Beverly Morgan - RFCD Conference @ Arthur Lok Jack GSB - November 2011

1. Regional Forum on Cluster
Development in the Caribbean:
Opportunities for Business
Cluster Development in Agribusiness & Tourism in Jamaica
Beverley Morgan
The Competitiveness Company
November, 2011

2. Competitiveness: Context for
Clusters
• Competitiveness analysis covers the range of
actions through which nations and firms “manage
the totality of their competencies to achieve
prosperity or profit” (Garelli, Top Class Competitors, Wiley, 2006, p.3).
• Productivity key component of competitiveness-
determines “how much firms or nations produce
with limited resources”
• Much more to competitiveness than productivity
alone. ‘Competitiveness is also about changing
mindsets: looking at the world, nations, firms,
and people from a different perspective” (ibid, p. 21).

3. Every morning in on the Masai Mara
in Kenya, a zebra awakens. She has only one
thought: To be able to run faster than the fastest
lion. If she cannot, then she will be eaten.
Every morning on the Masai Mara in Kenya a lion
awakens. He has only one thought: To be able to
run faster than the slowest zebra. If not, he will
be hungry and he will not be able to feed his
pride.
It is enough to know that with the rising of the sun,
you must run. And you must run faster than you
did yesterday or you will be eaten.

5. Why Clusters Matter
• Firms often possess competitive advantage
because national institutions that surround them
are better suited for organising industrial activity in
their particular sector of the economy (Porter, M, On
Competition, Harvard University Press,1998)
• “Firms do not create all the resources,
infrastructure, and knowledge that are required to,
make a product by themselves. If one considers
the variety of supporting organizations associated
with a particular industry, it becomes apparent
that competency-enhancing or – destroying
innovations can occur not only at the firm level but
also at the level of what analysts have called the
industrial district...(Murmann, J.P., Knowledge & Competitive
Advantage, Cambridge University Press, 2003, p. 63).

6. The Challenge for the Caribbean
• In the context of the Caribbean:
Can the focus on cluster
development alter the
competitive space within which
micro, small and medium-sized
enterprises operate, thereby
making them more
competitive?

7. Developed vs. Developing
Country Dichotomy
• Porter:
– Clusters in developing economies essentially
less rich in connections
– Involving fewer participants
– More limited communications
– Less developed linkages between institutions
and firms.
– On the contrary
• clusters in developed economies involve “a dense
mesh of continually evolving relationships and
linkages…”

8. The Juke Box on The Corner
Criteria Scoring (Points)
Willingness to embrace new
Low = 1-3 points Medium = 4-6 pts High = 7-10 pts
ideas w/supporting resources
Potential to be internationally
Low = 1-3 points Medium = 4-6 pts High = 7-10 pts
competitive
Employment potential and GDP
Low = 1-3 points Medium = 4-6 pts High = 7-10 pts
contribution
Mass (no#) of qualified firms Low = 1-3 points Medium = 4-6 pts High = 7-10 pts
Potential to motivate other
Low = 1-3 points Medium = 4-6 pts High = 7-10 pts
potential clusters
Macro barriers to success High = 1-3 points Medium = 4-6 pts Low = 7-10 pts

9. Cluster Selection Results
Cluster Results
Agribusiness High Overall Score
Tourism High Overall Score
Entertainment & Culture Medium Overall Score
Shipping and Berthing Medium Overall Score
v
The Agribusiness and Tourism clusters posted high overall scores with
generally comparable results across all of the criteria.
The Shipping and Entertainment clusters both posted medium overall
scores but their results differed significantly across the criteria.

10. Phased Approach
Facilitator-led
Phase 0 Phase 1 Phase 2 Phase 3
Mobilise Execute Institutionalise
Engage
•Standardise new
1. Revalidate competitive practices
•Define and engage
Objectives and diffuse broadly
•Communicate •Reconfigure
•Evaluate 2.Engage Others with public and operational systems,
competitiveness
coordinate supporting
potential (define 3.Search for participants organizations to
competitiveness Insight
objectives) sustain new standards
•Execute important
4.Select & agree competitiveness-
•Get authorisation winning •Leaders & members
building initiatives reflect to consolidate
/ coordination / strategies
encouragement to learning, internalise
•Regular guiding principles, set
proceed 5. Commit to Act performance priorities for future
monitoring and
active change
management

11. What Were People Thinking? Mental Models Survey Results
Rate Jamaica’s current levels of each source of prosperity ranging from “among the best in the world” to
“among the worst in the world”
Amongst the best in the world (1 to 3) Average (0) Amongst the worst in the world (-3 to -1)
Respondents considered the overall business environment in Jamaica to be extremely
challenging. Government support for the private sector and the level of trust between
the two was considered to be amongst the worst in the world.

12. Mental Models Survey Results
Generally speaking, would you say that most people in your country can be
trusted, or that you can't be too careful in dealing with people?
A significant majority of respondents stated that you can’t be too careful in
dealing with fellow Jamaicans. JCCP

13. Process Report
The National Summit marked a transition point in the project. The JCCP moved
forward from mobilisation phase to execution phase:
(Facilitator – Led)
Phase I: Phase II:
The National
Mobilise Execute
Summit
Phase I Mobilisation efforts include:
 Meetings with over 300 companies
 15 workshops with the IAC members
 Public presentations given to Associations and Chambers of Commerce in Kingston,
Mandeville, Port Antonio, Ocho Rios, and Montego Bay
 Formal meetings held with dozens of chamber heads, industry association presidents,
and large company CEOs
 Formal meetings held with Senior Government Ministers
 Newspaper articles voice competitiveness issues nationally
 Radio interviews on clusters and competitiveness

14. Agribusiness Cluster Process
THREE LEVELS OF EFFORT & ACTIVITY
1. Full Session: Agribusiness Sector
A. Learning Environment
B. Overarching strategy and direction-setting
C. Cross-cutting initiatives
D. Sub-group initiative updates & cross-fertilization
E. One new strategy tool per session
F. Initially, bi-weekly, then monthly
2. Sub-groups
A. Marketing, Sales Channels, Packaging, Standards, Supply
B. Analysis of each opportunity area
C. Initiatives to fill gap/meet opportunity
D. Meetings as needed: initially, less frequently, increasing during implementation
3. Individual Company Projects
A. Coaching as requested (by senior experts & cluster facilitators)
B. Open to all cluster participants

15. Agribusiness Cluster Production Supply
Working Group (Groups Work with Facilitator Support)
Commodity Jamaican Production Practices Best International Practices
Yield Cost of Volume Yield Cost of Volume
(kg/ha) production produced (kg/ha) productio produced
n
Country Red
Pepper
Scotch 11364 J$35.2 /kg 300 t 9000 J$16.1 /kg N/A
Bonnet J$22.12 J$15.40
Pepper
Ginger 8-13t J$0.48/lb 295t 48.3t 15 500 t
Tamarind ? N/A N/A 960 N/A 257 t
Escallion 16845 21.44/kg 13761 t 31524 N/A N/A
Onion J$31.86/kg 788t
Pimento 1500 N/A 1485 t 800 N/A 8012 t
Thyme 5896 J$93 /kg 1510 t
Quantities in pounds/acres (kg/ha) Data represent averages collected during past 5-10 years

16. Agribusiness: Packaging Working Group
Almost all packaging inputs are imported (Trinidad, Venezuela, USA, UK):
Delivery from suppliers of packaging inputs inconsistent. Suppliers require 6
weeks to process and deliver orders, but supplies are rarely received on time. This
scenario happens for various packaging inputs at different times.
Because of the need to ensure against any hitch in production and to reduce the
cost of the imported inputs it is necessary to carry a large inventory of these items,
this ties up working capital.
Import costs would be reduced if container space could
be shared, however this degree of cooperation has
proven rare.
Packaging related inputs account for 40% to 66% of total
production costs.
Bureau of Standards is the key agency for product packaging and labeling.

17. Real Results for Real Firms
Consolidated purchasing of glass bottles:
Individual Consolidated Cost Savings
8.2¢ 7.4¢ 11%
Per Unit Cost (5oz bottle):
Shipping/storage/transport: 2.1¢ 1.6¢ 24%
Finance: 26% 12% 14%
The avg. cluster member realised overall cost savings of some 10%.
Greater reliability of supply resulted in improved customer service and
reduced lead times as inventory now located in Kingston not off-island.

18. Cluster Initiatives: Packaging
Glass bottle Consolidated Purchasing Program:
Sauce Manufacturers
Glass
Distributor
Manufacturer
JEA/EXIM
Financing
 Lower costs (unit & service)  120 day financing facility  Reduced pricing ~ 10%
 Extended terms (N60 days)  Brokering services  Handling equipment
 Greater reliability of supply  Trucking services  Technical Support
Framework for consolidated  Warehousing facilities
purchases of other inputs (closures)
By consolidating their purchases cluster members shifted the balance of power away from
suppliers and realized significant improvements in pricing, service levels, and payment terms.

19. THE PROCESS
IDENTIFIED THE ISSUE
THE DATA WAS
GATHERED
THE FAMOUS
BOTTLE INITIATIVE THE SOLUTION
PROPOSED
THE INITIATIVE
UNDERTAKEN
THE RESULTS ASSESSED

20. Tourism Cluster: Data Analysis for Informed Decision-
Making
(Process)
Average spend per day in Select Destinations in 2000
300.00 275.00
250.00
200.00
158.60 160.08
150.00
96.10 92.30
100.00
50.00
0.00
Cuba Jamaica Turks and Hawaii Ireland
Caicos
Source: CTO, Ireland Tourist Board, JTB
The metric to watch is not solely arrivals but a combination of other factors that makes each
firm (attraction, tour operator, restaurateur, hotelier) more profitable. Jamaica ranks amongst
the lowest on average spend per day.

21. Birth of a New Group & Segment

22. Unique Jamaica – Explore it, Taste it, Feel the Vibes
Roots Jamaica Taste of Jamaica Jamaica Naturally
• Dance Hall • Food • Waterfalls
sessions
• Local Theatre • Hiking Trails
• Rum Bars
• Art exhibitions • Natural Parks
• Fish feeds
• Cultural shows • Caving
• Markets
• ATV • River rafting
• Trench Town
Culture Yard • Maroon Towns • Bird watching
• Round Robin in
Towns on Friday
nights
• Dominoes
Working groups created 5, 7 and 10 day experiences that travelers can choose
from to ‘Explore, Taste and Feel the Vibes’ of Jamaica. Many Tours in
collaboration with Sauces & Spices and Entertainment Clusters

23. What Was Achieved? Cluster Level
 Unique Jamaica  Sauces & Spices
(Tourism) (Agribusiness)
 The Power of  Joint Purchasing of
Collaboration Bottles
 BLCF Grant  Sharing of Shelf Space
 Collaboration within  Sharing of Market
the cluster: Contacts
o Development of Bed &  Marketing
Breakfast Segment Collaboration
 Across clusters:  High six figure order
o Entertainment for 1 firm (ongoing)
o Agribusiness

24. Outcomes: Reach
• More than 300 firms participated in the
programme
• Approximately 200 organisations (over 150
firms) actively participated in the three selected
clusters
• While the bulk of firms were micro, small and
medium-sized enterprises (SMEs), larger firms
also participated actively in cluster activities.
[

25. What Did We
Learn that is
Generalisable?
Best
Practices

26. Lessons Learned
 Imperative of Transparent Processes
 Importance of Rigorous Methodologies for Selection
 Need for Cluster Diagnostics to Ground Choice of Initiatives
 Need to be able to build consensus on basis of data
 Protocols around respectful interpersonal interactions
 Process Must be Private Sector - Led and Driven
 Importance of Cluster Facilitators with Skills to both Analyse
and Facilitate
 Importance of Clustering as Learning Process – at the end of
the day, participants are enriched and enabled to practise
 Clear & Meaningful Processes
 Good Cluster Leaders Make Enormous Difference
 Good Public – Private Partnerships necessary