facilitating business linkages
I got a glimpse of how it's done through the "Seabiscuit" movie. But that was so yesterday, and I know radio stations are now computerized.
We always hear about globalization. Because of this process and convergence, new strategies arise and there is a continuing need for new ways of doing business. Ultimately, all this leads to a more competitive business environment, and the need for business linkages.
Grierson, Mead and Moyo in 1997 defined the term business linkages as "mutually beneficial commercial relationships between independent profit-oriented enterprises". From this arrangement, the parties involved will benefit from its results - specialization, diversification, improved economic efficiency, increased profits, and wide benefit dispersion.
Business linkages are important, most especially to the small, medium and micro entrepreneurs of our community. Through business linkages, they can reach their market faster, improve their business, reduce costs, increase flexibility, access financing, and improve production.
... they actually made me comfortable. There were two lady hosts. They sort of complement each other, building from what the other had said. I felt like we were just neighbors going out for a gab.
According to a material prepared by GTZ, there are three types of business linkages: vertical business linkages, horizontal business linkages, and the cluster linkage development.
Horizontal linkages are cooperative activities between firms on the same step in the value chain. This presupposes that each firm is too small to implement economies of scale in purchasing or to have the scope to serve customers with special demands. Therefore, cooperation is needed so marketing costs can be reduced through attending trade fairs jointly or by producing a group catalogue. This arrangement also allows for joint development of products. Examples are the trade and industry associations.
Vertical linkages are cooperative activities between firms along the value chain. The underlying economic rationale is that by cooperating, success in the destination market can be enhanced. An example of the vertical linkage is the relationship between a franchiser and a franchisee. Subcontracting and outsourcing to small firms is indeed a way to bring small enterprises to the mainstream economy, educating them on quality standards, increasing information flow, jointly acting on product improvement and reduction of costs.
Clusters are bigger in scope, and are an important economic development approach characterised by the identification of competitive advantages of a region or a group of local enterprises for a certain product or service. Clusters can create a joint strategy with participation of the other local stakeholders, developing the capacity of public and private business service providers.
... we pause for commercials, during which, of course, we talk some more. Imagine the hedgerow.
Grierson & Mead postulated four elements in business linkages: opportunities, information, capacity and capital. The worldwide economic pressures and domestic policies shaping the country's economy are generating various opportunities, and thus every sector is compelled to seek out efficient business solutions. Information is needed by potential partners in business linkage relationships so they will know the market opportunities, identify requirements of buyers, or evaluate the capabilities of sellers. Information about opportunity must be supported by the capacity to fulfill their obligations and meet client expectations. Finally, capital is needed to enable businesses to take advantage of the available opportunities, and relationships based on business linkages help facilitate access to credit and involve arrangements that make efficient use of capital.
With small, medium and micro enterprises comprising 99% of the Philippine economy, it is imperative that significant investment is made with this group. SMMEs have a major role to play in terms of employment creation, income generation and redistribution, and output growth for the country.
Identifying that there is a need to locate these emerging small enterprises, the Cagayan de Oro Chamber takes upon itself to identify these enterprises and bring them into collaboration and business linkages with other product and service providers. The Oro Chamber assists sub-sectors to identify and promote their competitive advantages. Moreover, the chamber will endorse these enterprises for help at the public sector level, and possibly integrate the private sector development strategy in the regional development plans.
As enterprises prepare themselves to get involved in business linkages, they must also be aware of the opportunities open to them. They should also accept that there will be transaction costs to be incurred. Finally, the most convincing argument of all is the experience of, and therefore faith in, the advantages of collaborative actions. And this can be provided by a business enterprise that has already been there.
As business linkages change the course of the local economy, the players are all winners in the end - constantly shaping the direct and indirect job creation, and participating in the growth rates of the market. Business linkages continue to contribute to the overall competitiveness of the enterprises involved and the country's private enterprise sector as a whole.
... it was the best chance to promote membership for the Oro Chamber, as well as the various activities and projects being undertaken.
* My discussion guide during the guesting at the Mom's Radio, 09:30am-10:30am April 27.
