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Value Chain Management: a Proactive Strategic Approach to Go Successfully in the International Market for the Shrimp Processing Industry of Bangladesh

Mehedi Hasan
Business Administration Discipline, Khulna University, Khulna 9208, Bangladesh

Md. Hefzur Rahman*
Business Administration Discipline, Khulna University, Khulna 9208, Bangladesh

Abstract/ Executive Summary:

This is a study of exploring a prospective strategy for Bangladesh shrimp processing industry with a view to meeting the challenges that have been posed in the international market by other foreign marketers in the same trade. Shrimp processing and export has been accepted as an industry for a very long time in the economy of Bangladesh. Due to its immense contribution to the economic development of the country, the industry has already exerted itself as the second largest sector after the garments industry. The EU, USA and Japan have the greatest potential for growth of market share for the Bangladesh shrimp industry. The shrimp processing industry and its total value network is beset by various problems. These problems have been piling up since the inception of the industry. Industry is suffering from lack of professional outlook and quality continuity which have not yet developed to capture the long-term business gain. Sufficient supply of shrimp fry and higher productivity per acre need to be ensured in collaboration with technical experts. Sharing the experiences and the strengths of different parties along the value-network of the industry need to be aligned, so as to work as an integrated single entity for the shared objectives. They have complementary resources and experiences and strengths, which are important to each other to be competitive in the international market. Shared Cultural Practice among the strategic partners is the single most important prerequisite to implement virtual integration through strategic alliance for successful value-chain management (VCM).

Keywords: Value chain; Network structure; Core competence; Competitive advantage

Location: In Bangladesh

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Shrimp

Objectives:

A large number of unemployed manpower can be engaged through long-term planning and training thereafter. Only the properly educated quality conscious workforce can significantly contribute to this long-term objective. The unemployment problem will partly be solved through plugging them into the main stream of the value network. So a strategic guideline is needed for the Bangladesh Shrimp Processing Industry to underpin the present strategic advantages in the international export market against the erstwhile country competitors.

Methodology:

Problems in the Prevailing Business Process The shrimp processing industry of Bangladesh and its total value network is beset by various problems. These problems have been piling up since the inception of the industry. In the recent past imposition of a ban on the import of Bangladeshi shrimp by the EU authority was a great warning for the industry. This imposition due to quality reasons not only happened in Bangladesh but also in India and Madagascar. According to one EU official in Dhaka, “we have been asking Bangladesh to improve its quality of shrimp processing since 1993 but they have paid little heed” (Financial Times, London, 1997). The EU is the single largest customer of the Bangladesh shrimp industry. The total EU import from Bangladesh was 111,617 million dollar in the FY 1995-96 with a slight increase over the corresponding FY 1994-95 (Bangladesh Export Promotion Bureau). The EU, USA and Japan have the greatest potential for the growth of market share of the Bangladesh shrimp industry. Factories in the industry have implemented the HACCP system, which was recommended by the potential importers for health quality management. That action helps them to get rid of the hurdles of the industry. Recently it has been viewed by the Exporters that container rejections have been reduced due to their corrective actions. So the health quality of shrimp is one of the basic problems of the industry. This action alone, however, is not enough to get required control on the internal market further down of the value chain and the international as well. If we delve into this issue further, we find that the root of the quality problem will go beyond the boundary of the existing factory processing activities. Besides lower productivity on per acre shrimp production is being pointed as a main problem of the industry. Lack of supply of the raw materials capacity of the industry is remaining unused.

Industry Analysis in The Face of Changes of International Market Scenario: Without a strategy a business can only perform in a reactive manner to the changes that are surrounding it. A proactive strategy will be required to reflect the anticipated changes in the international market environment. That strategy will not only be treated as a static theoretical document but also will contain productivity and export targets and ways of reacting to environmental changes during the stipulated planning period. The Bangladesh shrimp processing industry needs to develop a proactive strategic plan in order to fortify its international market position. By doing an extensive scanning of the external and internal environment of the Bangladesh Shrimp Processing Industry, a SWOT analysis has been done that will be helpful for selecting a effective strategy for the industry.

Value-chain management is a strategic way forward for the Shrimp processing industry “Today strategic relationships among organizations consider the elements of overall competitive strength--- technology, costs and marketing. Unlike the tactical relationships, the effectiveness of these strategic agreements among companies can affect the long term performance of the business”1 Due to sharing the experiences and the strengths of different parties along the value-network of the industry they need to be aligned, so as to work as an integrated single entity for the shared objectives. They have complementary resources and experiences and strengths, which are important to each other to be competitive in the market. On the one hand, the processors in the shrimp industry have got some connection in the international market, so the cultivators and fishermen need to keep themselves closer with the processors in order to sell their output. On the other hand processors are dependent on cultivators because of their experience and knowledge of cultivating shrimps. In the same way cultivators are dependent on the hatchery to get high yielding shrimp fry, hatcheries are dependent on research laboratories and researchers to get the best knowledge of hatching high yielding shrimp fry.

Source of Information: Khulna University Studies, 2(1): 227-238

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Demanding buyers, fast-moving technologies, intense global competition, deregulation and social changes are the main changing forces in the local and international market. These frequent changes in the business environment have been bringing opportunities as well as threats to the respective firms involve in the international market continually. Because of those challenges to management include escalation of international competition, political and economic upheaval, the dominance of the customers and increasing market complexity, companies are drastically altering their business and marketing strategies. Shrimp processing industry is not out of those evolving challenges. Only value-chain management (VCM) could be treated as a panacea to offset threats and utilize opportunities evolving in the environment. VCM strategies will ease tasks of the leaders of the value-chain to take over a cohesive plan of actions to work as a team with a shared vision and goal. Concerted efforts of the members of the respective value-chain will keep them on the top of the customers’ demand and move with fine-tuning with the business environment changes. Bangladesh Shrimp Processing Industry, therefore, would be able to extend greater market share with stronger positioning in the international market if the value chain management (VCM) has been adopted from a self-motivated strategic point of view.

Knowledge Management: Journal