BDS market development guide.pdf - PACA

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24 As supply expands, the overlap becomes larger, and it is this overlap that is defined as an effective market—supply and demand meeting each other’s needs, causing many transactions to take place at market prices. Figure 9: The Process of Overcoming a Supply Constraint Non-Existent BDS Market Effective S D S D S D S D WHAT TYPE OF INTERVENTION IS USEFUL? The goal of intervention is to develop markets so they can provide solutions to SME business service needs. Figure 10 shows intervention options that have been used to overcome consumer demand and/or supplier constraints to effective markets. Interventions options such as vouchers, matching grants, and information (including media campaigns and directories listing service providers) have been used to stimulate consumer demand by overcoming problems of awareness and understanding and the valuation of benefits and costs or their willingness to pay for business services. Intervention options such as product development, skills and management development, and venture finance have been used to remove supply constraint by addressing provider skills deficiencies, motivating entrepreneurial behavior, providing information on consumer preferences on products and features, and joint-funding to innovate and test new markets and products. Business linkages is both a demand-side and a supply-side intervention that tries to foster a culture of inter-firm linkages between SMEs (suppliers) and larger-firm buyers (providers of BDS). 16 16 Emerging Good Practices in Business Development Services, The First Annual Seminar Turin Italy, 4-8 September, 2000, BDS Seminar Reader by Mary McVay and Alexandra Overy Meihlbradt provides case examples of the different interventions options noted here. Microenterprise Best Practices Development Alternatives, Inc.
25 Figure 10: Matching Market Analysis to Intervention Options BDS Providers Constrained by: Limited Information— about market opportunities Skills Deficiencies— technical or business Operational Deficiencies—resources, systems, structures Inappropriate Products Environment—distortions and barriers to activity Intervention Options Supply-side Product development Venture finance Technical assistance Training EFFECTIVE MARKET Supply = Demand Market provides solutions that SMEs want Demand-side Vouchers Matching grants Information Business Linkages BDS Consumers Constrained by: Limited Information or Awareness—about problems or solutions Valuation Problems— affecting willingness to pay Limited Resources— to assess or purchase services Environment— pervasive subsidy reduces willingness to pay Figure 10 is necessarily simplistic. In reality, interventions will often affect both supply and demand sides. Box 6 provides an example from a pilot voucher project in the Ukraine. CONCLUDING COMMENTS From the preceding discussion, and the conceptual framework for market analysis presented, four key points emerge: 1. SMEs live and die within a market context. Few are actually touched by donors 18 . Designers need to first ask why the market fails to serve SMEs with Box 6: Interventions Affecting Demand and Supply Sides In a post-test survey, 17 voucher users said that they would have paid the full cost of training in computers and business accounting had they known that these services were available. This finding indicates that vouchers were able to overcome a demand-side problem of limited information, which inhibited SMEs to recognize a business problem and seek an appropriate solution. The value of the voucher was as much in the information it conveyed as the discount it offered consumers to try to services once consumers learned about their availability. The same survey revealed that providers of computer training were encouraged to develop new courses based on the feedback they received from the trainees. The injection of demand stimulated and 17 Field et al., Report on NewBizNet Pilot Voucher Scheme, 1999. motivated suppliers to develop products, 18 “The Application of Market Led Tools in the Design of BDS Interventions enter new (Influencing markets, the and Price develop of Soup new in Nepal)” by Jim Tomecko of GTZ presented at the Donor Committee’s relationships. Asia conference The in survey Hanoi results reported illustrates the finding from a nationwide survey of BDS consumption across multiple the sectors twin effects and learned of some that instruments. “free services” – those offered by donor partners – were a fraction of the overall BDS market estimated at $320,000 per year. Chapter Two—Where We Are Now—A Framework for Market Assessment and Intervention Choice
Page 1 and 2: BDS Market Development: A Guide for
Page 3: Alan Gibson is a co-founder of The
Page 6 and 7: ii CHAPTER FOUR HOW DO WE GET THERE
Page 8 and 9: iv Table 1 Implications of Differen
Page 10 and 11: vi How to Use This Guide: A Quick R
Page 12 and 13: 2 • To address poverty, governmen
Page 14 and 15: 4 • Potentially, a range of provi
Page 16 and 17: 6 Figure 2: Flows of Services in th
Page 18 and 19: 8 • Efficiency—The cost bases o
Page 20 and 21: 10 • Advocacy: for the business c
Page 23 and 24: 13 CHAPTER TWO WHERE WE ARE NOW—A
Page 25 and 26: 15 The flow diagram of an effective
Page 27 and 28: 17 KEY CHARACTERISTICS OF EFFECTIVE
Page 29 and 30: 19 Figure 7: Quadrant of Supply-sid
Page 31 and 32: 21 • Consumers—such as female-o
Page 33: 23 WHERE SHOULD INTERVENTIONS FOCUS
Page 37 and 38: 27 CHAPTER THREE WHERE DO WE WANT T
Page 39 and 40: 29 Markets are institutions. Develo
Page 41 and 42: 31 What Needs to Be Done?—Key Sup
Page 43 and 44: 33 Box 7: Key Considerations in Ass
Page 45 and 46: 35 Figure 12: Functions of the Stat
Page 47 and 48: 37 Table 2: Sustainability Framewor
Page 49 and 50: 39 CHAPTER FOUR HOW DO WE GET THERE
Page 51 and 52: 41 Figure 13: Where to Intervene to
Page 53 and 54: 43 • Consistent Policies and Appr
Page 55 and 56: 45 • Have been developed to be pe
Page 57 and 58: 47 Avoiding overloading may involve
Page 59 and 60: 49 C For new product development, a
Page 61 and 62: 51 • Precisely, what are they goi
Page 63 and 64: 53 Existing MARKET (sub-sector, ent
Page 65 and 66: 55 To Reach Female-Owned Businesses
Page 67 and 68: 57 C Informal, and C Individuals. T
Page 69 and 70: 59 The drawbacks of tender-based se
Page 71 and 72: 61 CHAPTER FIVE HOW DO WE ASSESS OU
Page 73 and 74: 63 • How well?—the quality dime
Page 75 and 76: 65 day income * This highlights key
Page 77 and 78: 67 Beyond SMEs—Unchanged Indicato
Page 79 and 80: 69 Figure 16: Measurement Methods i
Page 81 and 82: 71 • Donors may be interested in
Page 83 and 84: 73 and poverty reduction? Or is the
Page 86 and 87:
A-3 KEY REFERENCES Anderson, Gavin,
Page 88 and 89:
A-5 Hitchins, R and Gibson, A; "The
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