distribute Value Current Participants in the Value Chain Potential Participants in the Value Chains Aspiring Participants in the Value Chain Competency Development Trade Information Trade Finance Export Quality Management Other Support Finance Institutions Programmes People

Start with a Thorough Assessment of the Sector

4 Analysis Where are We Now?

Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options to:

Confirm Client Demands and Needs

Review Essential Trade Support Services

7 8 Strategic Focus Where Do We Want to Be? 9 10 11 Formulation and Management How Do We Get There?

Assess Available Resources within Public and Private Sectors Prepare a SWOT Analysis Create a Vision Specify Priorities Establish the Framework for Managing and Monitoring the Strategy

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Formulate a Plan of Action

Confirm Strategic Considerations Determine Objectives Specify Performance Measures Set Targets Specify Initiatives Identify Responsible Organizations Allocate Resources Set the Implementation Schedule

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Maintain the Public-Private Partnership for Strategy Implementation

Introduction
The Strategy Design and Management Framework The thirteen-step process involves determining: (i) (ii) (iii) where the sector currently stands with respect to its international competitiveness and performance, where the sector should be with respect to competitiveness and performance within a period of 3 to 5 years, and how the sector will reach this position within the specified timeframe.

Once the Strategy Team has been established and completed its analysis of where the sector currently stands with respect to foreign competition, performance, market opportunities and capacities to respond (i.e. completed Steps 1 to 8), it should begin the detailed design phase of the process. It is important that the Team determines the most effective approach to managing the implementation of the strategy implementation, concurrently with preparing the strategys detailed design. To this end, it is recommended that the Strategy Team: defines a Vision for the medium-term development of the sector (i.e. where do we want to be in 3 to 5 years' time); takes into account the Perspectives of the various stakeholders in the sector (i.e. the Development Perspective, the Competitiveness Perspective, the Client Perspective and Institutional Perspective); confirms the priority Strategic Considerations of each Stakeholder Perspective; determines what Objectives are to be achieved for each Stakeholder Perspective; agrees the Measures that will be used to determine the extent to which each Objective is being achieved during implementation of the strategy; sets Targets against which these Measures will be benchmarked; specifies the Initiatives that will be implemented to achieve each Objective; identifies those Organizations that will be responsible for implementing each Initiative; realistically assesses and effectively allocates Resources to the implementing Organizations; and prepares a detailed Plan of Action and a schedule for implementing the Initiatives.

In addition, it is recommended that the Strategy Team should decide on which organization, or coalition of organizations, will assume responsibility for monitoring the strategys implementation and impact .

Introduction
The Strategy Design and Management Framework An Illustration
The Development Perspective
Weighting of Perspectives Strategic Consideration #1 - Objectives - Performance and Impact Measures - Targets - Initiatives

To achieve the vision, how must politicians, government decision-makers, civil society and the donor community perceive its relevance from the standpoints of social and economic development and its contribution to the national good? What are the implications for strategy design and management?

Strategic Consideration #1: The Development Gear of Strategy

The Competitiveness Perspective


Strategic Consideration #2-4 - Objectives - Performance and Impact Measures - Targets - Initiatives Priorities

To achieve the vision, how must sector associations and advocacy groups, potential investors (domestic and foreign) and prospective buyers/importers perceive it in terms of reinforcing the sectors capacity, improving the business environment, enhancing participation in the international value chain and increasing the sectors opportunities for value retention, value addition and value creation? What are the implications for strategy design and management? #3: The Border Gear of Strategy #4: The Border-Out Gear of Strategy

#2: The Border-In Gear of Strategy

The Vision The Client Perspective


#5: Client Priorities

To achieve the vision, how must the sectors current, potential and aspiring exporters, and other key enterprises and players in the sectors value chain perceive its relevance in terms of furthering their commercial objectives and satisfying their needs for support? What are the implications for strategy design and management? #8: Trade Finance #9: Quality Management #10: Other Support

Strategic Consideration #5-10 - Objectives - Performance and Impact Measures - Targets - Initiatives

#6: Business Competency

#7: Trade Information

The Institutional Perspective

To achieve the vision, how must each organization w ithin the sectors trade support netw ork, public and private, perceive the vision's relevance in terms of consolidating/reinforcing its position, facilitating its w ork and enhancing its capacities and competencies? What are the implications for strategy design and management? #12: The Services Delivery Netw ork

Resources

Strategic Consideration #11-12 - Objectives - Performance and Impact Measures - Targets - Initiatives

#11: The Strategy Support Netw ork

Introduction
The Sector's Trade Support Network Throughout the strategy design process, the Strategy Team should assess the implications of each decision and strategic option on the sectors trade support network. The trade support network, in fact, involves two networks: the export strategy support network which is responsible for ensuring that the sectors business and policy environment reinforces the sectors competitiveness (and the competitiveness of enterprises in the sector); and the services delivery network, which comprises those public and private sector organizations that provide export-related services to enterprises in the sector.
Relevant Line Ministries Ministry of Education and Research Ministry of Com m unication and Inform ation Technology Ministry of Finance Ministry for Transport Cham ber of Com m erce Ministry for Wom en's Affairs Ministries of Trade, Econom y and Com m erce Export / Com petitiveness Council Association of Exporters and Im porters

Ministry of Foreign Affairs Regional and Local Governm ents Ministry of Labour

Export Strategy Support Network

Environm ent Protection Agency

Board of Investm ent

Statistical Agency

Sectoral Associations Research and Technology Organizations Banks / Financial Services Organizations Clustering Organizations Industrial, Technology Parks & Business Centres Sm all Industry Developm ent Organization Regional Developm ent Organizations NGOs Border-In

Standards Organization Vocational and Training Centers Universities Certification Bodies

Services Delivery Network


Developm ent

National Custom s Authority Border Telecom s Organizations Insurers Forw arders/ Shippers

Wom en's Associations Environm ental Groups Cooperatives Micro Finance Providers Trade Prom otion Organizations Investm ent Prom otion Agency Trade Inform ation Organizations Border-Out Exporters' Associations

Introduction
The Output of the Process - The Sector-Level Export Strategy Document It is recommended that the Strategy Team prepare a written document that summarizes its analysis, conclusions, and recommendations for action. It is, in this regard, important that the Team ensures that specific members are assigned responsibility for preparing the Document at the outset of the strategy design process. Recommended Outline of the Strategy Document
1. Introduction Rationale Principles of Analysis: Scope of Strategy Framework for Strategy Design and Management Application of the Value Chain 2. Where Do We Want to Be? The Vision The Sectors Future Value Chain An Illustration 3. Where Are We Now? An Assessment Export Performance and Assessment of Overall Competitiveness The Sectors Current Value Chain An Illustration Performance against Critical Success Factors Government Policy and Strategy in Support of the Sector The Sectors Trade Support Network: Capacity, Competency and Coordination 4. The Resource Situation in the Public and Private Sectors (Current and Projected) 5. SWOT Analysis of the Sector 6. The Way Forward (over 3-5 years): The Development Perspective Strategic Consideration # 1 Developmental Considerations and Priorities The Competitiveness Perspective Strategic Consideration # 2 Border-In Issues and Priorities Strategic Consideration # 3 Border Issues and Priorities Strategic Consideration # 4 Border-Out Issues and Priorities The Client Perspective Strategic Consideration # 5 Client Prioritization Current Exporters and Other Current Participants in the Value Chain: Support Requirements and Response Potential Exporters and Other Potential Participants in the Value Chain: Support Requirements and Response Aspiring Exporters and Other Aspiring Participants in the Value Chain: Support Requirements and Response Implications for Sector Support Services Strategic Consideration # 6 Business Competency Strategic Consideration # 7 Trade Information Strategic Consideration # 8 Trade Finance Strategic Consideration # 9 Quality Management Strategic Consideration #10 Other Support Services The Institutional Perspective Strategic Consideration # 11 Strengthening the Sectors Strategy Support Network: Strategy Coordination and Management: Structure Process (Strategy Monitoring) Strategic Consideration # 12 The Sectors Services Delivery Network 7. Weighting of the Stakeholder Perspectives and Summary of Strategic Objectives 8. Resource Mobilization Annex 1: Overview of the Sectors Global Market Annex 2: The Plan of Action Annex 3: The Strategys Balanced Scorecard

Part B Process Fundamentals

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Process Fundamentals
Steps 1 and 2 of the Strategy Design and Management Process 1 Process Fundamentals 2 Ensure Private Sector Leadership and Public Sector Support Ensure Comprehensive Scope Border-In Border Border-Out Development

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Process Fundamentals
Step 1. Ensure Private Sector Leadership and Public Sector Support ITC's experience suggests that the private sector has a better understanding (than the public sector) of best business practices and market requirements in the target sector. Consequently, ITC recommends that the private sector should take the lead in designing sector-level strategy. The ITC approach involves, therefore, the private sector determining priorities within each target sector and developing strategy within the context of these priorities, while the public sector maintains responsibility for determining priorities among sectors. To ensure that the design process is effectively managed, it is recommended that overall leadership be assigned to one member of the Strategy Team. Ideally this 'navigator' will be from the sector association. Strategy Team Membership Team Navigator: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #: Team Member 1: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #: Team Member 2: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #: Team Member 3: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #:

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Process Definition
Step 1. Ensure Private Sector Leadership and Public Sector Support Strategy Team Membership (continued) Team Member (4): Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #: Team Member 5: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #: Team Member 6: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #: Team Member 7: Name: Surname: Position: Organization / Company: E-mail Address: Telephone #: Fax #:

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Process Fundamentals
Step 1. Ensure Private Sector Leadership and Public Sector Support To facilitate management, and transparency, and to ensure that all interested parties are engaged in the process, it is recommended that the Team work on the basis of a RACI matrix. The RACI matrix assigns specific functions to each team member with respect to completion of individual tasks: to be Responsible (R) for completing, or contributing to the completion, of a particular task, to be Accountable (A) for the completion of a task by an agreed time and to an agreed standard, to be Consulted (C) while the task is being completed, or to be Informed (I) on progress.

It is advisable to routinely consult and inform all stakeholders, including those who are not Team members. This ensures that there is universal support of the process. It will also facilitate information collection and analysis.

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Example of RACI Matrix

The RACI Matrix Team Member Informed Start End

Week 1 Week 1 Week 1 Week 1 8,9 6,8 5 7,4 Week 1 Week 1 Week 1 Week 1 Week 4 Week 4 Week 4 6 Week 5

Week 2 Week 2 Week 2 Week 2 Week 3 Week 3 Week 3 Week 3 Week 4 Week 4 Week 4 Week 5

. Responsible Accountable Consulted Task Step 1: Ensure Private Sector Leadership and Public Sector Support Task: Establish Sector Strategy Team Navigator Step 2: Ensure Comprehensive Scope Task: Prepare Summary of Strategic Consideration #1: All 4 Development Issues Task: Prepare Summary of Strategic Consideration #2: All 2 Border-In Issues Task: Prepare Summary of Strategic Consideration #3: All 5 Border Issues Task: Prepare Summary of Strategic Consideration #4: All 7 Border-Out Issues Step 3: Start with a Thorough Assessment of the Sector Task: Benchmark the Sector's Business Environment 1,4 7 2,3,5,6 Task: Assess Competitors 2,5 1 3,4,7,9 Task: Review Main Markets, Current Performance and 3,7,9 6 1,2,4,8 Capacities to Respond Task: Review Current Approach to Export Development 5,6 8 1,2,3,9 Step 4: Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Task: Map and Analyze the Value Chain All Navigator Task: Assess Ability to Meet Critical Success Factors All Navigator Task: Review Value Options All Navigator Task: Develop an Initial Version of the Future Value Chain All Navigator Step 5: Confirm Client Demands and Needs Task: Assess Demands and Needs of Client Categories All Navigator 1,5,8

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9 3 8 6 4 2,7 1,2,9 7,8 Week 5 Week 5 Week 5 4,5,9 1,7,8 Week 8 Week 9 Week 9 Week 9 Week 9 Week 9 Navigator Navigator 1 Navigator Navigator Navigator Navigator Navigator Navigator Navigator 1 1 Week 7 Week 7 Week 7 Week 8 Week 9 Week 9 Week 9 Week 9 Week 9 Week 10 Week 10 Week 11 Week 12 Week 12 Week 12

Step 6: Review Essential Trade Support Services Task: Assess Business Competency Development Services 3,4,5,8 Task: Assess Trade Information Services 2,4,6 Task: Assess Trade Finance Services 1,9 Task: Assess Quality Management Services 5,7 Task: Assess Other Trade Support Services (Packaging) 2,5 Step 7: Assess Available Resources within the Public and Private Sectors Task: Assess Available Resources (Strategy Support All Network) (institution specific) Task: Assess Available Resources (Services Delivery All Network) (institution specific) Task: Assess Available Resources (Business Sector) 2,4,7 Step 8: Prepare a SWOT Analysis Task: Complete Sector's SWOT All Step 9: Create a Vision Task: Review Initial Version of Future Value Chain All Task: Draft the Vision All Step 10: Specify Priorities Task: Prepare Long List of Priorities All Task: Weight the Stakeholder Perspectives All Task: Prepare Final List of Priorities All Step 11: Establish the Framework for Managing and Monitoring the Strategy Task: Prepare the Objectives/Measures/Targets Matrix All Step 12: Formulate a Plan of Action Task: Complete the Objectives/Initiatives/Organizations/ All Resources Matrix and Timeframe Step 13: Maintain the Public-Private Partnership for Strategy Implementation Task: Review Options and Determine Structure/Approach All 1,2,6,7 1,5,7,8,9 3,4,5,6 3,4,8 1,3,6,9 Week 6 Week 6 Week 6 Week 6 Week 6 Week 7 Week 7 Week 7 Week 7 Week 7

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The Strategy Teams RACI Matrix

It is recommended that the Strategy Teams navigators complete the following matrix at the beginning of the strategy design process. The RACI Matrix Team Member Informed Start End

. Responsible Accountable Consulted Task Step 1: Ensure Private Sector Leadership and Public Sector Support Task: Establish Sector Strategy Team Step 2: Ensure Comprehensive Scope Task: Prepare Summary of Strategic Consideration #1: Development Issues Task: Prepare Summary of Strategic Consideration #2: Border-In Issues Task: Prepare Summary of Strategic Consideration #3: Border Issues Task: Prepare Summary of Strategic Consideration #4: Border-Out Issues Step 3: Start with a Thorough Assessment of the Sector Task: Benchmark the Sector's Business Environment Task: Assess Competitors Task: Review Main Markets, Current Performance and Capacities to Respond Task: Review Current Approach to Export Development Step 4: Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Task: Map and Analyze the Value Chain Task: Assess Ability to Meet Critical Success Factors Task: Review Value Options Task: Develop an Initial Version of the Future Value Chain Step 5: Confirm Client Demands and Needs Task: Assess Demands and Needs of Client Categories

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Step 6: Review Essential Trade Support Services Task: Assess Business Competency Development Services Task: Assess Trade Information Services Task: Assess Trade Finance Services Task: Assess Quality Management Services Task: Assess Other Trade Support Services (Packaging) Step 7: Assess Available Resources within the Public and Private Sectors Task: Assess Available Resources (Strategy Support Network) Task: Assess Available Resources (Services Delivery Network) Task: Assess Available Resources (Business Sector) Step 8: Prepare a SWOT Analysis Task: Complete Sector's SWOT Step 9: Create a Vision Task: Review Initial Version of Future Value Chain Task: Draft the Vision Step 10: Specify Priorities Task: Prepare Long List of Priorities Task: Weight the Stakeholder Perspectives Task: Prepare Final List of Priorities Step 11: Establish the Framework for Managing and Monitoring the Strategy Task: Prepare the Objectives/Measures/Targets Matrix Step 12: Formulate a Plan of Action Task: Complete the Objectives/Initiatives/Organizations/ Resources Matrix and Timeframe Step 13: Maintain the Public-Private Partnership for Strategy Implementation Task: Review Options and Determine Structure/Approach

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Process Fundamentals
Step 2. Ensure Comprehensive Scope To be effective, sector-level strategy must be comprehensive, responding to all issues that have an impact on the sectors international competitiveness. As importantly, strategy must address the following key question: How will improved competitiveness of the sector contribute directly to the wider concern of economic and social development within the country as a whole? In other words, what is, and what should be the sectors contribution to national development. To achieve this combination of competitiveness and developmental impact, the scope of strategy should comprise four 'gears': the border-in gear the border gear the border-out gear the development gear

For strategy to be effective, each gear must mesh with (i.e. reinforce) the others.

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Process Fundamentals
Step 2. Ensure Comprehensive Scope The tendency is for strategy-makers to concentrate on improving export performance by: seeking increased access for exportable products into priority markets; and concentrating trade support on market development and promotional activities.

In short, strategy-makers are usually preoccupied with the border-out gear of strategy. This preoccupation is inadequate. While border-out activities represent an essential aspect of strategy, they do not address the key factors determining export competitiveness. Export competitiveness is a function of the capacity to sell the product demanded in the international marketplace, at the quantity, quality, price and time required. The border-out gear of strategy does not address these issues. Only through implementation of a strategy that is driven by the combined power of border-in, border and border-out gears, can long-term international competitiveness within the sector be achieved.

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Process Fundamentals
Step 2. Ensure Comprehensive Scope The Border-In Gear of Sector-Level Export Strategy Strategy must ensure that the sectors 'supply side' can effectively respond to opportunities in the international marketplace. Strategy must therefore encompass initiatives to: reinforce existing supply side capacities, develop new capacities, reinforce skill and technical competency and encourage entrepreneurship.

This, paradoxically, requires export strategy to have an inward-looking orientation. Border-in issues can be divided into three categories: Capacity Development Capacity development issues relate to production capability with regard to productivity, volume, quality and value-addition. Enhancing capacity requires the combination of private sector readiness to invest, and the availability of specialized skills and services within the private and public sectors. The challenge for the strategist is twofold: to establish an environment that facilitates skill acquisition, promotes entrepreneurship and stimulates private sector investment, and to ensure that the export support services delivered to enterprises in the sector encourage investment, increased productivity and export orientation.

Capacity Diversification Capacity diversification involves: producing new product lines (i.e broadening and adjusting the sectors current value chain) and/or producing new related products (i.e entering into new value chains associated with the sector).

Given that capacity diversification usually requires capital investment, sector-level strategy should highlight and proactively support the investment decision. Support to the development of enterprise clusters and joint ventures can be particularly effective in diversifying export capacity within a sector. Human Capital Development Strategy-makers must ensure that the strategy addresses directly the need to generate, and continuously upgrade, the sectors basic and specialized vocational, technical and shop-floor competencies. Similarly, the strategy must foster the development of entrepreneurship within the sector.

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Process Fundamentals
Step 2. Ensure Comprehensive Scope It is recommended that each team member completes the following chart and that the designated RACI 'A' team member then prepares an overall summary of the Teams views and findings. Issues The Border-In Gear of Strategy Capacity Development:

Capacity Diversification:

Human Capital Development:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Process Fundamentals
Step 2. Ensure Comprehensive Scope The Border Gear of Export Strategy Border issues have a significant influence on the sectors competitiveness. They define the sector's operating environment, and largely dictate the cost of the export transaction. Analysis of the border gear of strategy is, therefore, of paramount importance to the strategy design process. An initial review of border issues will assist the Strategy Team in identifying what organizations should be closely involved in the process (i.e. the strategy support network and the services delivery network). The Strategy Team will have to consider objectively all border issues that affect the sectors business operating environment. Infrastructure Issues Probably the most obvious border issues to be addressed are bottlenecks in traderelated infrastructure (transport and handling problems in particular). These affect profit margins and limit options for market development (border-out) and capacity development (border-in). Trade Facilitation Issues Perhaps the second most important border issue that the sector strategy must address relates to regulations, administrative procedures and documentation requirements that govern how business (importing, intermediary processing and exporting) is done in the sector. Often the streamlining of import and customs clearance procedures is at the top of the sector strategist's priority action list. 'Cost of Doing Business' Issues The strategy must also seek to reduce the cost of doing business within the sector. Costs of company registration, ISO 9000/1200 certification, Internet access, port fees, inspection charges, insurance premiums, for example, must be minimized.

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Process Fundamentals
Step 2. Ensure Comprehensive Scope Each team member should complete the following chart and the designated RACI 'A' team member should then summarize the Teams views and conclusions. Issues The Border Gear of Strategy Infrastructure:

Trade Facilitation:

Cost of Doing Business:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Process Fundamentals
Step 2. Ensure Comprehensive Scope The Border-Out Gear of Export Strategy The border-out gear of export strategy relates to: Market Access Tariffs, non-tariff barriers and related entry issues. In-Market Support Services Acquisition and dissemination of trade information, identification of commercial opportunities abroad, initiation of contact with potential buyers, and generation of interest among prospective foreign direct investors and joint venture partners. National Promotion Building and reinforcing the sectors image and organizing promotional programmes (e.g. fairs and missions). To achieve the greatest impact, the border-out gear of strategy should focus on export-ready firms.

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Process Fundamentals
Step 2. Ensure Comprehensive Scope Each team member should complete the following chart and the designated RACI 'A' team member should then summarize the Teams views and conclusions. Issues The Border-Out Gear of Strategy: Market Access:

In-Market Support Services:

National Promotion:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Process Fundamentals
Step 2. Ensure Comprehensive Scope The Development Gear of Export Strategy While the border-in, border and border-out gears of strategy directly influence the sector's competitiveness, the development gear of strategy reinforces the sector's contribution to economic and social development within the country. The development gear addresses the key national issues of: Employment generation Poverty alleviation Development of disadvantaged groups and backward regions Gender equality Environmental protection

To ensure widest stakeholder commitment, the strategy must highlight the development perspective.

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Process Fundamentals
Step 2. Ensure Comprehensive Scope Each team member should complete the following chart and the designated RACI 'A' team member should then summarize the Teams views and conclusions. Issues The Development Gear of Strategy Employment generation:

Poverty alleviation:

Development of disadvantaged groups and backward regions:

Gender equality:

Environmental protection:

Other:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Part C Analysis Where are We Now?

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Process Fundamentals
Steps 3 to 8 of the Strategy Design and Management Process Benchmark the Sector's Business Environment Assess Competitors Review Main Markets, Current Performance and Capacity to Respond Evaluate Current Approach to Export Development Acquire Greater Value Retain Greater Value Add Value Create Value Distribute Value Current Participants in the Value Chain Potential Participants in the Value Chains Aspiring Participants in the Value Chain Competency Development Trade Information Trade Finance Export Quality Management Other Support Finance Institutions Programmes People

Start with a Thorough Assessment of the Sector

4 Analysis Where are We Now?

Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options to:

Confirm Client Demands and Needs

Review Essential Trade Support Services

7 8

Assess Available Resources within Public and Private Sectors Prepare a SWOT Analysis

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector To be in a position to identify and assess strategic options, the Strategy Team should first determine where the sector currently stands, in terms of: competitiveness, export performance, readiness to meet future market opportunities and challenges.

As a first step the Strategy Team should: benchmark the sectors business environment, identify competitors, review main markets, current performance and capacity to respond to commercial opportunities and demands, evaluate the current approach to export development.

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Benchmark the Sector's Business Environment It is suggested that each member of the Strategy Team completes the following and then compares notes. Competitiveness Indicators A. Values and Behaviour
1. My country has: Social cohesion A strong legal and institutional base A system of values that encourages learning and innovation A system of values that encourages entrepreneurship Mechanisms to encourage cooperation between the private and public sectors Confidence in the integrity of public institutions and officials (Y/N) Remarks

B. Macroeconomic Environment
1. My country has a predictable macroeconomic environment for enterprise development characterized by: Low budget deficits Tight inflation control Competitive and stable exchange rates Intense local competition (including in the target sector) Competition in the banking system A high level of private business investment (as percentage of GDP) A high level of foreign direct investment Openness to trade (import and export policies) 2. The current approach to the sector's development is: Export-oriented Supportive of business initiatives Supportive of investment in research and development Reinforced by full protection of property rights, including intellectual property (Y/N) Remarks (Y/N) Remarks

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Competitiveness Indicators (continued) C. Private Sector Support Environment
1. Compared to foreign competitors, the sector has a competitive advantage: 2. The competitive advantage of the sector is due to: Sustained investment in human capital Access to a sizeable pool of suitably-trained personnel (basic level) Access to a sizeable pool of suitably-trained personnel (technical and managerial ) Assistance from industry associations Availability of affordable local business counselling and management consulting Availability of technological support (including agricultural extension services) Existence of business incubators Existence of business parks Proactive support to enterprise clustering Tax incentives for training Tax incentives for research and development 3. Enterprise competitiveness in the sector is supported by: Adequate, efficient and competitively priced air cargo transport facilities Adequate, efficient and competitively priced sea cargo facilities Adequate and efficient roads and rail networks Efficient and transparent customs procedures Adequate and efficient warehousing facilities Effective and competitively priced telecommunications Effective and competitively priced water utilities (including irrigation) Effective and competitively priced electricity utilities 4. Enterprises in the sector enjoy: Export incentives Tax incentives Access to cost competitive finance Access to training and competency development services (Y/N) Remarks (Y/N) Remarks (Y/N) Remarks

D. Business Attitudes (in the sector)


1. Compared with foreign competitors, enterprises in the sector seek to: Continuously improve efficiency Continuously raise quality performance Continuously innovate Continuously upgrade their technology absorption capacity Pursue realistic business strategies Enter alliances and cooperation schemes with other local firms Achieve effective advocacy through business associations (Y/N) Remarks

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Benchmark the Sector's Business Environment The RACI 'A' team member concerned with the task of benchmarking the sectors competitiveness should summarize the Teams analysis and conclusions. The Sectors Competitive Environment Overall Conclusions Values and Behaviour:

Macroeconomic Environment:

Private Sector Support Environment:

Business Attitudes:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector

Assess Competitors

It is recommended that two to three members of the Strategy Team assume responsibility for completing this assessment.

Sector Competitiveness
Current Competitiveness Situation Likely Future Situation (in absence of new strategy)

Main Competitors Why? More (M), Equally (E) or Less Competitive Why?

More (M), Equally (E) or Less (L) Competitive

Country 1

Country 2

Country 3

Country 4

Country 5

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Assess Competitors Based on the previous analysis, the RACI 'A' team member should complete the following. Assessment of Competitors to the Sector Overall Conclusions Main Competitors:

Sectors Current Competitive Position:

Sectors Forecast Competitive Position (3-5 Years):

Key Issues:

Strategic Options:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Review Main Markets, Current Performance and Capacities to Respond to Commercial Opportunities and Demands Market diversification may be a relevant strategic option for the sector. It is, therefore, important to examine not only current destinations for the sectors exports, but also the situation and trends in any non-traditional market with potential. In addition, the Strategy Team should endeavour to identify market opportunities for new product lines (and related products) that the sector could potentially produce.

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector

Review Main Markets, Current Performance and Capacities to Respond to Market Opportunities and Demands

It is recommended that two to three members of the Strategy Team assume responsibility for completing this assessment.

Part 1: Main Markets (Traditional and New Markets)


Total Exports to Country (Vol./Value) Sector's Market Share as % of Countrys Total Imports of Product Group Prospects for Increasing and/or Diversifying Exports to Country (Remarks) Recommended as Target Market in Future Strategy? (Yes/No)

Country

Product Lines Exported to Country

1.

/ / / / / /
Trend (past 3 years) Value Addition Capacity to Improve Performance in Traditional Markets High Medium Low High Medium Low Growth Decline Neutral New Market/s with Export Opportunities (Specify Countries) Capacity to Enter these New Markets High Medium Low Key Factors Influencing Capacity and Export Performance Priority to be Attached to Product Line High Medium Low

2.

3.

4.

5.

6.

Part 2: Sector Capacity and Export Performance

Subsector (Product Line)

Average Annual Output (past 3 years)

Capacity Utilization (as % of possible / installed production capacity)

Average Annual Exports (past 3 years)

1.

2.

3.

4.

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Main Markets, Current Performance and Capacities to Respond Following the Teams assessment of main markets, performance and capacities to respond the designated RACI 'A' team member should complete the following summary. Main Markets, Current Performance and Capacities to Respond - Conclusions Main and Prospective Markets:

Current Performance:

Sectors Capacity to Improve on Performance:

Scope for Diversification (Markets and Product Lines):

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Evaluate Current Approach to Export Development in the Sector It is important for the Strategy Team to review the initiatives underway to address the issues that influence the sectors export competitiveness and prospects for greater value retention, value addition and value creation. The objective is to identify on-going programmes that are having a positive impact on the sectors export performance and to build on these within the context of an enhanced sectorlevel strategy. Likewise, programmes of limited utility, or those which have a negative impact on the sector's export performance, should be identified with a view to phasing them out under a future strategy.

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Evaluate Current Approach to Export Development in the Sector Designated members of the Strategy Team should complete the following assessment. Assessment Current Approach to Export Development in the Sector Status Y/N 1. An export strategy exists for the sector 2. Scope and emphasis of strategy Border-In: Border Border-Out 3. The strategy is led by the private sector 4. The strategy specifies priorities 5. The strategy is under implementation 6. The strategy is being managed and monitored 7. The strategys objectives are Remarks

8. The principal initiatives of the strategy are 9. These initiatives are under implementation 10. The key organizations concerned with strategy implementation and management are 11. Resource constraints mainly are financial institutional personnel 12. The more effective initiatives/programmes include 13. The public-private partnership in strategy design and management is effective 14. Areas where the strategy is failing include 15. New initiatives are required in the following areas 16. Overall the strategy is working 17. The major lessons learned are

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Current Approach to Export Development in the Sector The following should be completed by the designated RACI 'A' team member. Current Approach and Strategy for Export Development in the Sector Conclusions Key Aspects of Current Strategy:

Level of Effectiveness:

Major Achievements:

Major Shortcomings:

Lessons Learned:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 3. Start with a Thorough Assessment of the Sector Based on the analysis to date, the Strategy Team may wish to organize a group consultation to prepare preliminary conclusions. Initial Strategic Summary An Assessment of the Sector Where are We Now? The Sector Business Environment:

Preferred Strategic Option

Competitors:

Preferred Strategic Option

Main Markets, Current Performance and Capacity to Respond:

Preferred Strategic Option

Current Approach to Export Development:

Preferred Strategic Option

Implications for Strategy Organizations Concerned Resource Implications

44

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options The value chain for any product sector extends from pre-production research and development, through raw material supply and all activities of production, through handling and delivery of the product to a foreign buyer, to sale to the final consumer, and finally, to disposal and recycling of the product. The analysis of the sector's value chain provides the basis for determining the focus of sectorlevel strategy. The analysis is based on the following premises: While it is the consumer who determines the ultimate value of the product (in so much as he or she is, or is not, ready to pay the price for acquiring the product), from the standpoint of the exporter, it is the international buyer who determines the final value of the product (i.e. it is the international buyer who determines the price and, in most cases at least, the exporter is a 'price-taker', not a 'price-maker'). The buyer, international or domestic, largely determines the value of the product at each stage of value addition (i.e. at each link in the value chain). The final value of the product (i.e. the price he is prepared to pay), and the value allocated to each link in the value chain, reflects the buyers preferences with respect to level of processing, volume and quality of the product, level and nature of packaging, the speed of delivery, etc. Critical success factors are those buyer preferences and market conditions (such as market access and market perceptions) that will determine the sectors ability to compete and the value options open to the Strategy Team. The value options relate to the ultimate goals of achieving greater value retention, value addition and value creation.

These value-related goals should be the drivers of the sectors future Vision.

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Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

A Generic Sector Value Chain An Illustration of an Agro-Processed Product

Value Machinery Supplier Main Market # 1 Re-Packer Technology / Know-How Supplier

Packaging Materials Supplier

Pesticide Supplier

Fertilizer Supplier

Importer / Distributor

Retailer

Consumer

Disposal / Recycler Main Market # 2

Grower

Buyer / Collector / Transporter International Transporter Importer / Retailer

Processor / Manufacturer

Consumer

Disposal / Recycler Main Market # 3

National Component of the Value Chain Importer / Wholesaler

Seed Supplier

Tools Supplier

Industrial Consumer

Disposal / Recycler

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Value chain analysis is a systemic approach to identifying and assessing options. In addition to ensuring that the strategy effectively addresses issues that influence the sectors current competitiveness (i.e. critical success factors), the value chain approach provides a framework within which to identify opportunities to: acquire value by improving efficiency within the national component of the value chain (and thereby enhancing the sectors competitiveness), retain greater value by reducing leakage from the national component of the value chain, add value by developing new product lines and/or extending the national component of the value chain, create value by expanding production of current or new product lines, or by entering the value chains of related sectors, distribute value within the economy by increasing the sectors direct contribution to such national development goals as employment generation, poverty reduction, rural and regional development, gender equality and sustainability of the environment.

The analysis involves: A. B. C. D. Mapping the sectors value chain Identifying the critical success factors Assessing value options Developing the initial version of the sectors future value chain that will enable the Team to identify those linkages in the new chain upon which strategy should focus (i.e. prioritize), and to decide what key initiatives are called for.

47

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options A. Map the Sectors Value Chain Objective The objective is to obtain a comprehensive understanding of the sectors current value chain and its dynamics. Specifically: What are the links in the value chain? Which of the links contribute the most, and the least, value Where in the national component of the chain is value lost (e.g. through inefficiency, waste or leakage)? Where do unexploited opportunities to retain greater value, add value or create value exist?

Outputs The outputs of the exercise are: A map of the current value chain for the sector, including a detailed map of the national component of the chain; An assessment of each links contribution to final value (as determined by the buyer); The identification of opportunities to retain greater value, add value and create value.

How to Proceed Identify the main links in the international value chain by completing the Assessment Value Chain Analysis. It is suggested that the Strategy Team begins with the final consumer, and moves backwards to the raw material inputs or original intellectual property (i.e. identifying the links between consumer, importer, wholesaler and retailer, international handling and shipping, exporting, production, sourcing raw materials, and technical know-how, including R&D).

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Example of Value Chain Map and Analysis Chilled Fish Fillets
VALUE CHAIN LINKS Approximate Onward Selling Price $US/kg fillets $23.00 / kg fillet $15.00 / kg fillet Approximate Cost $US/kg fillets $15.00 $10.00 = $ 0.50 + $ 9.50 $1.50 $9.50 / kg fillet $0.50 $7.50 = $5.50 + $0.50 + $1.50 $4.55 / kg fillet = $4.25 for whole fish (2.25 kg of whole fish at $1.70 / kg required to produce 1 kg of fillet i.e. 60% wastage) $0.20 processing cost / kg fillet $0.10 packing material / kg fillet Packing material supplier (foreign) BUYING AGENT $0.10 / kg fillet $1.70 / kg whole fish chilled $0.10 / kg whole fish $1.30 / kg whole fish landed $1.40 / kg whole fish = $1.30 / kg whole fish $0.10 ice / kg whole fish Ice supplier ARTISANAL FISHERMAN $1.10 / kg whole fish landed = boat and amortization Boat supplier (local) Tackle supplier (imported) tackle Value addition Leakage $0.10 $0.20 Value addition Value addition $0.30 Leakage Value addition Value Retained $8 $5 Analysis

SUPERMARKET IMPORTER, of which Handling and repackaging Exporter TRANSPORTER Freight forwarder EXPORTER, of which Cost of fillet Freight forwarding Transport (cold chain) PROCESSOR (filleting, chilling and bulk packing)

Highest value addition High value addition

$1.50 $0.50 $2.00

Leakage (nonnational carrier) Value addition Significant value addition

$5.50 / kg fillet

$0.95

Value addition Opportunity for value creation from wastage

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Assessment - Value Chain Analysis
Value Chain Link Approximate Selling Price Approximate Cost Approximate Value Addition Level of Influence in the Value Chain (High, Medium. Low) Link with National Value Chain (Yes ,No) Analysis Type of Trade Support Service Involved

1. Final Consumer 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

No

How to Complete this Assessment: Enter the links in the value chain, beginning with the final consumer, and moving backwards to the raw material inputs (or original intellectual property). Estimate the cost and the selling price at each link. The difference between the selling price from one link to the next can be used as a rough estimate of the value created at that link and the level of the link's influence over the entire chain. Precise figures are not necessary. What is necessary, however, is to reach consensus on where the most value is created. The Strategy Team should determine if, and how, these links can be incorporated into the national component of the value chain (thereby retaining, adding and creating maximum value within the sector).

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options B. Assess Ability to Meet Critical Success Factors in Specific Target Markets Objectives The objectives are to: identify the critical success factors within the sector as determined by market conditions and international buyer preferences, determine the extent to which the sector complies with these critical success factors, confirm if action is required within the strategy.

Outputs The outputs will be: an assessment of the compliance of the sector (i.e. the national component of the value chain) to each critical success factor, the identification of those success factors upon which strategy should focus.

How to Proceed i) For each geographic market identified earlier (Step 3), the concerned team members should assess the sectors competitive position with regard to the following market conditions: market access, technical barriers to trade, other market conditions (e.g. consumer preferences).

Assess which market conditions represent critical success factors and therefore may need to be addressed under the sector strategy. ii) Using the Assessment - Ability to Meet Buyer Preferences establish what the key buyer preferences are in each target market: list buyers overall preferences, indicate the relative importance of each preference, indicate how well the sector (i.e. the national component of the value chain) responds to each preference, indicate how well international competitors respond to each preference, identify which preferences represent critical success factors.

iii) From the analyses of market conditions and buyer preferences: confirm the list of critical success factors (general and market specific) that must be addressed within the sectors future export strategy (to sustain or increase competitiveness and to ensure greater value retention, value addition and value creation), determine the initiatives that should be taken at appropriate links in the chain.

Record the results in the Assessment Matrix - Critical Success Factors.

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Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

The concerned team members should complete the following matrix. The designated RACI 'A' team member should then summarize the findings in the matrix 'Assessment Critical Success Factors'. Assessment Target Market Conditions
CSF Action Required? (Recommendation) (Yes/No) Other Market Conditions (e.g. consumer preferences/biases) CSF (Yes/No)

Geographic Market

Market Access

CSF

(Competitive Advantage, Disadvantage, Neutral)

(Yes/No)

Action Required? Technical Barriers (Recommendation) to Trade (Competitive Advantage, Disadvantage, Neutral)

Competitive Position (Advantage, Disadvantage, Neutral)

Action Required? (Recommendation)

1.

2.

3.

4.

5.

6.

7.

8.

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by the designated RACI 'A' team member. Assessment - Critical Success Factors
Critical Success Factor (CSF) Target Market Specific or General Sector's Position vis--vis Competitors (Advantageous, Disadvantageous, Neutral) Root Cause Relevant Link(s) of the Gap in the Value (Basis for Chain Advantage) Implications for Sector Strategy / Action Required

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Note: In column 2, indicate whether the CSF is a factor that is relevant to all markets or if it is limited to a specific market or markets. In the latter case, specify which markets.

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Ability to Meet Buyer Preferences - Example (Coffee) Target Market: (Germany)
1 Buyer Preference 2 Relative Importance (I) (%) 10% 5% 5% 5% 5% 5% 5% 5% 25% 25% 3 Sector Performance Rating (R) (1-10) National 8 7 9 7 8 7 7 8 4 3 Competitor 7 8 8 7 8 7 7 7 9 9 4 Competitiveness (IxR) National .80 .35 .45 .35 .40 .35 .35 .40 1.0 .75 Competitor .70 .40 .40 .35 .40 .35 .35 .35 2.25 2.25

Price (Exchange Risk) Volume (For all EU Outlets) Quality (EU SPS and HASAAP) Moisture Content (EU Standards) Packaging (Retail Shelf Ready) Defects (<0.01%) Density of Beans Bean Size Supply Consistency Delivery Reliability (>98% on time and in full within 48 hours of picking Roast Appearance Total Competitiveness Index (sum)

5% 100%

.45 5.65

.30 8.10

In this example, we note that the national suppliers have a competitiveness index score of 5.65, compared to 8.10, for the highest performing competitor. The analysis shows clearly that the sector rates poorly vis--vis competitors on the key buyer preferences with respect to supply consistency and delivery reliability (i.e. those with high relative importance). Meeting these key buyer preferences is fundamental to the ability of the sector to compete in this international market, and these therefore represent critical success factors.

54

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by the relevant members of the Strategy Team for each target market and the results to be incorporated into the Assessment Critical Success Factors by the designated RACI 'A' team member. Assessment - Ability to Meet Buyer Preferences Country/Market: (Complete the matrix for each target market) Buyer Relative Sector Performance Competitiveness Preference Importance Rating (1 lowest, 10 (%) highest) (I) (R) (I x R) National A. B. C. D. E. F. G. Total 100% Competitors National Competitors Critical Success Factor (Yes/No)

The 'Assessment - Ability to Meet Buyer Preferences' above is a decision support tool that identifies a sectors ability to respond to specific buyer preferences compared to that of competitors. This matrix can be completed either qualitatively, using a consensus approach, or by using actual quantitative data. How to Complete this Matrix Select the target country/market. List the buyer preferences in column 1. In column 2, using percentages, indicate the relative importance of each preference to the buyer. In column 3, indicate on a scale of 1 to 10, how well the sector rates on each buyer preference. Do the same for the three major competitors. In column 4, Competitiveness, multiply the rating (R) (in column 3) by the percentage Relative Importance (column 2) to obtain a competitiveness score for the sector and for major competitors (I x R). In column 5, indicate whether the buyer preference is a Critical Success Factor. Carry-over those buyer preferences deemed to be critical success factors to the Assessment matrix entitled 'Critical Success Factors' (page 51). Specify if the critical success factor is specific to the market or is general to all potential markets.

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Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Critical Success Factors Example (Fish)
Sector Position vis--vis Competition
(Advantageous, Disadvantageous, Neutral)

Critical Success Factor Phytosanitary Certification Consumer Preference Disadvantageous Advantageous Advantageous Disadvantageous Infrequent air transport to target market Frequent disruptions in cold chain Neutral (advantageous cost of fillet offset by disadvantageous cost of air freight to high priority target markets) (abundant supply) Fisherman and processor links Transporter link (Consumer Premium for 'Nile Perch' designation) Exporter Reliance on foreign inspectors Processor link

Market

Root Cause of the Gap (Basis for Advantage)

Relevant Link(s) in Value Chain

Implications for Sector Strategy

Phytosanitary Certification

All

Accreditation of local inspectors Reinforce 'brand' Maintain superior supply capacity Chartering

Consumer Preference

France

Consistent Volume of Supply

All

Delivery

France Switzerland

Handling link Transporter link

Additional refrigeration capacity (mobile and at airport) Renegotiate cargo rates

Price

France Switzerland United Kingdom

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options C. Assess Value Options Objective The objective is to identify options for reinforcing, adjusting or extending the national component of the sector's value chain to maximize value retention, addition and creation. Output The intended output is confirmation of possibilities for: acquiring value by improving efficiency within the national component of the value chain (and thereby enhancing the sectors competitiveness), retaining greater value by reducing leakage from the national component of the value chain, adding value by developing new product lines and/or extending the national component of the value chain, creating value by increasing production of existing or new product lines or by entering the value chains of related sectors, distributing value within the economy by increasing the sectors direct contribution to such national development goals as employment generation, poverty reduction, rural and regional development, gender equality and sustainability of the environment.

How to Proceed The Strategy Team should review the sectors current value chain in the context of each of the five future scenarios indicated above. Based on the analysis of these options, the Team should decide, on a preliminary basis, which option, or combination of options, should ideally form the basis of the sectors future value chain and export development strategy.

57

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options C. Assess Value Options How to Proceed (continued) Value Option I: Acquire value by improving competitiveness Identify: dysfunctions within the existing national component of the value chain, and how they can be overcome, links, and linkages, within the existing value chain where performance could be improved, and how, synergies to be exploited through linkages with other sectors' (or sub-sectors') value chains, and how the implications for the enterprises in the sector the implications for trade support services and their providers (i.e. which support services need to be provided, or improved, to increase the sectors efficiency), and how.

58

Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Value Option I: Acquire Greater Value by Improving Efficiency

Value Machinery Supplier Main Market # 1 Re-Packer Technology / Know-How Supplier

Packaging Materials Supplier

Improved import operations Better communication Importer / Distributor

Pesticide Supplier

Fertilizer Supplier

Retailer

Consumer

Disposal / Recycler Main Market # 2

Better coordination Processor / Manufacturer International Transporter Importer / Retailer

Grower

Buyer / Collector / Transporter

Consumer

Disposal / Recycler Main Market # 3 Importer / Wholesaler Industrial Consumer Disposal / Recycler

National Component of the Value Chain Improved import operations

Seed Supplier

Tools Supplier

Reduction of waste

59

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Value Option I Acquire Greater Value by Improving Efficiency Assessment Correct dysfunctions within the existing national component of the value chain:

Improve linkages within the existing value chain that could be improved:

Maximize synergies through linkages with other sectors' (or sub-sectors') value chains:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

60

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options C. Assess Value Options How to Proceed (continued) Value Option II: Retain greater value by reducing leakage in the national component of the chain Determine: the prospects that may exist for local enterprises to secure production inputs and services locally, rather than from imported sources, the possibilities for maximizing the involvement of local personnel (and particularly managerial personnel) in the operations of foreign-owned firms in the sector, the scope for encouraging foreign-owned firms to re-invest profits in the national economy, rather than repatriating them, what are the implications for the enterprises in the sector (i.e. what they themselves can do to improve efficiency), what are the implications for trade support services and their providers (i.e. which support services need to be provided, or improved, to minimize leakages).

61

Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options Value Option II: Retain Greater Value through Minimizing Leakages

Value Machinery Supplier Main Market # 1 Re-Packer Technology / Know-How Supplier

Packaging Materials Supplier

Pesticide Supplier

Fertilizer Supplier

Packaging Materials Supplier

Importer / Distributor Retailer

Consumer

Disposal / Recycler Main Market # 2

Grower

Buyer / Collector / Transporter Processor / Manufacturer International Transporter Importer / Retailer


Reduced leakage as local suppliers replace im porters

Consumer

Disposal / Recycler Main Market # 3

Tools Supplier

National Component of the Value Chain

Importer / Wholesaler

Industrial Consumer

Disposal / Recycler

Seed Supplier

Tools Supplier

62

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Value Option II Retain Greater Value by Reducing Leakage in the National Component of the Chain Assessment Prospects for local enterprises to secure production inputs and services locally:

Possibilities for maximizing the involvement of local personnel in the operations of foreign-owned firms:

Scope for foreign-owned firms to reinvest profits in the national economy:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

63

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options C. Assess Value Options How to Proceed (continued) Value Option III. Add value by reinforcing and extending the national component of the value chain Confirm if: the sector can add value by promoting a distinct attribute that differentiates the product and enhances its value the sector can capitalize on certain buyer preferences (e.g. certification) that enhance the products value, scope exists for extending the national value chain for existing product lines, production capabilities, buyer preferences and market conditions are consistent with developing new, higher-value added product lines, there are specific implications for the enterprises in the sector (i.e. what they themselves can do to add greater value), there are implications for trade support services and their providers (i.e. what key support services need to be improved to effective promote value addition).

64

Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

Value Option III: Add Value by Reinforcing and Extending the National Component of the Value Chain

Value

Machinery Supplier Main Market # 1 Re-Packer

Technology / Know-How Supplier

Pesticide Supplier Re-Packer

Fertilizer Supplier

Packaging Materials Supplier Processor / Manufacturer


(premium high value product line) Quality Certification Value added through reinforcing and extending national com ponent of chain

Importer / Distributor Retailer

Consumer

Disposal / Recycler

Main Market # 2 International Transporter Importer / Retailer Consumer Disposal / Recycler

Grower

Buyer / Collector / Transporter

Differentiating Attribute

Tools Supplier

Main Market # 3 Importer / Wholesaler Industrial Consumer Disposal / Recycler

National Component of the Value Chain

Seed Supplier

65

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member.

Value Option III Add Value by Reinforcing or Extending the National Component of the Value Chain Assessment Scope for promoting a distinct attribute that differentiates the product:

Scope for capitalizing on certain buyer preferences (e.g. certification):

Scope for extending the national value chain for existing product lines:

Scope for developing new, higher-value added product lines:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

66

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options C. Assess Value Options How to Proceed (continued) Value Option IV: Create value by expanding production and/or entering new value chains within the sector, or related sectors Determine if: market and local conditions are consistent with expanding output and capacity, the sector can expand into value chains in associated sectors, and if so, how, there are particular implications for enterprises in the sector (i.e. what they themselves can do to enter new value chains), there are implications for trade support services and their providers (i.e. what key support services need to be improved to be able to enter new value chains).

67

Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

Value Option IV: Create Value through Expanding Production and/or Entering New Value Chains

Value Technology / Know-How Supplier Main Market # 1 Re-Packer

Packaging Materials Supplier

Machinery Supplier

Pesticide Supplier

Fertilizer Supplier

Importer / Distributor Retailer

Consumer

Disposal / Recycler

Value created through increased production and creation of new value chains

Main Market # 2 International Transporter Importer / Retailer Consumer Disposal / Recycler Main Market # 3

Grower

Buyer / Collector / Transporter Processor / Manufacturer

Grower of Organics Exporter

Processor / Packer

International Transporter

Importer / Wholesaler

Industrial Consumer Main Market # 1 Importer / Wholesaler Retailer Consumer

Packer

Packaging Materials Supplier Exporter International Transporter

Disposal / Recycler

National Component of New Value Chains

Seed Supplier

Tools Supplier

International Component of New Value Chains

68

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Value Option IV Create Value by Expanding Production and/or Entering New Value Chains Assessment Scope for expanding output and capacity:

Scope for expanding into value chains in associated sectors:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

69

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options C. Assess Value Options How to Proceed (continued) Value Option V: Distribute Value by Maximizing the Developmental Impact of the Sectors Value Chain Determine: the links in the national component of the value chain that are most important from the perspective of the sectors overall contribution to economic and social development (e.g. poverty alleviation, employment generation, geographic diversification of productive capacity and gender equality), if the value options assessed previously are consistent with national development objectives, what are the implications for enterprises in the sector, what are the implications are for trade support services and the trade support network overall.

70

Analysis Where are We Now?

Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options

Value Option V: Distribute Value by Maximizing the Sectors Contribution to Development:

Value Machinery Supplier Main Market # 1 Re-Packer Technology / Know-How Supplier

Packaging Materials Supplier

Pesticide Supplier

Fertilizer Supplier

Importer / Distributor Retailer

Consumer

Disposal / Recycler

Main Market # 2 Processor / Manufacturer International Transporter Importer / Retailer Consumer Disposal / Recycler Main Market # 3 Exporter Importer / Wholesaler Industrial Consumer Main Market # 1 Importer / Wholesaler Retailer Consumer Disposal / Recycler

Grower

Buyer / Collector / Transporter

Micro-Scale Outgrowers

Handicraft Producers

Income, Employment and Gender Equality Retailer Opportunities Tourist International Transporter

National Component of New Value Chain

Seed Supplier

Tools Supplier

International Component of New Value Chain

71

Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Value Option V Distribute Value by Maximizing the Sectors Contribution to Development Assessment Links that are most important to developmental considerations:

Relevance of Value Options I, II, III and IV to developmental considerations:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 4. Apply Value Chain Analysis, Identify Critical Success Factors and Assess Value Options D. Develop the Preliminary Version of the Sectors Future Value Chain Based on: its assessment of the sectors competitiveness and performance (Step 3), its review of the sectors current value chain and prevailing and projected market conditions and buyer preferences, and its analysis of value options for reinforcing and adjusting the national component of the chain,

the Strategy Team should develop a preliminary outline of the future national component of the value chain.

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Analysis Where are We Now?


Step 5. Confirm Client Demands and Needs The enterprises in the sector are the ultimate clients of the export strategy. To ensure that the strategy has full credibility within, and has the support of, the business community, it must respond to the demands of the enterprises in the sector. At the same time, the strategy must address clients' needs. These may differ substantially from their demands for support as, in many instances, the individual enterprise manager does not recognize his, or his enterprises, needs (e.g. the need for management training). Moreover, the envisaged future value chain, developed in preliminary fashion the Strategy Team (Step 4), may create new needs for support within the sectors business community. Complicating the situation is the fact that different enterprises in the same sector are likely to have different demands and needs, as a consequence of their differing priorities, range of experience and level of prior success in the international marketplace. The strategys clients fall into three categories: Current participants in the national component of the value chain The principal demand from current exporters is most likely to be for export finance, trade information and, of course, market access. Trade facilitation (i.e. the streamlining of regulations and procedures) and reduction in the costs of doing business are also likely to be high on their agenda. Other current participants in the value chain are most likely to prioritize access to finance and border issues. Potential participants in the national component of the value chain Enterprises that have the capacity to export but are not exporting fall into this category. They require encouragement and support before investing in an export effort. They are likely to require a mix of border-in, border and border-out assistance. Aspiring participants in the national component of the value chain This client category wishes to join the export effort, but lacks the capacity to do so. Enterprises in this category tend to be entrepreneurial and therefore should not be overlooked. They are likely to require a broad package of border-in support, at least initially.

As the above suggests, it is essential that the sector strategy addresses not just the demands and current and future needs of exporters. The requirements of other players in the sectors value chain upon whom exporters rely (such as intermediate producers, local suppliers of production inputs, and business services providers) must also be addressed. The strategy should in other words, take into account the activities, demands and needs of all players in the national component of the sectors current and future value chains.

74

Analysis Where are We Now?


Step 5. Confirm Client Demands and Needs Within the context of the sectors current and possibly new (i.e. future) value chain, relevant members of the Strategy Team should complete the following chart and the RACI 'A' team member should then summarize the findings. Issues Enterprise Demands and Needs Key Demands: Current participants in the value chain

Potential participants in the value chain

Aspiring participants in the value chain

Key Needs (Current and Future): Current participants in the value chain

Potential participants in the value chain

Aspiring participants in the value chain

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

75

Analysis Where are We Now?


Step 6. Review Essential Trade Support Services The availability and quality of trade support services is likely to be a major determinant of the sectors competitiveness. It is essential that the Strategy Team determines which export support services are essential and at which links of the value chain. Trade support services most often required by the business community include: Business Competency Development Services Trade Information Services Trade Finance Export Quality Management Services

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services Business Competency Development Services The view of the majority of export managers is that the constraints to steady improvement in export performance are largely external to the enterprise. This assessment is often wrong. The constraints to export are also internal to the firm and often relate to limitations in managements knowledge and skill. The fact remains that in developing and transition economies, the business sector as a whole considers an investment in management training to be money poorly spent. As a consequence, there is, at best, only a small market for competency-development services. Most developing countries lack the capability to deliver competency development services of the type that will have a direct impact on an enterprises competitiveness. Training programmes currently on offer tend to be more general than 'applied', more conceptual than practical, and more information-based than competency-based. They lack sector specificity and generally do not reflect the realities that confront the exporter. The sector export strategy-maker is therefore confronted by two challenges: to change the mindset of the strategy's clients and create demand within the sector for competency development services, to strengthen the trade support networks capability to deliver relevant training and competency development services.

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Issues Business Competency Development Services Creating demand for competency development services within the sector:

Capacity to deliver competency development services of relevance to the sector: Current Value Chain

Envisaged Future Value Chain

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services Trade Information Services Information is essential to decision-making within the enterprise, business associations and sector advocacy groups, as well as public sector support agencies. Strategy-makers may well be correct in assigning top priority to the effective functioning of the trade information aspect of the services delivery network.

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Issues Trade Information Services Client Requirements (Current and Envisaged Future Value Chains): Enterprises:

Sector Associations and Advocacy Groups

Public and Private Sector Business Service Providers

Supply Capability: Public Sector Information Providers

Private Sector Information Providers

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services Trade Finance Access to finance at competitive rates is usually a top priority. Strategy-makers must, therefore, ensure that adequate attention is given to finance and finance-related issues at each 'gear' of export strategy: the border-in gear (availability and affordability of investment and operating capital), the border gear (acceptance of letters of credit, elimination of foreign exchange constraints, facilitation of export transactions and payment), the border-out gear (creation of matching grant programmes, and export credit and guarantee schemes), the development gear (financing of aspiring exporters and of 'pro-poor' export development initiatives).

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Issues Trade Finance

1. Border-In Finance Issues:

2. Border Finance Issues:

3. Border-Out Finance Issues:

4. Development Finance Issues:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services Export Quality Management Services Meeting technical and quality requirements in the international marketplace is a tall order. But it is one that the export strategy for the sector must address. Exporters in the sector must ensure that their products meet the mandatory technical specifications that have been established in main markets to protect consumers health and safety, and the environment. Exporters must also meet the standards and production specifications required by the prospective buyer. Both these mandatory and buyer-specific specifications are critical success factors. To meet these requirements, the exporter, and other participants in the sector's value chain may require: information on mandatory and voluntary requirements in target markets, assistance to adapt the product to meet these requirements, assistance that will enable him to demonstrate that the product meets the mandatory and voluntary requirements.

Creating quality management infrastructure, and incorporating it into the trade support network, is a complex undertaking. It is also expensive and time-consuming. However, establishing a national quality infrastructure is an essential aspect of sectoral competitiveness and a suitable plan of action must be included in the sector's export development strategy.

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Issues Export Quality Management Services Quality Management Needs within the Sector:

Current Response by National Quality Infrastructure:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services Other Trade Support Services Apart from the services most commonly needed by enterprises, there may be other trade support services that are essential for the sector's export performance and competitiveness. These may include: Research, Development and Innovation Export Packaging Handling and Transport

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Analysis Where are We Now?


Step 6. Review Essential Trade Support Services To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Issues Other Trade Support Services

Other Support Service (1):

Other Support Service (2):

Other Support Service (3):

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors The design of sector-level export strategy must be consistent with the resources available to implement it. Otherwise the exercise is not grounded in reality and strategy becomes nothing more than a wish list. In most instances, funding is the greatest resource constraint facing export strategy-makers and the various institutions in the trade support network, public or private (see page 7). The challenges confronting the Strategy Team are, therefore, to: assess correctly the resources available for export development, design an export strategy that is consistent with available resources, allocate these resources in a suitable manner within the trade support network, ensure that the strategy incorporates ways of generating additional resources.

Categories of Resources Finance: Defined in terms of funds available within the private and public sectors to implement strategic action leading to the improvement of the sectors competitiveness and export capacity/performance. Financial resources include the budgets of individual institutions in the trade support network. It is also important for the strategy to accurately estimate the financial resources within the private sector that are available for investment in production and product development. Institutions: Defined in terms of the assets of organizations in the sectors trade support network. Such assets include databases and information systems, contact networks and physical facilities such as training rooms and reference centres, and reputation and goodwill (within the business community). Programmes: Defined in terms of the relevance, efficiency and impact of existing programmes offered by the trade support network that are designed specifically to enhance the sectors competitiveness and export capacity/ performance (e.g. certification schemes, duty drawback schemes, agricultural extension programmes, matching grant schemes, incentive programmes, trade fairs and missions, and awareness and 'export culture' development programmes). People: Defined in terms of the number and competence/experience of individuals within the trade support network. The assessment of the sectors resources, by-and-large, involves estimating the resources of each organization in the sector's trade support network.

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors The strategy support network ensures that the business environment reinforces the international competitiveness of the export sector as a whole. In other words, it ensures that the business environment is 'pro-export'. The services delivery network extends services to the enterprise to enhance its competitiveness. The services delivery network normally includes specialized public and private sector organizations. To be effective, trade support must: develop the overall competitiveness of the enterprise, rather than seek to increase its immediate export sales, develop capabilities, both production and managerial, rather than simply marketing competency, promote technology acquisition, investment and linkages within the national component of the value chain, in addition to making it easier to get the goods out of the country.

One of the key objectives of the strategy must be to build the capacities of the overall trade support network in terms of competence, delivery and coordination.

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors The Sector's Trade Support Network
Relevant Line Ministries Ministry of Education and Research Ministry of Com m unication and Inform ation Technology Ministry of Finance Ministry for Transport Cham ber of Com m erce Ministry for Wom en's Affairs Ministries of Trade, Econom y and Com m erce Export / Com petitiveness Council Association of Exporters and Im porters

Ministry of Foreign Affairs Regional and Local Governm ents Ministry of Labour

Export Strategy Support Network

Environm ent Protection Agency

Board of Investm ent

Statistical Agency

Sectoral Associations Research and Technology Organizations Banks / Financial Services Organizations Clustering Organizations Industrial, Technology Parks & Business Centres Sm all Industry Developm ent Organization Regional Developm ent Organizations NGOs Border-In

Standards Organization Vocational and Training Centers Universities Certification Bodies

Services Delivery Network


Developm ent

National Custom s Authority Border Telecom s Organizations Insurers Forw arders/ Shippers

Wom en's Associations Environm ental Groups Cooperatives Micro Finance Providers Trade Prom otion Organizations Investm ent Prom otion Agency Trade Inform ation Organizations Border-Out Exporters' Associations

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Issues Resources 1. Finance (including Budgets): Public Sector Key Organizations: Private Sector: 2. Institutional Assets: Public Sector Key Organizations: Private Sector: 3. Programmes: Public Sector Key Organizations: Private Sector: 4. People: Public Sector Key Organizations: Private Sector: 5. Impact on the Relevance of the Envisaged Future Value Chain

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors Following its assessment of client needs (Step 6) and resource availability, the Strategy Team should re-visit the preliminary version of the sectors future value chain and adjust it as magnitude of needs and limitations on resources may dictate.

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors It is inevitable that resource availability will fall short of resource requirements. In this respect one of the challenges confronting the team is to mobilize additional resources that the public sector or donor community may be prepared to contribute. Ideally, proposals for incremental resources would be based on self-contained initiatives focusing on specific objectives and outputs.

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Analysis Where are We Now?


Step 7. Assess Available Resources within the Public and Private Sectors To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Resource Mobilization
Sources of Incremental Resources:

Suggested Approach to Generate Interest:

Possible Areas of Focus:

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Analysis Where are We Now?


Step 8. Prepare a Sector SWOT Analysis Based on the 'Where Are We Now?' analysis, selected members of the Strategy Team should prepare a SWOT analysis of the sector. The analysis should be finalized by the designated RACI 'A' team member. Strengths Weaknesses

Opportunities

Threats

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Analysis Where are We Now?


Step 8. - Prepare a Sector SWOT Analysis Example the Tanzanian Leather Sector Strengths
Large and stable cattle and goat population (annual take-off of 2.6 million hides and 3.1 skins) Comprehensive legislation and regulations on animal husbandry, slaughtering, grading and preserving of hides Entrepreneurial business sector driving the movement towards value-addition Extensive under-utilized capacity to add value (i.e. tanning capacity) An sector association with the dynamism, commitment and level of technical support (from UNIDO and CFC) to lead the valueaddition and export development effort A 20% levy on raw hides and skins export (for the exclusive use of the Livestock Development Fund - LDF) which provides a direct incentive to increase export valueaddition and finance development of the sector

Weaknesses
Poor quality hides/skins due to generally inadequate livestock husbandry, branding practices and disease control No commercial incentives to improve quality of hides/skins Small size of hides due to type of breed Poor flaying practices Improper handling of skins and hides prior to processing Prevalent practice of ground drying of skins in rural areas Grossly inadequate enforcement of legislation and regulations Remoteness and poor transportation infrastructure No effluent discharge standards specifically for sector (environmental) Urgent need to re-habilitate/modernize tanneries Inadequate, cumbersome and expensive credit facilities (limited long term facilities) Extensive smuggling into Kenya and Uganda Inadequate monitoring of exports (with consequent under-valuation and implications for the LDF) Over dependence on a single market i.e. Hong Kong. Poor market information Lack of clarity regarding leadership and coordination within the sector

Opportunities Renewed government commitment to support development of sector through enforcement of laws and upgrading of extension services Leather sector under Government consideration to become 'lead' industry, thereby qualifying for special enterprisespecific incentives Government priority to ban live animal exports Production of exotic leather (fish, reptiles, pigs and wild animals) provides new value addition possibilities. Environmental concerns stimulating tanneryrelated FDI Availability of international cooperation to assist development of raw material (i.e. CFC) Joint public-private sector initiative to establish a hides/skins urban exchange Open access to foreign markets, reinforced by initiatives such as AGOA and 'Everything but Arms'

Threats
Absence of solidarity among the major private sector players in the sector Lack of financial reward to herdsmen/farmers likely to undermine move to upgrade quality of hides/skins Poor policing of existing laws and regulations undermines drive towards value-addition Major tanneries 'going slow' to revive their facilities Threat of livestock associated diseases prompting countries to be wary of importing unprocessed animal products (e.g. raw hides) Major market (China) may ban imports of dry hides and skins

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Part D Focus

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Focus
Steps 9 and 10 of the Strategy Design and Management Process Strategic Focus Where Do We Want to Be? 9 10 Create a Vision Specify Priorities

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Focus
Step 9. Create a Vision Creating a vision for the sector is the principal means of unifying, and thereby motivating, all stakeholders in the sector. The vision also provides the foundation for setting priorities. The vision illustrates where the sector ought to be at a future, but not too distant, point in time, ideally three to five years. The vision should, therefore, be fully consistent with a description of the sectors future value chain. The vision should be a short statement that provides an inspirational view of the sectors future position. It should address the concerns of all principal stakeholder groups in the sector. It should be credible but challenging. It should be non-quantitative (i.e. not expressing targets in terms of percentages or specific numbers). The Vision An Example (Agro-Processed Product) "An entrepreneurial and vibrant sector maximizing commercial opportunity while contributing directly and increasingly to rural development and the overall well-being of the country."

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Focus
Step 9. Create a Vision To be completed by all members of the Strategy Team and finalized by the designated RACI 'A' team member. The Vision

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Focus
Step 10. Specify Priorities The issues that the strategy should address will in most instances exceed the resources available. Priorities must therefore be established. Specifying priorities is the most challenging step in the strategy design process. It requires that the Strategy Team has a clear overview of: the strategic options that have emerged during the assessment of the sector (particularly during the value chain analysis and the review of relevant support services), and the availability of resources.

Priorities should be defined taking into account: The Development Perspective This perspective addresses the following questions: How will politicians, government decision-makers, civil society and the donor community perceive the vision from the standpoint of its relevance to social and economic development and its contribution to the national good? What are the implications for the strategys design and management? The Competitiveness Perspective This perspective addresses the following questions: How will sector associations and advocacy groups, potential investors (domestic and foreign) and prospective buyers/importers perceive the vision in terms of reinforcing the sectors capacity, improving the business environment, enhancing participation in the international value chain and increasing the sectors opportunities for value retention, value addition and value creation? What are the implications for the strategys design and management? The Client Perspective This perspective addresses the following questions: How will the sectors current, potential and aspiring exporters and other key enterprises and players in the sectors value chain perceive the vision in terms of furthering their commercial objectives and satisfying their needs for support? What are the implications for the strategys design and management? The Institutional Perspective This perspective addresses the following questions: How will each organization within the trade support network, public and private, perceive the vision in terms of consolidating/reinforcing its position, facilitating its work and enhancing its capacities and competencies? What are the implications for strategy design and management?

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Focus
Step 10. Specify Priorities Priorities and Strategic Considerations: It is recommended that the priorities be grouped under the relevant Strategic Considerations specified in the strategys design and management framework (reference: page 5). Specifically: The Development Perspective: Strategic Consideration #1: Development Employment generation Poverty alleviation Development of disadvantaged and backward regions Environmental sustainability Gender equality Other Competitiveness Perspective: Strategic Consideration #2: Border-In Issues Capacity Development Capacity Diversification Human Capital Development Strategic Consideration #3: Border Issues Infrastructure Trade Facilitation Cost of Doing Business Strategic Consideration #4: Border-Out Issues Market Access In-Market Support National Promotion Client Perspective: Strategic Consideration #5: Client Priorities Current Participants in the Value Chain Potential Participants in the Value Chain Aspiring Participants in the Value Chain Strategic Consideration #6: Business Competency Development Strategic Consideration #7: Trade Information Strategic Consideration #8 : Trade Finance Strategic Consideration #9: Quality Management Strategic Consideration #10: Other Support Services Institutional Perspective: Strategic Consideration #11: Strategy Support Network Coordination (consistency of policy, maximization of transparency, minimization of bureaucracy, reinforcement public-private sector partnership, strengthened lines of communication) Capacity and Competency Development Strategic Consideration #12: Services Delivery Network Coordination (emphasis on specialization and referral, minimization of duplication of effort, optimisation of resources, facilitation of access) Capacity and Competency Development

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Focus
Step 10. Specify Priorities To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Long List of Priorities 1. Priorities - Development Perspective:

2.

Priorities - Competitiveness Perspective:

3.

Priorities - Client Perspective:

4.

Priorities - Institutional Perspective:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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Focus
Step 10. Specify Priorities Once priorities have been established within each Stakeholder Perspective, it is essential that the Team determines priorities among Perspectives. This is achieved by weighting each Perspective. The list of priorities can then be refined, with the top priorities of those Perspectives assigned the greatest weight taking precedence. All Team members should complete the following chart which should then be finalized by the designed RACI 'A' team member. Weighting of Importance of Stakeholders Perspectives Development Perspective Competitiveness Perspective Client Perspective Institutional Perspective % % % %

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Focus
Step 10. Specify Priorities Based on the weighting of Perspectives, the Team should finalize the strategy's priorities, keeping in mind the level of resources that are available. Final Priorities 1. Priorities - Development Perspective:

2.

Priorities - Competitive Perspective:

3.

Priorities - Client Perspective:

4.

Priorities - Institutional Perspective:

Implications for Strategy Objectives On-Going/Required Initiatives Organizations Concerned Resource Implications

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PART E FORMULATION AND MANAGEMENT

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Formulation and Management


Steps 11 to 13 of the Sector Strategy Design and Management Process Establish the Framework for Managing and Monitoring the Strategy Confirm Strategic Considerations Determine Objectives Specify Performance Measures Set Targets Specify Initiatives Identify Responsible Organizations Allocate Resources Set the Implementation Schedule

11 Formulation and Management How Do We Get There?

12

Formulate a Plan of Action

13

Maintain the Public-Private Partnership for Strategy Implementation

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Formulation and Management


Step 11. Establish the Framework for Managing and Monitoring the Strategy Once agreement has been reached on the strategys priorities, the Team should complete the construction of the strategys design and management framework. This design and management framework brings together all the Strategic Considerations within the context of the four Stakeholder Perspectives. For each Strategic Consideration that has been assigned a priority, the Team should: establish Objectives, specify Measures by which strategy-managers can monitor progress, set Targets to facilitate monitoring, and list the Initiatives to be mounted to achieve each Objective, ensuring, of course, that the number and scale of Initiatives are fully consistent with resource availabilities (financing, institutional assets, existing programmes and people).

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Formulation and Management

Step 11. Establish the Framework for Managing and Monitoring the Strategy The Integrated Strategy Design and Management Framework
The Development Perspective
Weighting of Perspectives Strategic Consideration #1 - Objectives - Performance and Impact Measures - Targets - Initiatives

To achieve the vision, how must politicians, government decision-makers, civil society and the donor community perceive its relevance from the standpoints of social and economic development and its contribution to the national good? What are the implications for strategy design and management?

Strategic Consideration #1: The Development Gear of Strategy

The Competitiveness Perspective


Strategic Consideration #2-4 - Objectives - Performance and Impact Measures - Targets - Initiatives Priorities

To achieve the vision, how must sector associations and advocacy groups, potential investors (domestic and foreign) and prospective buyers/importers perceive it in terms of reinforcing the sectors capacity, improving the business environment, enhancing participation in the international value chain and increasing the sectors opportunities for value retention, value addition and value creation? What are the implications for strategy design and management? #3: The Border Gear of Strategy #4: The Border-Out Gear of Strategy

#2: The Border-In Gear of Strategy

The Vision The Client Perspective


#5: Client Priorities

To achieve the vision, how must the sectors current, potential and aspiring exporters, and other key enterprises and players in the sectors value chain perceive its relevance in terms of furthering their commercial objectives and satisfying their needs for support? What are the implications for strategy design and management? #8: Trade Finance #9: Quality Management #10: Other Support

Strategic Consideration #5-10 - Objectives - Performance and Impact Measures - Targets - Initiatives

#6: Business Competency

#7: Trade Information

The Institutional Perspective

To achieve the vision, how must each organization w ithin the sectors trade support netw ork, public and private, perceive the vision's relevance in terms of consolidating/reinforcing its position, facilitating its w ork and enhancing its capacities and competencies? What are the implications for strategy design and management? #12: The Services Delivery Netw ork

Resources

Strategic Consideration #11-12 - Objectives - Performance and Impact Measures - Targets - Initiatives

#11: The Strategy Support Netw ork

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Formulation and Management


Step 11. Establish the Framework for Managing and Monitoring the Strategy

An Example: The Strategy Management and Monitoring Framework for the Agri-Business Sector

1. The Development Perspective

Strategic Consideration #1: The Development Gear of National Export Strategy


Targets 12% increase in full time employment within sector, and 15% increase in part-time employment within the sector by end of year 3 3 new, large-scale agribusiness enterprises established and operational by end of year 3

Objectives Development To raise employment as a direct result of increased export activity in the sector

Measures Actual number of new full-time and parttime hirings by firms in the agri-business sector

Initiatives Intensified involvement of municipal and regional organizations engaged directly in implementation of sector strategy at a grass roots level (identify agencies concerned) Maintenance of minimum wage (Concerned Agencies: Ministry of Labour, National Employers Federation and Union of Agricultural Workers) Investment promotion programme targeting three principal national sources of FDI (Concerned Agencies: National Export and Investment Promotion Agency and Agri-Business Exporters Association) Creation of one-stop investment servicing centre (Concerned Agency: National Export and Investment Promotion Agency) Re-orientation of operations of national and commercial offices abroad to include investment promotion function (Concerned Agency: Ministry of Foreign Affairs)) Proactive market development activities (Private sector enterprises)

Actual number of labour-intensive exportoriented enterprises expanding operations

10% increase in full time employment by established firms in the sector by end year 2 8 labour-intensive exportoriented enterprises expanding production operations by an average of 20% by year 3

Expansion of business linkage programme targeting local producers and prospective external partners ((Concerned Agencies: National Export and Investment Promotion Agency, AgriBusiness Exporters Association and Federation of Chambers of Commerce) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association) Introduction of new lending programmes (Concerned Agencies: National Development Bank and Agriculture Development Bank)

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30 new employment places each year for university graduates beginning year 2 10 NGOs active in poverty reduction having agri-business trade development programmes within 3 years Minimum of 300 outgrowers joining sourcing networks by year 2

Actual number of university graduates obtaining professional employment in the agri-business sector

Development To reduce poverty as a direct result of improved export activity in the sector

Actual increase in number of outgrowers supplying agri-business processors with export activity

Actual number of NGOs operating traderelated poverty reduction programmes in agri-business sector, and scope of these programmes

DfID and USAID funded Regional Poverty Reduction Projects under implementation by years 2 and 3 respectively

Donor response to agri-business export development objectives, particularly with respect to disadvantaged target groups / areas

Development To promote development of backward and disadvantaged regions

Actual number and type of public sector infrastructure projects to support sectorrelated export activities in regions A, B and C

Re-invigorated placement service (Concerned Agency: Agriculture and Business Faculties of University) Introduction of new agri-business curriculum (Concerned Agencies: Ministry of Education and University) Introduction of micro finance and seed distribution programmes targeting the agri-business sector (Concerned Agencies: Ministry of Agriculture, local government and NGOs) Intensification of extension services programme (Concerned Agencies: Ministry of Agriculture and NGOs) Extension of outgrower training programme (Private sector enterprises) Intensified collaboration between key trade support organizations, municipal authorities and NGOs, particularly in geographic regions A, B and C Inauguration of an export awareness programme targeting NGO field staff (Concerned Agencies: National Export and Investment Promotion Agency, Ministry of Agriculture and Agri-Business Exporters Association) Awareness programme targeting donor community, which emphasizes agri-business priorities and ongoing consultations with DfID and USAID (Concerned Agencies: Ministry of Agriculture, Ministry of Regional Development and Ministry of Trade) Trade and development relationship established on agenda of National Export Council Implementation of World Bank Feeder Road project (Concerned Agencies: Ministry of Finance and Ministry of Roads and Transport) Acceleration of storage and distribution programme (Concerned Agencies: Ministry of Agriculture and local governments) Investment promotion programme targeting FDI sources (Concerned Agencies: National Export and Investment Promotion Agency and Agri-Business Exporters Association)

Level of private sector export-related investment going into targeted, less developed regions

New feeder road system established in geographic region A by end of year 3 Storage and silo programme underway in region B by end of year 1 one new, large-scale agribusiness facility established in regions A, B and C by end of year 3 Agri-business cluster established in region C by end year 2 100 prospective outgrowers and 50 specialized agri-business workers trained each year beginning year 1

Actual number of prospective outgrowers and agri-business workers trained

Initiation of cluster promotion and creation of cluster support group in region C (Concerned Agencies: Ministry of Agriculture, Ministry of Regional Development, National Export and Investment Promotion Agency and local government) Extension of outgrower and vocational re-training programmes in regions A, B and C (Concerned Agencies: NGOs and Ministry of Agriculture)

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A minimum of 50% of the total of annual new hirings and outsourcing arrangements 20 percent of new businesses owned and/or operated by women in year 1, increasing to 40 per cent in year 3 A minimum of 50% of advisory, training and support services being provided by women

Actual number of new women hirings in the sector (including outgrowers)

Development To increase the participation of women in the sector

Actual number of new business (including small and micro-businesses) established in the sectors value chain

Actual level of participation of women in delivering the strategys inputs

Consultation with business sector and would-be investors (Concerned Agencies: Ministry of Agriculture, local government, NGOs and private sector enterprises) Expansion training and outreach programmes targeting women entrepreneurs (Concerned Agencies: Small Scale Business Organization, local government and NGOs) Creation of new financial window (Concerned Agency: Agriculture Development Bank) A pro-active, gender equality programme introduced by each organization concerned with delivering support to the sector

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2. The Competitiveness Perspective:

Strategic Consideration #2: The Border-In Gear of National Export Strategy


Objectives Capacity Development To develop supply side capacity within the sector

Measures Actual increase in supply capacity and utilization within the sector

Targets 3 new, large-scale agribusiness enterprises established and operational by end of year 3 Capacity utilization up to 80 percent (from current 55%) by end year 3 8 labour-intensive exportoriented enterprises expanding production operations by an average of 20% by end year 3

Initiatives Investment promotion programme targeting three principal national sources of FDI (Concerned Agencies: National Export and Investment Promotion Agency and Agri-Business Exporters Association) Commencement of a Benefits of Exporting Campaign targeting potential exporters (Concerned Agency: National Export and Investment Promotion Agency) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Market development programmes to increase sales of enterprise in the sector with idle production capacity (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Proactive market development activities (Private sector enterprises) Introduction of new lending programmes (Concerned Agencies: National Development Bank and Agriculture Development Bank) Proactive market development activities (Private sector enterprises) Initiation of cluster promotion and creation of cluster support group in region C (Concerned Agencies: Ministry of Agriculture, Ministry of Regional Development, National Export and Investment Promotion Agency and local government)

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50% of enterprises in the sector confirming an increase in productivity by end year 2

Actual increase in productivity

Local content of sector increased to 85% by the end of year 2 High value added products representing 30% of sectors export value by end of year 2, increasing by 5% annually thereafter

Actual level of value retention within the sector

Creation of new financial window for agri-business enterprises seeking to update technology (Concerned Agency: Agriculture Development Bank) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Extension of activities of National Productivity and Competitiveness Council to include agri-business sector (Concerned Agency: National Productivity and Competitiveness Council) Improved outgrower extension services focusing on efficiency (Concerned Agencies: Ministry of Agriculture and NGOs) Initiation of producer/exporter survey (Concerned Agencies: AgriBusiness Exporters Association and Ministry of Agriculture) Completion and commissioning of local fertilizer production facility (resulting in reduction of import requirement)

Capacity Diversification To diversify the export base into new, high value product lines and associated products)

Actual contribution of high value addition products in sectors export mix

Actual number of new product lines introduced (with emphasis on retail products)

Retail packed products representing 20% of total export value by the end of year 3

Level of product development R&D underway and market testing by enterprises in the sector

Proactive R&D effort underway at cluster and individual enterprise levels.

Invigorated investment promotion programme local and FDI partners (Concerned Agencies: National Export and Investment Promotion Agency) Creation of new financial window for agri-business enterprises seeking to update technology (Concerned Agency: Agriculture Development Bank) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Upgraded enterprise advisory support programme, including feasibility analysis capacity (Concerned Agencies: Small Scale Industries Organization, National Productivity and Competitiveness Council, Agri-Business Exporters Association) Extended outreach and advisory programme (Concerned Agency: National Productivity and Competitiveness Council) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association)

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10 percent increase per year in each category beginning year 2

Human Capital Development To raise the skills base within the sector and to promote entrepreneurship Minimum of 100 potential outgrowers participating each year, beginning year 1 Revamped agri-business curriculum adapted to technical college level by end of year 3 Entrepreneurship programme introduced at 25% of technical colleges by year 2

Actual number of graduates of vocational institutes, technical colleges and universities joining the sector per year

Actual number of participants in outgrower training programme

Number and description of new curricula introduced to support human capital development and stimulate entrepreneurship within the sector

Continuation of programme to upgrade technical and scientific training and expansion of university uplift initiative (Concerned Agencies: Ministry of Education, Ministry of Agriculture, AgriBusiness Exporters Association) Introduction of management trainee programme for university graduates under public-private cost-sharing arrangement (Concerned Agencies: Ministry of Education, Ministry of Agriculture, Agri-Business Exporters Association) Re-invigorated placement service (Concerned Agency: Agriculture and Business Faculties of University) Extension of outgrower and vocational re-training programmes in regions A, B and C (Concerned Agencies: NGOs and Ministry of Agriculture) Introduction of new agri-business curriculum at technical schools (Concerned Agencies: Ministry of Education, University and technical college network) Introduction of entrepreneurship programme at technical colleges (Concerned Agencies: Ministry of Education, Ministry of Industry, University, technical college network and NGOs )

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Strategic Consideration # 3: The Border Gear of National Export Strategy


Targets Transport bottlenecks between production centres CX, CY and CZ overcome by year 2, 3 and 3 respectively Average cargo handling time at national port reduced to 3 days from current 11 days by end of year 2

Objectives Infrastructure To ensure that the physical infrastructure in the country is conducive to sustained improvement in the sectors export performance

Measures Actual level of improvement of transportation infrastructure and handling along key export corridors: roads rail canals seaports airports

Initiatives Implementation of World Bank Feeder Road project (Concerned Agency: Ministry of Roads and Transport) Embark on comprehensive road upgrade between production centres C X, CY and CZ and national port (Concerned Agencies: Ministry of Road and Transport and Port Authority) Completion of rail rehabilitation programme between region RA and national port (Concerned Agencies: Ministry of Roads and Transport , Ministry of Public Works and National Rail Authority) Implementation of national port infrastructure project funded by World Bank loan (Concerned Agency: Ministry of Finance and Port Authority)

Actual levels of availability, reliability and cost of electricity, water and telecommunications

15 percent reduction of electricity tariff for SMEs, with less than 100 full time employees by end of year 1 Irrigation systems established throughout region B and C by end year 3 Expansion of cellular telephone network in region A by end of year 3.

Completion of hydro-electric power generation and uplands irrigation project funded by Islamic Development Bank loan (Concerned Agencies: Ministry of Finance, Ministry of Agriculture and Electricity Authority) Introduction of new electricity tariff structure (Concerned Agency: Electricity Authority) Completion of telecommunications privatization programme (Concerned Agencies: Ministry of Telecommunication and Ministry of Finance) Privatization of national trucking company (Ministry of Finance and Ministry of Roads and Transport)

Actual levels of efficiency of transport carriers (surface, water and air)

Trade Facilitation To minimize regulatory and procedural requirements

Degree of harmonisation of procedures and documents with international conventions

Regularity of road transport service increased in regions A, B and C by 15 percent each year and cost of transport services reduced by 10, 15 and 20 percent respectively in years 1, 2 and 3 Basic documents to aligned with United Nations Layout Key (UNLK) by end of year 2

Confirmation of alignment with UNLK, UN Trade Data Elements ISO 6422, International Conventions (e.g. TIR, ATA) as per UN/CEFACT Compendium of Trade Facilitation Recommendations (Concerned Agencies: Ministry of Trade, Ministry of Finance, Ministry of Agriculture and Customs Administration)

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within the sector

Actual time to undertake all required procedures and obtain approvals necessary to complete an export transaction

Completion of ongoing documentation simplification programme and associated electronic processing initiative (Concerned Agencies: Ministry of Trade and Customs Administration) On-going training and management upgrading programme at Customs Administration (Concerned Agency: Customs Administration) Introduction of bonded warehouse programme (Concerned Agencies: Ministry of Trade and Customs Administration)

Actual time to clear imported materials and equipment required for exportrelated activities

Current 19 documents with an average of 6 days processing time to be reduced to 4 documents in 1 day by end of year 1 Same day clearance for registered and tax compliant importers by end year 2

All costs reduced by an average of 15% per year Full traceability system in place by end of year 2 Informal costs reduced to nil by year 1

Cost of Doing Business To minimize indirect costs of exporting

Actual level of non-tradable costs incurred, e.g. company registration, ISO 9000/2000 certification, clearing and forwarding, internet access and export finance application procedures

Level of compliance with traceability requirements of major trading partners

Actual level of informal costs associated with completing the import and / or export transaction

Introduction of a streamlined, paperless, one-stop registration procedure in place (Concerned Agencies: Customs Administration Ministry of Commerce, Ministry of Finance and Ministry of Trade) Expedition of international accreditation of locally based ISO certification agencies (Concerned Agencies: Customs Administration National Standards Body and Bureau of Standards) Introduction of a computerized interface system for Customs and clearing agents (Concerned Agency: Customs Administration) Promotion of competition among internet service providers (Concerned Agency: Ministry of Telecommunications) Promotion within banks to accept government export credit guarantees (Concerned Agency: Customs Administration Ministry of Finance and Ministry of Trade) Capacity established to provide traceability documentation and certification systems for priority (Concerned Agency: Customs Administration, Standards Bureau and Ministry of Trade) Introduction of zero tolerance anti-corruption programme (Concerned Agencies: Ministry of Trade and Customs Administration:)

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Strategic Consideration # 4: The Border-Out Gear of National Export Strategy


Targets Accession to WTO by year 3 Preferential access to regional markets by end of year 2

Objectives Market Access To secure best possible access into international and regional markets

Measures Comparative access conditions into major markets Comparative access conditions into regional markets

Comparative access conditions into new and emerging markets.

Initiatives Ongoing accession talks (Ministry of Trade, Ministry of Agriculture, Ministry of Foreign Affairs and Ministry of Finance) Ongoing bilateral and regional negotiations (Concerned Agencies: Ministry of Trade, Ministry of Agriculture, Ministry of Foreign Affairs and Agri-Business Exporters Association) Creation of pubic-private sector consultative mechanism to establish negotiation priorities (Concerned Agencies: Ministry of Trade, Ministry of Agriculture and Agri-Business Exporters Association) Exploratory and follow-up consultations with counterparts in countries C1, C2, and C3 (Concerned Agencies: Ministry of Trade, Ministry of Agriculture and Agri-Business Exporters Association)

In-market Business Support To provide the sectors exporters with a full-service advisory and support programme in principal markets

Actual scale, availability and quality of business support services (commercial intelligence, buyer and investor contacts, business and market advisory services) provided by commercial offices abroad to visiting business persons

Bilateral free trade agreements signed with high potential trading partners by end of year 3 All posts abroad equipped to provide hands-on support to incoming business representatives from the sector by end of year 1

Professional cadre established within civil service (Agencies Concerned: Ministry of Foreign Affairs, Ministry of Trade and National Export and Investment Promotion Agency) Expansion of network of commercial representatives abroad (Agencies Concerned: Ministry of Foreign Affairs, Ministry of Trade and National Export and Investment Promotion Agency) Introduction of management and operational processes for commercial representation service, including post performance evaluation system (Agencies Concerned: Ministry of Foreign Affairs and Ministry of Trade) Preparation of brief on sector capacities and enterprises provided to commercial posts abroad (Agencies Concerned: Agri-Business Exporters Association and National Export and Investment Promotion Agency)

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Actual number of participants receiving and utilizing border-out support or information services (including prospective foreign partners)

All enterprises in the sector receiving trade information and market intelligence bulletins disseminated through e by members of services delivery network by end year 1 All enterprises in the sector receiving tailor-made, in-market business support by end year 2

Creation of sector brief and exporters register (Agencies Concerned: Agri-Business Exporters Association and National Export and Investment Promotion Agency) Upgrading and extension of National Export and Investment Promotion Agencys e portal

Expansion of 10% per year of possible foreign partners (investors and/or importers) beginning year 1

Introduction of Opportunity Partnership programme whereby commercial office abroad provides comprehensive pre-visit, during, and post-visit support to individual exporters on contract basis (Agencies Concerned: Agri-Business Exporters Association, National Export and Investment Promotion Agency, posts abroad and individual enterprises). Expansion of commercial intelligence and buyer/investor contact programme by each commercial post abroad

2:1 ratio between market visits and export sales by end year 2 85% score in client satisfaction index by end year 2

Actual commercial impact of the inmarket support provided by members of the services delivery network (i.e. those providing commercial intelligence, trade fairs and missions and business advisory services)

Introduction of Opportunity Partnership programme whereby commercial office abroad provides comprehensive pre-visit , during, and post-visit support to individual exporters on contract basis (Agencies Concerned: Agri-Business Exporters Association, National Export and Investment Promotion Agency, posts abroad and individual enterprises). Introduction of business surveys to confirm commercial results successes and failures ((Agency Concerned: Agri-Business Exporters Association)

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Increased participation of sector enterprises in national trade fairs and missions programme by end year 1 Expanded market development activities by individual enterprises in the sector by end year 1

Actual scale of promotional programmes tailored specifically to the sector

Promotion To establish a positive image both border-out and border-in to reinforce the sectors competitiveness and export effort

All exporter category firms participating in national programmes

Actual scale of participation of sector enterprises in national promotional programmes

Actual number of commercial and investment enquires new contracts negotiated

20% annual increase in enquiries and 10% increase in value of contracts negotiated

Ongoing trade fairs and missions programme (Agencies Concerned: National Export and Investment Promotion Agency and Agri-Business Exporters Association) Introduction of Opportunity Partnership programme whereby commercial office abroad provides comprehensive pre-visit , during, and post-visit support to individual exporters on contract basis (Agencies Concerned: Agri-Business Exporters Association, National Export and Investment Promotion Agency, posts abroad and individual enterprises). Expansion of market development services targeting enterprises in sector with idle production capacity (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Expanded participation of the sector in the national e portal (Concerned Agency: Agri-Business Exporters Association and National Export and Investment Promotion Agency) Commencement of a Benefits of Exporting Campaign targeting potential exporters (National Export and Investment Promotion Agency) Introduction of Opportunity Partnership programme whereby commercial office abroad provides comprehensive pre-visit, during, and post-visit support to individual exporters on contract basis (Agencies Concerned: Agri-Business Exporters Association, National Export and Investment Promotion Agency, posts abroad and individual enterprises). Expansion of market development services targeting enterprises in sector with idle production capacity (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Annual statistical review and business survey (Agencies Concerned: Agri-Business Exporters Association and Federation of Chambers of Commerce))

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3. The Client Perspective:

Strategic Consideration #5: Client Priorities


Targets For current exporters focus on: increased efficiency, increased utilization of existing capacity, and increased value retention and addition

Objectives Focus on Client Priorities To prioritize client categories and to ensure that all priority needs of these clients are addressed

Measures Actual performance of targeted client categories, measured in terms of export growth and increments in value retention and, value addition and value creation for current exporters export activities launched, markets entered and export receipts for potential (or formerly potential) exporters investment and business activities of aspiring exporters efficiency of non-exporting participants in the sectors value chain entry into the sectors value chain by potential or aspiring, non-exporting participants

For potential exporters focus on: increased efficiency, export development

Initiatives Completion of ongoing documentation simplification programme and associated electronic processing initiative (Concerned Agencies: Ministry of Trade and Customs Administration) Upgrading of trade and advisory support services initiative (Concerned Agencies: All members of services delivery network) Extension of activities of National Productivity and Competitiveness Council to include agri-business sector (Concerned Agency: National Productivity and Competitiveness Council) Expansion of business linkage programme targeting local producers and prospective external partners ((Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association) Expedition of international accreditation of locally based ISO certification agencies (Concerned Agencies: Customs Administration National Standards Body and Bureau of Standards) Intensified collaboration between key trade support organizations, municipal authorities and NGOs, particularly in geographic regions A, B and C Introduction of Opportunity Partnership programme whereby commercial office abroad provides comprehensive pre-visit, during, and post-visit support to individual exporters on contract basis (Agencies Concerned: Agri-Business Exporters Association, National Export and Investment Promotion Agency, posts abroad and individual enterprises). Commencement of a Benefits of Exporting Campaign (National Export and Investment Promotion Agency) Expansion of business linkage programme targeting local producers and prospective external partners ((Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of

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For aspiring exporters focus on: value creation

For non-exporting participants in value chain focus on: Increased efficiency and value retention For potential and aspiring members of the sectors value chain focus on: increased efficiency and value creation

Chambers of Commerce) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association) Completion of ongoing documentation simplification programme and associated electronic processing initiative (Concerned Agencies: Ministry of Trade and Customs Administration) Upgrading of trade and advisory support services initiative (Concerned Agencies: All members of services delivery network) Expansion of business linkage programme targeting local producers and prospective external partners ((Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Expansion training and outreach programmes targeting women entrepreneurs (Concerned Agencies: Small Scale Business Organization, local government and NGOs) Creation of new financial window (Concerned Agency: Agriculture Development Bank) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association) Improved outgrower extension services focusing on efficiency (Concerned Agencies: Ministry of Agriculture and NGOs) Introduction of new lending programmes (Concerned Agencies: National Development Bank and Agriculture Development Bank) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association) Consultation with business sector and would-be investors (Concerned Agencies: Ministry of Agriculture, local government, NGOs and private sector enterprises) Introduction of micro finance and seed distribution programmes targeting the agri-business sector (Concerned Agencies: Ministry of Agriculture, local government and NGOs) Introduction of new agri-business curriculum at technical schools (Concerned Agencies: Ministry of Education, University and technical college network) Introduction of new lending programmes (Concerned Agencies: National Development Bank and Agriculture Development Bank) Extension of outgrower and vocational re-training programmes in

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Overall priority to be attached to current exporters 100% positive response

regions A, B and C (Concerned Agencies: NGOs and Ministry of Agriculture) Consultation with business sector and would-be investors (Concerned Agencies: Ministry of Agriculture, local government, NGOs and private sector enterprises) Initiation of client survey (Concerned Agency: Agribusiness Exporters Association, Ministry of Agriculture and National Export and Investment Promotion Agency)

Response of priority client categories to survey (client satisfaction index) on quality of export support services provided by the services delivery network and degree of effectiveness and coordination of strategy support network

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Strategic Consideration #6: Business Competency Development


Targets Nil disputes and complaints

Measures Actual number of export disputes and complaints against current exporters

Objectives A Competent Export Sector To ensure that entrepreneurs and managers in priority client categories have the competency profile required to achieve sustained market success

25%, 40% and 60% of targeted firms achieving first order in years 1, 2, and 3 respectively

Actual number of potential exporters successfully entering the international market

Actual number of aspiring exporters introducing competitiveness-based business development plans

Export start-up plans by 10 firms every six months

Initiatives Expanded export management and related training and business counselling programmes (Concerned Agencies: Ministry of Education, University, technical college network, NGOs, National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Extended outreach and advisory programme (Concerned Agency: National Productivity and Competitiveness Council) Expedition of international accreditation of locally based ISO certification agencies (Concerned Agencies: National Standards Body) Continuation of programme to upgrade technical and scientific training and expansion of university uplift initiative (Concerned Agencies: Ministry of Education, Ministry of Agriculture, AgriBusiness Exporters Association) Expanded export management and related training and business counselling programmes (Concerned Agencies: Ministry of Education, University, technical college network, NGOs, National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) New cluster development / support programme for agri-business (Concerned Agencies: Ministry of Agriculture, Ministry of Industry, Agri-Business Exporters Association) Commencement of a Benefits of Exporting Campaign targeting potential exporters (National Export and Investment Promotion Agency) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Introduction of new, specialized awareness and capacity-building programme targeting priority export sectors (identify agencies concerned) Introduction of entrepreneurship programme at technical colleges (Concerned Agencies: Ministry of Education, Ministry of Industry, University, technical college network and NGOs )

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Business plans introduced by a minimum of 30 sector participants each year

Actual number of non-exporting firms introducing new or updated efficiency improvement / business expansion plans

Introduction of business counselling programme, tailor-made to specific priority export sectors (identify agencies concerned) Intensification of extension services programme (Concerned Agencies: Ministry of Agriculture and NGOs) Inauguration of an export awareness programme targeting NGO field staff (Concerned Agencies: National Export and Investment Promotion Agency, Ministry of Agriculture and Agri-Business Exporters Association) Introduction of new agri-business curriculum at technical schools (Concerned Agencies: Ministry of Education, University and technical college network)

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Strategic Consideration # 7: Trade Information


Targets A fully coordinated trade and technology information service available to the sector by end of year 2

Objectives An Informed Export Community To ensure that coordinated and comprehensive trade information services are available to sector enterprises and decision-makers

Measures Actual increase in the number of specialized information sources and types of information disseminated (general, statistical, analysis, commercial intelligence and qualitative market opportunity) available to the sector

Actual number of recipients of information types disseminated

All current exporters and all potential exporters receiving e based information on a regular basis by end of year 1 15% of recipients paying for qualitative types of information / market intelligence delivered by members of the sectors information network

Actual number of export opportunities pursued and / or influenced as a consequence of receiving trade information

Initiatives Inclusion of the agri-business sector within the information collection and analysis activities of the National Export and Promotion Agency and creation of a first stop shop referral service within the Agency Introduction of a first-stop shop and referral system within the national trade development focal point organization Introduction of a technology information collection and dissemination programme (Concerned Agency: Agri-Business Exporters Association) Expanded cooperation between national focal point and information staff of sector associations (identify agencies concerned) Maintenance of up-to-date profile of information needs of all priority clients (identify agencies concerned) Hardware and software upgrading within national information network (identify agencies concerned) Maintenance of e competency awareness programme within the sectors business community (Concerned Agencies: Agri-Business Exporters Association and the National Productivity and Competitiveness Council) Introduction of income generation activities, i.e. information payment system, whereby service standards are specified and monitored and revenue generated and re-invested into information acquisition and human resource development (Concerned Agency: National Export and Promotion Agency) Reinforced directives on commercial intelligence collection and dissemination to commercial representation service officers and associated reporting system introduced (Concerned Agencies: Ministry of Foreign Affairs, Ministry of Trade and National Export and Promotion Agency)

Each quarter, a minimum of 10 credible business opportunities identified and disseminated by national trade information network (including the commercial representation service abroad) 20, 40 and 80 per cent uptake rate by clients in years 1, 2 and 3 respectively

Introduction of information usage monitoring and reporting system by national export development focal point organization Concerned Agency: Agri-Business Exporters Association) Action by private sector enterprises

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Strategic Consideration # 8: Trade Finance


financial applications increasing by 10 percent annually beginning year one and 60, 75 and 80 percent success rate in obtaining financing in years 1, 2 and 3 respectively

Objectives Financially Serviced Export Community To ensure that all pre-shipment and post-shipment financial options are available to enterprises in the sector at competitive cost

Targets Pre-shipment finance available at internationally competitive rates and innovative collateral conditions offered by all commercial banks within 1 year Special financial arrangements available to SME and SMEE participants in the value chain by end year 2

Measures The type and cost of financing options actually available to the current, potential and aspiring exporters and participants in the national component of the sectors value chain, including, but not limited to: Borrowing options (short and long term) Facilitation of export transactions and payment Export credit insurance and guarantees Suppliers credits Discounting The extent to which the various client segments in the national component of the value chain utilize the financial options available to: current exporters potential exporters aspiring exporters other participants in priority value chains Number of non performing loans reduced by 10 percent per year

The export performance of clients receiving trade finance, particularly loan financing

Initiatives Review and improvement of export credit guarantee programme (Concerned Agencies: Ministry of Trade, Ministry of Finance and National Export and Promotion Agency) Introduction of new lending programmes (Concerned Agencies: National Development Bank and Agriculture Development Bank) Introduction of micro finance and seed distribution programmes targeting the agri-business sector (Concerned Agencies: Ministry of Agriculture, local government and NGOs) Creation of new financial window (Concerned Agency: Agriculture Development Bank) Introduction of matching grant scheme under World Bank programme (Concerned Agencies: Ministry of Finance and National Export and Promotion Agency) Commencement of a Benefits of Exporting Campaign targeting potential exporters (National Export and Investment Promotion Agency) Expansion of training and counselling programmes in preparation of a business plan (Concerned Agencies: National Export and Promotion Agency, NGOs, technical colleges, University) Consultation with commercial and development banks on risk management policies and introduction of related training for loan officers (Concerned Agencies: Ministry of Finance, Agriculture Development Bank, National Development Bank and National Export and Promotion Agency) Introduction of monitoring system (Concerned Agencies: National Export and Promotion Agency and Agri-Business Exporters Association)

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Strategic Consideration # 9: Quality Assurance


Measures The extent to which national standards conform to international standards in the agribusiness sector internationally accredited local certification bodies are in place to confirm adherence to these standards

Targets A minimum of 1 new internationally accredited private sector organization providing ISO certification to be operational each year Bureau of Standards with a fully comprehensive information and advisory service incorporating the agri-business sector by end of year 2

Objectives A Quality Conformed and Supported Export Community To ensure that the export community is fully compliant with standards in the international marketplace and that the sectors image is positively reinforced through its quality performance A minimum of 30, 50 and 80 percent of firms in the sector have received ISO certification by end of year 1, 2 and 3 respectively

The number of firms in each client segment having: received ISO 9000/2000 certification met specific mandatory standards (e.g. HACCP) required by importing countries met voluntary standards required by international buyers

Initiatives Completion of accreditation process of certification bodies to provide certification to ISO 9000/2000 (Concerned Agencies: National Standards Body, Bureau of Standards, National Export and Promotion Agency and Agri-Business Exporters Association) Expedition of international accreditation of locally based ISO certification agencies (Concerned Agencies: National Standards Body) Introduction of comprehensive system and personnel upgrading programme within Bureau of Standards and relevant ministries to ensure capability to comply with international standards and market-specific certification requirements (Concerned Agencies: National Standards Body, Bureau of Standards and Agri-Business Exporters Association) Expedition of international accreditation of locally based ISO certification agencies (Concerned Agencies: National Standards Body) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Expansion of Bureau of Standards information, advisory and training programmes

A minimum of 50 percent of potential exporters meeting full compliance with mandatory standards by end of year 1 A minimum of 80 percent of current exporters introducing systems consistent with international buyer standards in the Europe and East Asia by end of year 2 and increasing to90 percent by the end of year 3

Reduction by 10 percent per year in number of rejected shipments

Actual number of opportunities lost and shipments rejected due to inability to meet quality specifications

Completion of accreditation process of certification bodies to provide certification to ISO 9000/2000 (Concerned Agencies: National Standards Body, Bureau of Standards, National Export and Promotion Agency and Agri-Business Exporters Association) Expansion of business linkage programme targeting local producers and prospective external partners (Concerned Agencies: National Export and Investment Promotion Agency, Agri-Business Exporters Association and Federation of Chambers of Commerce) Extended outreach and advisory programme (Concerned Agency: National Productivity and Competitiveness Council) Introduction of monitoring and reporting system and programme of follow-up by relevant members of the services delivery network (Concerned Agencies: Agri-Business Exporters Association and National Export and Investment Promotion Agency)

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Strategic Consideration # 10: Other Support - Export Packaging


Targets 40 % expansion of paper and board production capability by end of year 2 Packaging testing and advisory capacity established by end of year 2 Initiatives Intensification of investment promotion programme targeting development of packaging industry (Concerned Agencies: Ministry of Industry, National Productivity and Competitiveness Council and National Packaging Association) Introduction of new lending programme (Concerned Agency: National Development Bank) Creation of packaging testing and advisory unit within Bureau of Standards

Measures Actual level and quality of export packaging support provided to enterprises in the sector, in the areas of materials availability, transport packaging and packaging design (structure and presentation)

Objectives Increased Value through Packaging Capability To increase value retention and value addition within the sector through the provision of relevant export packaging products and services 100 percent of all non-retail packaging using local materials by end of year 2 and percentage of local packaging material in retail packs increasing by 15% per year beginning year 3 Reduction by 25% each year, beginning with immediate effect

Extent to which agri-business enterprises are using local packaging materials, structures and designs in exports of bulk and retail packaged products

Number of complaints and shipment rejections due to incorrect packing and packaging

Active business outreach programme - Benefits of Using Local Packaging Campaign - underway (Concerned Agencies: National Packaging Association, Agri-Business Association and packaging unit of Bureau of Standards) Initiation of on-going consultative (Concerned Agencies: National Packaging Association, Agri-Business Association, packaging unit of Bureau of Standards and National Export and Investment Promotion Agency) Proactive consultation with major buyers, local packaging suppliers and Ministry of Environment (Concerned Agencies: and National Export and Investment Promotion Agency, National Packaging Association and Agri-Business Association)

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4. The Institutional Perspective:

Strategic Consideration # 11: The Strategy Support Network

Objectives A Coordinated Policy Environment To reinforce the competitiveness and export development effort through coordinated policy and initiative within the national and sectors strategy support network

Targets Full membership of the AgriBusiness Association on the National Export Council

Initiatives Ongoing consultation with the National Export Council secretariat (Concerned Agency: Agri-Business Exporters Association)

Measures Actual extent of policy coordination among all members of the sectors strategy support network (public and private) in the areas of export development, infrastructure improvement and investment promotion Ministry of Trade Ministry of Finance Ministry of Agriculture Ministry of Roads and Transportation Ministry of Education, etc National Chamber of Commerce and Industry Federation of Chambers of Commerce, etc. Actual level of coordination of capacity and competency development initiatives by national and local government Introduction of extended outgrower programme in regions A, B and C by end of year 1 Introduction of entrepreneurship development and agri-business curricula at selected technical colleges by end of year 2 Full endorsement of all requests

Initiation of consultation and planning processes (Concerned Agencies: Ministry of Agriculture, local governments in the regions, Agri-Business Exporters Association and NGOs) (Concerned Agencies: Ministry of Education, Ministry of Trade, local government, Agri-Business Exporters Association, local technical colleges and NGOs) Ongoing consultations within the National Export Council

Degree to which resource requests are included within approved municipal, provincial (state) and national (federal) budgets

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Strategic Consideration # 12: The Services Delivery Network


Initiatives Introduction of network consultation and coordination mechanism (Concerned Agencies: Agri-business Exporters Association and the National Export and Investment Promotion Agency)

Objectives Stronger and More Response Institutions To ensure that the institutions at the forefront of supporting enterprise competitiveness are adequately resourced and coordinated to perform as required

Measures Actual competence and level of improvement in service delivery by individual members of the network, including: The Agri-Business Association The National Export and Investment Promotion Agency The Bureau of Standards The National Productivity and Competitiveness Council The Agriculture Development Bank NGOs, etc.

Implementation of professional development activities at all operational levels

Level of usage of services offered by individual members

Targets Full coordination of support to the sector by the services delivery network by end of year 1 Professional development programmes underway in all key members of the services delivery network by end year 2 10, 20 and 30 percent increase in number of clients served by each key member of the network in year 1, 2 and 3 respectively 10 percent annual increase in satisfaction rating from year 1 base

Rating by client segments of performance of individual members of the services delivery network

Expanded and intensified client outreach programme by each key network member Integrated service offering by various resource providers (Concerned Agencies: Agri-business Exporters Association and the National Export and Investment Promotion Agency) Commencement of a Benefits of Exporting Campaign targeting potential exporters (Concerned Agency: National Export and Investment Promotion Agency) Introduction of self evaluation process by each key member of the network Conduct of ongoing survey of members (Concerned Agency: Agri-Business Exporters Association)

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Formulation and Management


Step 11. Establish the Framework for Managing and Monitoring the Strategy The Strategy Management and Monitoring Matrix The Strategy Team should prepare the strategy management and monitoring matrix below in a manner similar to the example. The matrix should then be finalized by the designated RACI A team member. It is recommended that the number of measures applied to each objective should not be less than three or exceed six. The finalized matrix should be included in the Strategy Document as an annex. Stakeholder Perspective: Strategic Consideration: Objective 1 Objective 2 Objective 3 Measures Measures Targets Initiatives

Measures

Targets

Initiatives

Targets

Initiatives

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Formulation and Management


Step 11. Establish the Framework for Managing and Monitoring the Strategy The Strategy-Managers Scoring System Now that the matrix of objectives/measures/targets/initiatives has been formulated, it is essential that a system be put in place that will enable strategy managers to monitor implementation effectively. It is recommended, in this regard, that emphasis be placed on performance and impact measurement at the level of each Measure. A straightforward scoring system is suggested: One that assigns scores as follows: 0 = No progress 1 = Below expectations/target 2 = Met expectations/target 3 = Exceeded expectations/target

An aggregate score of: 80-100 implies that the strategy is highly successful, both in terms of implementation and impact; 66-79 implies that the strategy is sound and on target; 33-65 suggests that the strategy is falling short of its objectives and is in need of refinement; less than 32 suggests that the strategy management team should take a very serious look at both the strategys design and approach to implementation.

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Formulation and Management


Step 11. Establish the Framework for Managing and Monitoring the Strategy Example The Strategy Manager's Scoring System
Development Perspective Weighting = 15% Measures = 12 Objective 1 Development: To raise employment as a direct result of increased export activity in the sector Measure Score Comment Interim targets met with Actual number of new full-time and part-time 2 commissioning of new facility and hirings by firms in the agri-business sector increased capacity utilization of existing producers Interim targets met with majority of of Actual number of labour-intensive export2 producers increasing production and oriented enterprises expanding operations part-time employment First year target exceeded Actual number of university graduates 3 obtaining professional employment in the agri-business sector Objective 2 Development: To reduce poverty as a direct result of improved export activity in the sector Interim target exceeded with 250 Actual increase in number of outgrowers 3 potential outgrowers participating in supplying agri-business processors with information and training programmes export activity in year 1 Interim target exceeded with total of Actual number of NGOs operating trade3 5 NGOs increasing export-related related poverty reduction programmes in agripoverty reduction programmes business sector, and scope of these programmes Ahead of schedule with DiFD project Donor response to agri-business export 3 under implementation by end of year development objectives, particularly with 1 respect to disadvantaged target groups / areas Objective 3 Development: To promote development of backward and disadvantaged regions Storage project in region A delayed Actual number and type of public sector 1 infrastructure projects to support sectorrelated export activities in regions A, B and C No new investment in targeted Level of private sector export-related 1 regions investment going into targeted, less developed regions 3 First year target exceeded in regions Actual number of prospective outgrowers and A and B. Target met in region C agri-business workers trained Objective 4 Development: To increase the participation of women in the sector 1 First year target not met Actual number of new women hirings in the sector (including outgrowers) First year target more or less met. Actual number of new business (including 2 Particular success in region B small and micro-businesses) established in the sectors value chain 1 Target not met by all support Actual level of participation of women in agencies delivering the strategys inputs Maximum Possible Score: 12 X 3 = 36 Weighted Score: 69.4% X 15 = 10.4 Actual Score: 25 Score for the Development Perspective: 25/36 = 69.4%

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Competitiveness Perspective Weighting = 40% Measures = 27 Objective 1 Capacity Development: To develop supply side capacity within the sector 3 Interim production expansion and Actual increase in supply capacity and utilization targets exceeded utilization within the sector 3 Interim target exceeded as confirmed Actual increase in productivity by Ministry of Agriculture/AgriBusiness Exporters Association first year survey 2 Slight increase confirmed Actual level of value retention within the sector Objective 2 Capacity Diversification: To diversify the export base into new, high value product lines and associated products) 2 Slight increase in value addition in Actual contribution of high value addition first year contributed primarily by products in sectors export mix new facility 2 Introduction of strong new retail Actual number of new product lines packs by new facility introduced (with emphasis on retail products) 1 No increase in R&D which remains Level of product development R&D underway negligible and market testing by enterprises in the sector Objective 3 Human Capital Development: To raise the skills base within the sector and to promote entrepreneurship 3 10% increase achieved in first year Actual number of graduates of vocational institutes, technical colleges and universities joining the sector per year 3 Target greatly exceeded Actual number of participants in outgrower training programme 2 New technical and entrepreneurship Number and description of new curricula curricula being piloted in 9 technical introduced to support human capital colleges development and stimulate entrepreneurship within the sector Objective 4 Infrastructure: To ensure that the physical infrastructure in the country is conducive to sustained improvement in the sectors export performance 2 Road and rail improvement projects Actual level of improvement of transportation on schedule; World Bank Feeder infrastructure and handling along key export Road project in year 2 pipeline corridors: roads rail canals seaports airports 3 Electricity tariff reduced; irrigation Actual levels of availability, reliability and cost and cell phone projects under of electricity, water and telecommunications accelerated implementation 2 Transport services more regular in all Actual levels of efficiency of transport carriers target areas and modest cost (surface, water and air) reduction achieved Objective 5 Trade Facilitation: To minimize regulatory and procedural requirements within the sector 2 Programme continuing as planned Degree of harmonisation of procedures and documents with international conventions No reduction in procedures and Actual time to undertake all required processing time procedures and obtain approvals necessary 1 to complete an export transaction Customs training underway as planned and bonded warehousing programme initiated and covering 2 regions Objective 6 Cost of Doing Business: To minimize indirect costs of exporting Costs reduced significantly (more Actual level of non-tradable costs incurred, than 15%) due to new company e.g. company registration, ISO 9000/2000 3 registration law and increasing certification, clearing and forwarding, internet Actual time to clear imported materials and equipment required for export-related activities 2

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access and export finance application procedures Level of compliance with traceability requirements of major trading partners 2

3 Actual level of informal costs associated with completing the import and / or export transaction Objective 7 Market Access: To secure best possible access into international and regional markets 2 WTO accession negotiations on Comparative access conditions into major track markets 2 Regional negotiations proceeding as Comparative access conditions into regional planned markets 3 Bilateral negotiations fast tracked Comparative access conditions into new and emerging markets. Objective 8 In-market Business Support: To provide the sectors exporters with a full-service advisory and support programme in principal markets Decision to transfer responsibility of Actual scale, availability and quality of commercial offices abroad to business support services (commercial 3 National Trade and Investment intelligence, buyer and investor contacts, Promotion Agency having major business and market advisory services) positive impact provided by commercial offices abroad to visiting business persons First year target exceeded Actual number of participants receiving and 3 utilizing border-out support or information services (including prospective foreign partners) 3 Preliminary indications that year 2 Actual commercial impact of the in-market targets will be significantly exceeded support provided by members of the services delivery network (i.e. those providing commercial intelligence, trade fairs and missions and business advisory services) Objective 9 Promotion: To establish a positive image both border-out and border-in to reinforce the sectors competitiveness and export effort 3 Major advances Actual scale of promotional programmes tailored specifically to the sector 3 Major market development effort Actual scale of participation of sector launched by sector enterprises enterprises in national promotional programmes 3 Commercial enquiries up by 40%, Actual number of investment and joint venture commercial and investment enquires enquiries increasing, and value of new contracts negotiated negotiated sales up by 30% Weighted Score: 81.4% X 40 = 32.6 Maximum Possible Score: 27 X 3 = 81 Actual Score: 66 Score for the Development Perspective: 66/81 = 81.4%

competitiveness in telecommunications and clearing and forwarding sectors Planning underway in conjunction with trade facilitation and certification initiatives Significant improvement due to government action

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Client Perspective Weighting = 35% Measures = 17 Objective 1 Focus on Client Priorities: To prioritize client categories and to ensure that all priority needs of these clients are addressed All value-related considerations Actual performance of targeted client advancing in all client categories categories, measured in terms of other than women participation in the export growth and increments in value value chain. retention and, value addition and value creation for current exporters export activities launched, markets entered and export receipts for potential 3 (or formerly potential) exporters investment and business activities of aspiring exporters efficiency of non-exporting participants in the sectors value chain entry into the sectors value chain by potential or aspiring, non-exporting participants Ministry of Agriculture and Agri Response of priority client categories to 2 Business Exporters Associations survey (client satisfaction index) on quality of survey confirms high satisfaction export support services provided by the index with services provided, services delivery network and degree of especially by commercial posts effectiveness and coordination of strategy abroad and National Export and support network Investment Promotion Agency Objective 2 A Competent Export Sector: To ensure that entrepreneurs and managers in priority client categories have the competency profile required to achieve sustained market success 2 No significant disputes Actual number of export disputes and complaints against current exporters 3 First year target significantly Actual number of potential exporters exceeded successfully entering the international market 1 Lower than targeted start-ups within Actual number of aspiring exporters SME sector introducing competitiveness-based business development plans Significant new activity among Actual number of non-exporting firms 3 supporting firms in the sectors value introducing new or updated efficiency chain, especially at the outgrower improvement / business expansion plans level Objective 3 An Informed Export Community: To ensure that coordinated and comprehensive trade information services are available to sector enterprises and decision-makers National Export and Investment Actual increase in the number of specialized 2 Promotions information and referral information sources and types of information service performing well since redisseminated (general, statistical, analysis, organization; Agri-Business commercial intelligence and qualitative Exporters Associations technology market opportunity) available to the sector information service inaugurated 2 Dissemination lists increased Actual number of recipients of information significantly. Decision to charge for types disseminated service postponed Higher than expected response to Actual number of export opportunities 3 information provided; commercial pursued and / or influenced as a follow-up significant consequence of receiving trade information Objective 4 Financially Serviced Export Community: To ensure that all pre-shipment and postshipment financial options are available to enterprises in the sector at competitive cost New lending windows established The type and cost of financing options 3 ahead of schedule by Agriculture and actually available to the current, potential and National Development Banks; microaspiring exporters and participants in the finance programme targeting national component of the sectors value outgrowers initiated; streamlined chain, including, but not limited to: export credit insurance operations Borrowing options (short and long term) gaining greater support from Facilitation of export transactions and commercial banks payment

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Export credit insurance and guarantees Suppliers credits Discounting Active loan application pipeline at all The extent to which the various client 3 financial institutions (particularly segments in the national component of the Agriculture Development Bank and value chain utilize the financial options micro-financing schemes available to: current exporters potential exporters aspiring exporters other participants in priority value chains 3 Minimum of non-performing loans to The export performance of clients receiving enterprises in the sector trade finance, particularly loan financing Objective 5 A Quality Conformed and Supported Export Community: To ensure that the export community is fully compliant with standards in the international marketplace and that the sectors image is positively reinforced through its quality performance 1 new firm providing ISO 9000/2000 The extent to which: 2 certification and local accreditation national standards conform to objective advancing international standards in the agribusiness sector internationally accredited local certification bodies are in place to confirm adherence to these standards First year target exceeded; majority The number of firms in each client segment 3 of exporters having received, or having: seeking to obtain ISO 9000/2000 received ISO 9000/2000 certification certification met specific mandatory standards (e.g. HACCP) required by importing countries met voluntary standards required by international buyers 3 No rejected shipments during first Actual number of opportunities lost and year of strategy implementation shipments rejected due to inability to meet quality specifications Objective 6 Increased Value through Packaging Capability: To increase value retention and value addition within the sector through the provision of relevant export packaging products and services No significant improvement in Actual level and quality of export packaging packaging support to sector support provided to enterprises in the sector, 1 in the areas of materials availability, transport packaging and packaging design (structure and presentation) No increase in local packaging Extent to which agri-business enterprises are 1 content in sectors exports using local packaging materials, structures and designs in exports of bulk and retail packaged products No packaging-related complaints or Number of complaints and shipment 2 rejections in first year of strategy rejections due to incorrect packing and packaging Maximum Possible Score: 18 X 3 = 54 Weighted Score: 77.8% X 35 = 27.2 Actual Score: 42 Score for the Development Perspective: 42/54 = 77.8%

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Institutional Perspective Weighting = 10% Measures = 6 Objective 1 A Coordinated Policy Environment: To reinforce the competitiveness and export development effort through coordinated policy and initiative within the national and sectors strategy support network Chairman of Agri-Business Exporters Actual extent of policy coordination among all Association appointed to National members of the sectors strategy support 2 Export Council; requirements of network (public and private) in the areas of sector firmly on Councils agenda export development, infrastructure improvement and investment promotion Ministry of Trade Ministry of Finance Ministry of Agriculture Ministry of Roads and Transportation Ministry of Education, etc National Chamber of Commerce and Industry Federation of Chambers of Commerce, etc. Improvement in coordination Actual level of coordination of capacity and 2 between national and local members competency development initiatives by of the sectors strategy support national and local government network Required resource allocations of Degree to which resource requests are 2 direct interest to the sector generally included within approved municipal, provincial approved (state) and national (federal) budgets Objective 2 Stronger and More Response Institutions: To ensure that the institutions at the forefront of supporting enterprise competitiveness are adequately resourced and coordinated to perform as required Significant improvement in quality of Actual competence and level of improvement services and degree of coordination in service delivery by individual members of 3 within the sectors service delivery the network, including: network; due largely to re The Agri-Business Association organization of National Export and The National Export and Investment Investment Promotion Agency, Promotion Agency change in reporting responsibility of The Bureau of Standards commercial offices abroad, and The National Productivity and improvement in financial facilities Competitiveness Council available to the sector The Agriculture Development Bank NGOs, etc. 3 Response of enterprises to Level of usage of services offered by improvement in services significantly individual members exceeds projections Higher than anticipated; target Rating by client segments of performance of 3 exceeded individual members of the services delivery network Maximum Possible Score: 6 X 3 = 18 Weighted Score: 83.3% X 10 = 8.3 Actual Score: 15 Score for the Development Perspective: 15/18 = 83.3% The Balanced Scorecard Year 1 of Strategy Total Score: Development Perspective Competitiveness Perspective Client Perspective Institutional Perspective 10.4 32.6 27.2 8.3 78.5

Overall Assessment: The strategy is well on its way to achieving its vision.

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Formulation and Management


Step 11. Establish the Framework for Managing and Monitoring the Strategy The Strategy Manager's Scoring System
Development Perspective Weighting = Measures = Objective 1 Employment Generation Measure Score Comment Objective 2 Poverty Reduction Objective 3 Regional / Rural Development Objective 4 Environmental Sustainability Objective 5 Gender Equality Maximum Possible Score: Weighted Score: Actual Score: Score for the Development Perspective: Competitiveness Perspective Weighting = Measures = Objective 1 Capacity Development Objective 2 Capacity Diversification Objective 3 Human Capital Development Objective 4 Improved Infrastructure Objective 5 Improved Trade Facilitation Objective 6 Reduced Cost of Doing Business Objective 7 Improved Market Access

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Objective 8 Improved In-market Business Support Objective 9 Improved National Promotion Maximum Possible Score: Weighted Score: Actual Score: Score for the Development Perspective: Client Perspective Weighting = Measures = Objective 1 Focus of Response to Priority Needs of Current Exporters and Participants in the Value Chain Objective 2 Focus of Response to Priority Needs of Potential Exporters and Participants in the Value Chain Objective 3 Focus of Response to Priority Needs of Aspiring Exporters and Participants in the Value Chain Objective 4 A Competent Business Community Objective 5 An Informed Export Community Objective 6 A Financially Serviced Export Community Objective 7 A Quality Conformed and Supported Business Community Objective 8 Fully Supported Business Community (Other Support Services) Maximum Possible Score: Weighted Score: Actual Score: Score for the Development Perspective: Institutional Perspective Weighting = Measures = Objective 1 A Fully Coordinated Policy Environment Relating to the Sector's Export Development

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Objective 2 Stronger and More Response Institutions Maximum Possible Score: Actual Score: Score for the Development Perspective: The Balanced Scorecard Year 1 of Strategy Total Score: Development Perspective Competitiveness Perspective Client Perspective Institutional Perspective Overall Assessment:

Weighted Score:

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Formulation and Management


Step 12. Formulate a Plan of Action The Strategy Team can now prepare the strategys final Plan of Action which: specifies the Organizations responsible for implementing each Initiative the Resources that will be allocated to these organizations to implement the initiative, and the implementation timeframe for each Initiative.

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Formulation and Management


Step 12. Formulate a Plan of Action It is recommended that the Strategy Team should prepare the Plan of Action for each Objective based on the format outlined below. The complete Plan of Action should be included as an Annex to the Sector Strategy Document. Plan of Action
Strategic Consideration # Objective 1 Initiative A Responsible Organization(s) Resources Required Implementation Period Milestone: Milestone: Initiative B Responsible Organization(s) Resources Required Year 1 Q2 Q3 Year 2 Q2 Q3 Year 3 Q2 Q3 Year 1 Q2 Q3 Year 2 Q2 Q3 Year 3 Q2 Q3

Q1

Q4

Q1

Q4

Q1

Q4

Implementation Period Milestone: Milestone: Initiative C Responsible Organization(s) Resources Required

Q1

Q4

Q1

Q4

Q1

Q4

Implementation Period Milestone: Milestone:

Q1

Year 1 Q2 Q3

Q4

Q1

Year 2 Q2 Q3

Q4

Q1

Year 3 Q2 Q3

Q4

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Formulation and Management


Step 13. Maintain the Public-Private Partnership for Strategy Implementation Ideally some form of structure will be established to ensure that the various Initiatives and implementing Organizations are coordinated and the dialogue between the public and private sectors is maintained.
Relevant Line Ministries Ministry of Education and Research Ministry of Com m unication and Inform ation Technology Ministry of Finance Ministry for Transport Cham ber of Com m erce Ministry for Wom en's Affairs Ministries of Trade, Econom y and Com m erce Export / Com petitiveness Council Association of Exporters and Im porters

Ministry of Foreign Affairs Regional and Local Governm ents Ministry of Labour

Export Strategy Support Network

Environm ent Protection Agency

Board of Investm ent

Statistical Agency

Sectoral Coalition
Standards Organization Border-In Vocational and Training Centers Universities Certification Bodies

Sectoral Associations Research and Technology Organizations Banks / Financial Services Organizations Clustering Organizations Industrial, Technology Parks & Business Centres Sm all Industry Developm ent Organization Regional Developm ent Organizations NGOs

Services Delivery Network


Developm ent

National Custom s Authority Border Telecom s Organizations Insurers Forw arders/ Shippers

Wom en's Associations Environm ental Groups Cooperatives Micro Finance Providers Trade Prom otion Organizations Investm ent Prom otion Agency Trade Inform ation Organizations Border-Out Exporters' Associations

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Formulation and Management


Step 13. Maintain the Public-Private Partnership for Strategy Implementation To be completed by relevant members of the Strategy Team and the findings summarized by the designated RACI 'A' team member. Maintain the Partnership
Options and Recommendations

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PART F THE OUTPUT

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The Output
The Sector-Level Export Strategy Document
1. Introduction Rationale Principles of Analysis: Scope of Strategy Framework for Strategy Design and Management Application of the Value Chain 2. Where Do We Want to Be? The Vision The Sectors Future Value Chain An Illustration 3. Where Are We Now? An Assessment Export Performance and Assessment of Overall Competitiveness The Sectors Current Value Chain An Illustration Performance against Critical Success Factors Government Policy and Strategy in Support of the Sector The Sectors Trade Support Network: Capacity, Competency and Coordination 4. The Resource Situation in the Public and Private Sectors (Current and Projected) 5. SWOT Analysis of the Sector 6. The Way Forward (over 3-5 years): The Development Perspective Strategic Consideration # 1 Developmental Considerations and Priorities The Competitiveness Perspective Strategic Consideration # 2 Border-In Issues and Priorities Strategic Consideration # 3 Border Issues and Priorities Strategic Consideration # 4 Border-Out Issues and Priorities The Client Perspective Strategic Consideration # 5 Client Prioritization Current Exporters and Other Current Participants in the Value Chain: Support Requirements and Response Potential Exporters and Other Potential Participants in the Value Chain: Support Requirements and Response Aspiring Exporters and Other Aspiring Participants in the Value Chain: Support Requirements and Response Implications for Sector Support Services Strategic Consideration # 6 Business Competency Strategic Consideration # 7 Trade Information Strategic Consideration # 8 Trade Finance Strategic Consideration # 9 Quality Management Strategic Consideration #10 Other Support Services The Institutional Perspective Strategic Consideration # 11 Strengthening the Sectors Strategy Support Network: Strategy Coordination and Management: Structure Process (Strategy Monitoring) Strategic Consideration # 12 The Sectors Services Delivery Network 7. Weighting of the Stakeholder Perspectives and Summary of Strategic Objectives 8. Resource Mobilization Annex 1: Overview of the Sectors Global Market Annex 2: The Plan of Action Annex 3: The Strategys Balanced Scorecard

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