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CHANGES for Bá Thi Café (IDEAS OF SUPPLY INNOVATION (FEEDING INTO THE…

- - - - Moka Bourbon in DaSar
  - - - MOVING FROM COFFEE MANUFACTURING => RETAIL + SERVICE COFFEE
      - At the early phase of the upgrading trajectory—where process upgrading is critical—the primary arena for cooperation is in production sharing or a division of labour in the production cycle (for example, firms making complementary products or components for each other). But, as the upgrading frontier moves towards increasingly disembodied activities, SMEs require the skills to manage and share knowledge, rather than to cooperate in production.
    - - CAUDATFARM:
        
        Create retail + service first by introducing The Coffee House
        
        Create Caudatfarm = Manufacture Arm to ensure the quality of coffee and the supply of healthy vegetable
      - THE MARRIED BEAN
        
        Possess and Maintain a network of coffee farmers producing high-end coffee -> Product Upgrading + Functional Upgrading
        
        NOW, going to retail + service GOURMET coffee in SAIGON -> Chain Upgraidng + Product Upgrading
        
        Buying from high-end farmer + Focus on POST-HARVESTING coffee process -> Buying- Process Upgrading + Post-Harvesting Upgrading
      - THE K'HO COFFEE
        
        Having Rolan to control the quality of coffee through communicate to the group of K'HO People -> COMMUNITY RELATIONSHIP UPGRADING
        
        Josh take care of quality control: Picking the ripe cherries + Drying coffee on beds -> PROCESS UPGRADING + PRODUCT UPGRADING
        
        They are both selling ROASTED COFFEE to Cafes and Final Customers -> CHAIN UPGRADING
    - - These led to the development of standardized business processes such as just-in-time single unit flow procedures, total quality control, and continuous improvement practices. The mechanisms for activating these processes included the utilization of process-packages such as ISO quality and environmental standards (ISO 9000 and ISO 14000), and industry-specific standards such as Hazard Analysis and Critical Control Point (HACCP) processes in the food industry
      - This suggests that upgrading working conditions in global supply chains requires significant resources and managerial diligence
    - - The barriers to entry which define the envelope of profitable production are declining most rapidly in the embodied links in the value chain (that is, in regard to process capabilities). These are the areas most subject to competition and hence to declining terms of trade. By contrast, it is the disembodied activities such as design, marketing, technology and strategic repositioning where rents are appreciating and which are most difficult to enter and which consequently offer the highest rates of return
      - The relative importance of disembodied inputs is, as a general rule, progressively more important as the challenge moves from process, to product, to functional to chain upgrading. Hence, to sustain income growth SMEs— either individually or collectively— will in the long run need to develop the capability to upgrade not just processes and products, but increasingly also their functions
      - UNDERSTANDING THE MODE OF INCORPORATION IN THE GLOBAL ECONOMY
        
        Arms-length relationships describe a world where producers and customers are faceless to each other. They operate in a world of transient and impersonal relationships, much as that described in economic textbooks on perfect competition. The export of many primary commodities (such as coffee) is an example of this form of incorporation in global markets.
        
        Producers seldom supply directly to final consumers. Their products characteristically pass through a number of intermediary buyers, and these determine the extent to which SMEs can upgrade their operations. The following major types of buyers can be identified:
        In the consuming country:
        ❏ Multi-outlet retailers
        ❏ Single-outlet retailers
        ❏ Independent specialized buyers
        ❏ Large international firms with global production networks
        In the producing country:
        ❏ Local buyers and export agents
        ❏ Large producing firms acquiring products and other inputs from other local suppliers
        
        Quasi-hierarchical relationships between buyers and producers describe a world in which the two parties are not joined by ownership, but engage in a long-term relationship. One of the parties tends to be dominant—to assume the role of “governor”—and to define who is incorporated in the chain, and what standards they have to meet.
        
        NESTLE INSTANT COFFEE COMPANY => COFFEE FARMERS
        
        OLAM PROCESSING COMPANY => FARMERS
        
        These “governors” play an extremely important role in the modern era of globalization which, as we saw earlier, can be distinguished from nineteenth century internationalization precisely because of the complex and coordinated roles in which global production networks operate
        
        Network relationships occur when different producers have complementary skills which they need to share in order to prosper. The defining aspect of these complementary skills is that they define a world of cooperation among “equals”, often engaging in technological collaboration (for example in the electronics industry, or in automobiles where major assemblers jointly produce engines)
        
        Groups of firms located in the same geographical space benefit from collective efficiency when:
        
        Together they generate external economies which spill over in a beneficial way to other firms. For example, they may:
        ❏ Generate a pool of skills;
        ❏ Draw in infrastructure and specialized suppliers; and
        ❏ Attract buyers.
        
        They engage in joint actions. For example, they may:
        ❏ Engage in joint purchasing;
        ❏ Sell under a collective label; and
        ❏ Provide a collective facility for customs clearance.
        
        Hierarchical relationships refer to the incorporation of producers in a vertically integrated production chain, connected by close bonds of ownership. It describes a value chain of head offices and subsidiaries, that is a world of foreign direct investment.
- - - - Maybe TRUE & NOT TRUE FOR COFFEE
        
        Because MNCs can buy COFFEE BEAN, THEN EXPORT to consuming countries and finally ROAST THEIR COFFEE OVER THERE = JAPAN, US, EU
        
        => Potentially the way to export THE BRAND + THE COFFEE SAFELY by COOPERATING WITH AN OUTSOURCING COFFEE ROASTING in this consuming countries => DOI CHAANG COFFEE IN THAI LAND exported to CANADA MARKET + KEEP THE BRAND + STORIES
  - - - “Producer-driven commodity chains are those in which large, usually transnational, manufacturers play the central roles in coordinating production networks (including their backward and forward linkages). This is characteristic of capital- and technology-intensive industries such as automobiles, aircraft, computers, semiconductors, and heavy machinery.”
        
        “Buyer-driven commodity chains refer to those industries in which large retailers, marketers, and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically located in the third world. This pattern of trade-led industrialization has become common in labour-intensive, consumer goods industries such as garments, footwear, toys, house wares, consumer electronics, and a variety of handicrafts. Tiered networks of third world contractors that make finished goods for foreign buyers generally carry out production. The specifications are supplied by the large retailers or marketers that order the goods.”
        
        PG 56 OF INTEGRATING SMES BOOKS
      - From the perspective of developing country producers, the role played by these GOVENORS = PROCESS COFFEE COMPANIES = OLAM, VOLVO, LÀ VIỆTis critically important in determining:
        ❏ Whether they are to be incorporated in global value chains;
        ❏ Which market segments they will serve in these value chains;
        ❏ Which functions they will undertake in these value chains; and
        ❏ In which areas they will be allowed to upgrade their capabilities.
      - More contentious is the suggestion that producer-driven chains are a reflection of the old “import substituting industrialization order”, whereas buyer-driven chains are more attuned to the outward-oriented and networked production systems of the 21st century.
      - WHAT TECH?
        
        WASHING TECH
        
        FERMENTATION TECH
        
        WELL-FLOW TECH
        
        WHAT POWER?
        
        FINANCE POWER
        
        AGRO INPUTS SUPPLY
        
        GROWING TECH POWER