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    Putting It All Together: ITC's Template for Strategy-makers

     

     
     
    International Trade Forum - Issue 1/2003, © International Trade Centre

    Sustained improvement in export performance relies on a comprehensive, realistic national export strategy and the capacity to manage it. The fact is, however, that few developing countries have invested in formulating a national export strategy. Why?

    Debate in the Executive Forums has provided at least a partial answer. Politically, export development rates a low priority. The average voter considers other social and economic issues to be significantly more important than export performance. From the immediate perspective of the individual, they might seem right. In practice, once a government tries to take action on these social and economic issues, it soon runs up against the difficulty - even impossibility - of achieving development in an open economy without giving priority to export performance.

    For those engaged in international commerce, either directly (the case of the business executive) or indirectly (the case of the economic planner), there can be no higher priority than ensuring that the national export effort is based on a sound strategic foundation. The problem is that planners in many developing and transition economies are unfamiliar with what determines a good national export strategy, in terms of both process and content.

    A second finding from the Executive Forum is equally disturbing. In those countries that do have a national export strategy, very few are effective. Indeed, few are even implemented. One participant in the 2002 Executive Forum summed it up: "Most of them exist only in paper, not in action."

    Building strategies that work

    ITC's new Secrets of Strategy Template is an attempt to address both issues: the general absence of national export strategies and the overall ineffectiveness of those that exist. Its goal is to facilitate the formulation of effective and realistic national export strategies: in short, strategies that work. The template is an interactive CD-ROM. It is designed as a 'process tool' that will assist the strategy-maker - and more precisely the strategy-making team - to 'build' a relevant national export strategy based on a realistic assessment of national capacities, competitive position, the resources available to devote to the export priority and a clear understanding of what works and what does not.

    Content-wise, the template covers all the bases. It confronts the issue of political commitment to export development. It provides detailed parameters for the preparation of sector-level strategies. It includes step-by-step approaches to the design of strategies for essential cross-sectoral trade support services, such as trade information, trade finance, quality management and com-petency development. Equally important, the template provides guide-lines for managing the strategy.

    Best practice

    ITC developed the template on the basis of conclusions reached on 'best practice' during Executive Forum debates and on lessons learned during the course of providing technical assistance at field level. Experience from the Executive Forum suggested that strategy-makers in developing countries, and to a large extent those organizations involved in the national trade support network, today concentrate their attention on market development. The strategic imperative understandably, therefore, focuses current efforts on market access, export promotion and providing the export community with market information and related market support services.

    Border-out

    The template groups the above services within the 'border-out gear' of national strategy. It is an essential gear, one to which the exporter attaches highest priority. And the template provides a road map, benchmarks and best practice examples from which to develop an appropriate strategic approach to the delivery of border-out services to the business community.

    Border-in

    But border-out services are not nearly enough. The border-out gear seeks only to increase the sales of products that already exist… in other words, the status quo. It does not deal with tougher issues of ensuring that these products become increasingly competitive in terms of price, quality and consumer interest. Nor is the border-out gear of strategy concerned with creating new products for export and developing new exporters. And it does not deal with one of the major constraints to sustained improvement in export performance: the competency of the exporter or would-be exporter to manage the export process. These issues are largely the concern of the 'border-in gear' of export strategy. The template incorporates an analytical framework and strategic guidelines for the development of each of these border-in services.

    Border

    Strategy, too, must address the issue of transaction and non-tradeable costs. It's all very well to have a product, to have a potential buyer, and to have the competence to manage the transaction. If the cost of the transaction renders the offer uncompetitive, there will be no sale.

    The 'border gear' of the template deals with these issues, which generally tend to be ignored under conventional approaches to strategy development. Export procedures, customs procedures, infrastructure bottlenecks, the availability and cost of fundamental services, varying from ISO certification to international communication, are all critical aspects of competitive exporting and must, therefore, be addressed by the strategy-maker.

    Social development

    Export strategy must be viewed on a wider canvas than simply competitiveness. The social development dimension must be part of the picture, not simply for political expediency but for the fact that exports do contribute to overall development and with a little strategic thinking, this contribution can be increased substantially. The export sector's potential impact on poverty reduction, employment generation and the geographic decentralization of the export industry are development issues that the strategy-maker must take into account. What are appropriate responses? What approaches have proven successful?

    Examples are included in the template, together with checklists that ensure that the 'development gear' of strategy is fully synchronized with the border-out, border-in and border gears of the strategic machinery.

    A new game plan

    Pursuing this comprehensive, four-gear approach to strategy development requires a whole new game plan. New players will need to join the strategy development team. These will be principally from the public sector - officials of ministries representing both social and economic development disciplines. These individuals may relate in only a limited fashion to the trade portfolio and the export strategy-maker's competitiveness objectives.

    The four-gear paradigm is also likely to require a redefinition of the national trade support network, the role played by its various constituents and its operating ground rules. The team-building aspect of the strategy development process is therefore critical, as are issues on how the team should be managed.

    Best practice standards and examples are provided in the template. All are based on a single assumption: that the strategy development team will include representatives of the public and private sectors and work on the basis of open, but structured, dialogue throughout the process.

    Be realistic about resources

    But strategy building is not just about defining priorities and strategic objectives, gaining government endorsement of these priorities, and setting targets on the basis of extended public-private sector consultation. Strategy is all about realistically assessing the resources available, ensuring that strategic objectives are consistent with these resources and effectively allocating these resources to strategic initiatives. And it is here that experience suggests most national export strategies fall down.

    Many developing country strategy-makers define strategic objectives in terms of initiatives supported by international technical and financial assistance. A more appropriate way to build strategy is to base strategic objectives on the resources available within the country, resources defined in terms of finance (i.e. budget allocations to organizations participating in the national trade support network), institutions (i.e. the facilities, competencies, institutional memories and credibility of those organizations within the network), programmes (the utility and receptivity within the business community of existing trade support programmes) and personnel (the competencies and professionalism of staff in each organization of the trade support network).

    Without undertaking a critical assessment of such predictable and largely controllable resources, strategy becomes not much more than a wish list.

    Trade-offs

    This said, the building of a national strategy is not an easy exercise. It requires extensive analysis, trade-offs, hard decision-making and a considerable commitment of valuable time. Perhaps these, in combination, represent yet another reason why so few developing countries have a national export strategy. Hopefully, the Secrets of Strategy Template, with its guidelines, decision-support tools and best practice examples will provide the means by which planners can circumvent these various constraints and prompt greater interest in the strategy development challenge. From ITC's standpoint, accepting this challenge represents the essential first step to long-term success in the international marketplace.


     

    Trade Portal Tool

    The availability to enterprises of reliable trade information is a key component of the national export strategy. The Internet has become one of the principal means of disseminating trade information to clients, and trade support institutions, through their trade portals, are key players. 

    The 'Trade Portal Tool', available on the Secrets of Strategy Template and on the ITC Executive Forum site (http://www.intracen.org/execforum) is intended to help managers when designing a trade portal. It provides a series of content maps to stimulate ideas about the kind of information and services that can be offered online by trade support institutions to clients and to potential overseas business partners.

    In all, the tool suggests 200 elements or content ideas which are structured around five principal categories:

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    • institutional information; 

    • trade, market and business information; 

    • functional information; 

    • capacity-building resources; and 

    • promotional information. 

     

    The tool also provides various checklists that suggest criteria for building a 'good-practice' portal. There are five principal criteria, each providing 15 elements:

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    • credibility; 

    • navigation; 

    • presentation; 

    • technical; and 

    • features. 

     

    For each element, the content roadmap allows browsing to portals that employ good practice. This provides trade portal managers with an insight on tactics and styles whilst illustrating specific content. Users can share or keep track of the content plan and evaluation by saving sessions for future reference or revision.

    Brian Barclay is Coordinator of ITC's Executive Forum. The template is available to all export strategy-makers on request. Contact the ITC Executive Forum team at execforum@intracen.org