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5.3.2. Quantitative Analysis

Introduction USAID's value chain analysis methodology focuses on qualitative analysis to understand trends, incentives and relationships. However, quantitative analysis also plays an important role in value chain analysis by illustrating the current situation and revealing inefficiencies that can be addressed to increase competitiveness.

1.4.3. Competitiveness Strategy - Overview

What is a Competitiveness Strategy?  Designing a competitiveness strategy is the third of the five phases of the project cycle. A competitiveness strategy is a plan for moving the industry toward sustained growth. Industry competitiveness, as opposed to firm competitiveness, is systemic, the result of complex and dynamic interactions between national-level social and economic factors.

2.5.1. Value Chain Finance

What is Value Chain Finance? Value chain finance refers to financial products and services that flow to or through any point in a value chain that enable investments that increase actors' returns and the growth and competitiveness of the chain. Whereas financial transactions within a value chain are not new (production finance could be considered "value chain finance"), several emphases distinguish a value chain finance approach.

3.3.1. End Market Competitiveness Plan

An end-market assessment is the first step in determining where it is possible and most advantageous for a value chain to compete. In some cases, there are several end markets, each having different needs.

3.3.3. Plan to Sustain Competitiveness

The guidelines for developing an end-market competitiveness strategy and an upgrading plan focus on achieving competitiveness at a single point in time. Sustaining competitiveness over the long term requires a willingness and ability to continuously adapt to changes in consumer preferences, the availability and scope of supporting markets, competitors' capabilities, enabling environment policies and regulations, etc.

3.4.7. Facilitation

Facilitation can be defined as an action or agent that stimulates a value chain to develop and grow but does not become part of the chain.

3.4.9. Recommended Good Practices for Design and Implementation

Focus on a long-term industry vision and maintain a systemic perspective: End goals and a long-term vision for the industry should guide the design and implementation of value chain development projects. Results in the short term are very important for building trust and instilling confidence amongst stakeholders, but a project design that does not keep in mind longer-term objectives is unlikely to see the desired results from its interventions.

5.2.12 Supporting Markets Resources

Illustrative Interview Guides for Assessing Supporting Markets, Action for Enterprise PROFIT 2008 Annual Report, USAID/Zambia-funded project. Evaluability Assessment of PROFIT Zambia, Snodgrass, Don; Woller, Gary; 2006. <

2.5.2. Information and Communications Technology

Introduction Value chains encompass the full range of activities and services required to bring a product or service from its conception to sale in its end markets—whether local, national, regional or global. Value chains include input suppliers, producers, processors and buyers and are supported by a range of technical, business and financial service providers.

1.3.6. Value Chain Governance - Overview

What is Value Chain Governance? Value chain governance refers to the relationships among the buyers, sellers, service providers and regulatory institutions that operate within or influence the range of activities required to bring a product or service from inception to its end use. Governance is about power and the ability to exert control along the chain — at any point in the chain, some firm (or organization or institution) sets and/or enforces parameters under which others in the chain operate. The key parameters are:

5.6.10. GFSR Protocol

The Global Food Security Response (GFSR) framework—a response to the global food crisis—includes three components:

2.6.1. Why Governance Matters

Why Governance Matters Understanding how and when lead firms set, monitor and enforce rules and standards can help micro and small enterprises (MSEs) and other firms in the chain better integrate and coordinate their activities. Governance is particularly important for the generation, transfer, and diffusion of knowledge leading to innovation, which enables firms to improve their performance and sustain competitive advantage.

2.6.2. Types of Value Chain Governance

Types of Value Chain Governance The connections between industry activities within a chain can be described along a continuum extending from the market, characterized by "arm’s-length" relationships, to hierarchical value chains illustrated through direct ownership of production processes. Between these two extremes are three network-style modes of governance: modular, relational, and captive.

2.6.3. Determinants of Governance Structure

Determinants of Governance Structure The form of governance can change as an industry evolves and matures, and governance patterns within an industry can vary from one stage of the chain to another. The dynamic nature of governance can be largely accounted for with three variables: the complexity of information that the manufacture of a product entails (design and process); the ability to codify or systematize the transfer of knowledge to suppliers; and the capabilities of existing suppliers to efficiently and reliably produce the product.

1.3.8. Upgrading - Overview

Introduction In order to respond effectively to market opportunities, micro and small enterprises (MSEs) and industries need to innovate to add value to products or services and to make production and marketing processes more efficient. These activities are known as upgrading. Firm-level upgrading can provide MSEs with higher returns and a steady, more secure income through the development of knowledge and the ability to respond to changing market conditions.

2.8.1. Types of Upgrading

Introduction The pursuit of upgrading provides many opportunities to firms that range from increased efficiency and output to access to new market channels and industry knowledge. The types of upgrading firms undertake are characterized under the following categories:

2.8.2. Trajectories of Upgrading

The obstacles to process and then product upgrading tend to be the lowest. These forms of upgrading are the easiest to accomplish and thus represent the first upgrading strategies firms pursue. They do not require a firm to take on new tasks in the chain or to acquire additional knowledge (they simply involve doing the same task, but more efficiently or differently within the factory).

1.3.7. Inter-firm Relationships - Overview

Why Relationships Matter in the Value Chain Approach A distinguishing feature of the value chain approach is the attention that it gives to relationships between firms. Effective inter-firm relationships are considered an essential component in creating and maintaining value chain competitiveness.

2.7.4. Frameworks for Analyzing Relationships

Introduction There are a number of distinctive frameworks that can be used to analyze and evaluate inter-firm relationships. These frameworks emphasize different characteristics of the relationships, although some characteristics are common across more than one framework. Three types of frameworks are: cooperation and competition framework transaction cost framework political economy framework Each provides a useful perspective for analyzing the effectiveness of inter-firm relationships.

2.8.6. Ways to Facilitate Upgrading

Inter-firm Linkages Efforts to facilitate upgrading frequently come from inter-firm linkages—where assistance is provided by lead firms via vertical relationships or through collective efficiencies realized through horizontal linkages. Furthermore, access to support services like information and communications technologies (ICT) can help MSEs strengthen these inter-firm relationships to improve their opportunities and incentives for upgrading.

4.1.3. Applying a Conflict Lens throughout the Project Cycle

When selecting value chains for development during or following a conflict, implementers should start with multiple opportunities and seek to strike a balance between critical sectors for economic recovery and sectors that show potential for long-term competitiveness.

4.1.4. Recommendations for Adapting the Value Chain Approach to Conflict-Affected Contexts

The following practical lessons can assist practitioners as they assess the conflict and consider the best way to move forward in designing and implementing a value chain project. The recommendations can be divided into three categories: those related to sequencing or timing of activities, those related to partnerships and collaboration with other actors, and those related to the flexibility required in conflict-affected contexts.