Primary producers often fail to capture value within their particular industries as they do not approach their activities strategically. This report applies the principles of strategic management theory to the development of village industry in the Solomon Islands. Village industry is inherently simple, yet advantages are available if a strategic management focus is adopted.
To achieve this focus a full understanding of the external environment for commercial activity is required. This involves analysing the economic, political and social environments, as well as identifying demographic and technology trends. This analysis uncovers real problems in rapid population growth and economic stability yet also reveals strengths in natural resources I political and cultural stability and in new technology advances.
Having conducted an extensive external environment analysis, the strategic management process is continued into an industry study of village copra production. This industry study provides an analysis of the actual and potential industry size, the industry structure, distribution systems I trends and the key success factors required to capture value for the producer. This industry retains little value in its present form despite the size and attention it receives from government policy support. The analysis identifies new technology advances which promote the simple production of a downstream, value added coconut oil. The application of this new technology is seen as a key success factor for future value retention in this industry.
Strategic directions for the deployment of this new technology are then identified as a part of the process of strategic decision making. The necessity for product differentiation is explained and some strategic directions provided as building blocks for further development. Although being a somewhat generic product, village producers of natural coconut oil can pursue differentiation strategies by developing the product along simple dimensions that are of increased value to end-users.
How village producers can research their markets and achieve value retention through differentiation is the subject of the final chapter of this report. This section discusses ways in which village producers can be linked to end-users. Without such linkages these coconut producers will be locked into long-term production of merely another generically traded commodity product.
This report is designed to serve as a model for identifying and evaluating strategic directions through the application of strategic management theory. By applying these principles, village producers can achieve real and long-term value retention within their industries.