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Collective Upgrading of SMEs in the Tourism Sector Through Business Networks

Carlos Lpez Cerdn Ripoll UNIDO International Expert September 10-11 of 2012 Montego Bay, Jamaica.

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The first stament

Lessons learned from experience shows in other countries that an important part of the competitive advantage of SMEs are related with factors external to these. Such factors depend of the links between the SMEs and its productive and institutional environment.

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The first stament

The precedent statement means: all the business development services required for the improvement of SMEs are a necessary condition, but along they are not sufficient for competitiveness. The sufficient condition is the system of relations between the enterprises.

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The system of relations between companies

Horizontal Networks
Firm 1 Firm 5 Firm 2
Suplier Company
Suplier Company Suplier Company

Vertical Networks

Client Company

Firm 4

Firm 3

Business Networks Export Consortia Origin Consortia

Supplier Development Program

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Some definitions & examples: Horizontal Networks

Business Networks.
EMPRESA 1 EMPRESA 2 EMPRESA 3

EMPRESA 4

RED EMPRESARIAL

EMPRESA 5

EMPRESA 6

EMPRESA 7

EMPRESA 8

Alliance between a group of companies that manufacturing the same product or complementary products to achieve objectives that they can not achieve individually. These objectives can be directed to the market or to suppliers. .
CLCR 2004

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Indeturs Business Network

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Indeturs Business Network

q Date of incorporation: 2005. q Legal form: Corporation. q Members: 11 eco-touristic entrepreneurial developments. q Activities: promotion, path development, lodging, tours, events, etc.

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The Founders
q Kolem Jaa q Parque Ecolgico Olmeca q Agua y Cielo q Hacienda Jess Mara q CACEP q Hacienda la Luz q La Finca q Punta Manglar q El Negro Chon q Capital Beuto II q Tranpostadora Nautica Tabasquea

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The Objectives of Indeturs

q A better economic use of the ecosystem and rural areas of Tabasco without degrading it for the development of unprofitable productive activities. q Halt the expulsion of rural populations to urban areas or abroad through the promotion of economic activities. q Take advantage of business opportunity that represents the Mexican humid tropics for national and international tourism. This business network offers a mosaic of specialized services from which we can mention the following:
Promotion and marketing of tourist products of the group members. Transport services to facilitate the move of tourism to ecotourism products. Development of tourist paths ways to the region. Accommodation facilities in rural homes and farms.

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Main Accomplishments
q The 11 parks and reserves that make up Indeturs are experiencing visits from 100 to 150 people per day, and being 11 sites, this amounts to 600 thousand visitors per day for all inclusive. q The Southeast Tourism Development (Indeturs) agreed with the airline Aeromexico plan discounts of 30 percent for promotional packages from New York, so that more international tourists come to know the entity and destinations like the Swamps of Centla. .

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BACKGROUND
The state of Tabasco receives 83% of national tourist market. Tourism from Europe and USA with a 6% and 5%.
EEUU Mxico 2% 14% 9% 40%
5% 5% 1% 6%

83%

Canad Otros

Europa

Fuente: Subsecretaria de Turismo del Estado de Tabasco y Voluntarios OMT.TedQual 2005

7% 28%
Vacaciones/Ocio Estudios Salud Otros Negocios/Trabajo Visitas a familiares y/o amigos

The highest number of tourists visiting Tabasco is for vacation and leisure with 40%. The 28% by reason of business. The remaining 32% for other reasons tourism.

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BACKGROUND
The 43% of USA tourists make nature tourism. 93% of the European cultural tourism. Canadian tourism choose the adventure. The 36% of the Mexican makes cultural tourism.

Cultural S. arqueloga. T. de Naturaleza T. deportivo Otros

Cultural - Otros T. de aventura Sol y playa

Fuente: Subsecretaria de Turismo del Estado de Tabasco y Voluntarios OMT.TedQual 2005

IN RECENT YEARS THE TOURISM SERVICES INVOLVING DIFFERENT PROVIDERS IN THE STATE AND HAS GENERATED A DIVERSITY IN THE PRICE AND QUALITY STANDARDS .

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BACKGROUND
As a result, unfair practices have been favored between different existing travel agencies in the state. These practices affect directly and indirectly the sector. Travel agencies have been affected by large scale tour operators located in the center of the country about driving a greater number of tourists at lower prices. A lack of standardization of rates of local travel agencies to its products, have causes large scale tour operators sell directly to foreign market.

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Tabasco Travel Agencies Business Network

q Date of incorporation: 2006. q Legal form: Corporation. q Members: 5 travel agencies. q Activities: ticketing, lodging, tours, events, etc.

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The Founders
q Grupo CyC q Rutas del Usumacinta q Tursimo Nieves q Universo Maya q Creatur

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The Objectives of Tabasco Travel Agencies Network

q Generating new customers (market growth). q Management to the intervention of authorities in matters of unfair competition. q Reduced operating costs through agreements with service providers. Cost reduction focus through the operation of all members. q Creating a better tourist offer for international tourism. q Logistics to attract tourists. q Price standardization.

PATHWAYS TO PROMOTE

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BUSINESS MODEL TABASCO TRAVEL AGENCIES NETWORK

CUSTOMERS FAMSA Mountain Path Cocoa Path TRAVEL AGENCIES NETWORK Swamp Path

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Accomplishments: Pathway Operating Rules

1. To access the role to operate pathways the companies should count with a minivan with air conditioning. 2. All service must be guaranteed with minivan with air conditioning. In case of 3 persons may be replaced by a medium sedan car with air conditioning. 3. Report 15 days before the start of the month the companies will not cover the routes. 4. Any notice to enter the role of routes must be received 15 days before the start of the month. 5. Those who report with less than 48hr in advance that they can not provide the service will be punished with $ 100. 6. Those that do not indicate with 48hr in advance that they can not provide the service will be punished with $ 200. 7. If any company notified 24 hours in advance an oversold will be assigned to support a vehicle preassigned.

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Some definitions & examples: Horizontal Networks

Export Consortium.

MERCADO EXTERIOR

CONSORCIO DE EXPORTACION

Empresa A

Empresa B

Empresa C

Empresa D

Empresa E

MERCADO INTERNO

An export consortium is a voluntary alliance of firms with the aim of promoting goods and services of its members abroad and facilitating the export of their products through joint action. An export consortium may be considered as a machine for export promotion that offers specialized services to its members.

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TRAVEL PARTNERS MOROCCO

Travel Agencies Consortium

26

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Presentation of TPM
q Date of incorporation: 2007. q Legal form : GIE (Economic Interest Grouping without capital) q Members : 7 travel agencies. q Total staff :95. q Activities: ticketing, accommodation facilities, incentive, organization of events, .

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The Founders
q Activ Travel q Atelier du Voyage q Evasion on Line Maroc q Motivation & Events q NS Voyages q Visit Morocco q Ulysse Voyage

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Why an Export Consortium?

q Take part to the revival of the tourist sector. q Catch the opportunities offered by Vision 2010. q Meet the new needs of clients an the changes of demand. q Finding trends in the major international competitors and major tour operators in Morocco. q Face the treat of international competitors and large tour operators in Morocco.

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The objectives of TPM

q Improve of members competitiveness. q Development and diversification of the product. q Open up to international markets and access to new ones. q Promotion of member companies as travel agencies respecting specific principles and ethical values.

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Organizational structure
q One Secretary General elected for two years. q The four main axes of the action plan are distributed among the members Tourism (hotels, transports, restaurants). Ticketing and other grouped/common purchases: airlines, insurance, etc. Communication and training. Tourism exports : participation in business mission and trade fairs abroad. q A part-time coordinator.

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Main accomplishments
q Audit and operation of a common human resources policy and in accordance with the rules in force. q Creation and dissemination of internal newsletter. q Creating a website. q Exploration of new markets in common. q Pooling of purchases and suppliers. q Design and implementation of TPM values (sense of customer, professionalism, citizenship, solidarity).

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Prospects of development
q Place the consortium as a reference for the tourist spots foreseen under the Plan Azur and for the foreign tour operators. q Organize Workshops abroad. q Organize ductours (educational tours) by inviting foreign tour operators to Morocco. q Create a label for Travel Partners. q The consortium seeks to integrate in the short run some other travel agencies that agree with the same principles and core values, from different Moroccan regions.

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Presentation of Inkasexperiences
Date of incorporation: 2008. Legal form: Partnership Agreement. Members: 7 travel agencies in Cuzco. Activities: experiential tourism, trekking, culture, ecology. q Services: ticketing, accommodation, tours. q q q q

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The Founders
q Vanessa. q Royal Travel. q NDM. q Andean Challenger. q Flamenco. q Peruvian Highland Trek. q Ulysse Voyage.

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The Objectives of Inkasexperinces

q Access to international markets. q Promotion of member companies. q Development of new tourism products.

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Main accomplishments
q Creating a brochure and a website. q Exploration of new markets in common. q Development of new tourism products in collaboration with Quechua-Speaking communities.

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Tourism Consortia

ALTERPERU

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Presentation of Consortium Alterper

q Date of incorporation: 2008. q Legal form: Partnership Agreement. q Members: 5 travel agencies in Cuzco. q Activities: ticketing, lodging, tours, events, etc.

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The Founders
q Llapan Atiq Travels (traditional tourism). q Turismo Gastronmico (gastronomical tourism). q Epuerto ( gay market tourism). q Chaski Aventura (thematic tourism, experimental tourism, ecological tourism).

q Adventure zone (bike tourism).

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The objectives of Alterper

q Access to new markets. q Increase sales. q Development of new tourism products. q Development of services in a competitive framework.

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Business Model
MERCADOS INTERNACIONALES

UE

USA CANADA

ASIA

LATIN AMERICA

JAPON

AUSTRALIA

CONSORCIO ALTERPERU

LLAPAN ATIQ

ADVENTURE ZONE

EPUERTO

GASTRON.

CHASQUI AVENTURA

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Main Accomplishments
q Design of a joint tourism program aimed at visitors to collaborate in the development of the people who they visit. q Pilot program in community Patabamba (Choya). Crafts tissues. Construction of 2 houses. q Pilot program in community Piuray (Chinchero). Drainage works, sewage systems and toilets for lodging. q Exploration of new markets in common. q Pooling of purchases and suppliers.

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Consortium Alterper

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Some definitions & examples: Horizontal Networks

Origin Consortium.
CALIDAD

MERCADO EXTERNO TERRITORIO

CADENA DE VALOR

A consortium of origin is a voluntary alliance of individual producers, companies, cooperatives or associations in the same region with the objectives of promoting a typical or traditional product together. A consortium can bring together members of one or more links in the value chain planning. It can be considered as a partnership structure to enhance and protect typical products that represent the tradition and cultural heritage of a territory.

MERCADO INTERNO

FAMA

PRODUCTORES PRODUCTO TIPICO

Comt Cheese from Franche-Comt

Mountain cheese from unpasteurized cow's milk produced since the 12th century. Traditional methods of animal husbandry, production and ripening of cheese Establishment of a consortium and registration of a denomination of origin in the late '50s.

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Franche-Comt

Development contracts Control production volumes R & D to improve quality / safety Political lobbying Adaptation specification Consultation / scientific Tourism promotion activities Abroad marketing activities Defense of denomination of origin Coordination of certification Generational renewal cheese Makers gastronomic pathways

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Consortia Comt (All value chain links)

Certification DOP (Quality, Traditional Production)

20 cheese ripening entrepreneurs

Comt Cheese

Contracts

Comt Cheese Local Fair Comt Gastronomical Pathway Comt Museum R&D with University

169 cheese production cooperatives and SMEs

Contracts

3200 milk producers

Pasture For cattle

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President Milk producer Vice-president Cheese ripening entrepreneur Secretary Cheese producer Memberships Vice-president Cheese producer

Treasurer

Board Directors Comt C. Publicity C. Information

C. Economics

C. R&D

General Assembly

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Comt Consortia Staff

13 employees:
q q q q q q q q q q q q

Manager. Secretary. Account Keeper. Production Control. Comt Gastronomical Pathway. Grants. Communication and Marketing. Comt Museum. R&D (2). Logistic. Sanitation and Hygiene. Quality Control.

Financing: 95% of revenues for rights of use of the Denomination of Origin.

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Main accomplishments
Sale price of Comt cheese higher than generic. Fair distribution of benefits along the value chain. Comparatively higher profitability of dairy farms. Preservation over the years from traditional production techniques. Intensive in labor & employment, 5 times more than Emmental Cheese. Less rural exodus in other parts of France. Extensive production respects the environment. Comt helps attract tourists to the region.

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Some definitions & examples: Vertical Networks

MERCADO

Supplier Development Program.

La escala se establece de acuerdo con la EC con base a su filosofa y requerimientos

EMPRESA CLIENTE

Empresa Prov.

C
Empresa Prov.

Se acepta al proveedor potencial para hacerle compras inmediatas No requiere ingresar al PDP.

B
Empresa Prov.

Se acepta al proveedor potencial para ingresar al PDP. Esto no significa que se le hagan compras. Solo significa que entra a desarrollo

Se rechaza al proveedor potencial. No califica para hacerle pedidos. Tampoco califica para desarrollarlo A travs de un PDP

SDP it is a process to improve the business relationship between a client company and their suppliers so that they abandonment of poor purchasing practices based on the lowest price of the moment and develop a long-term relations between customer and supplier and seek solutions in both directions to the next problem:

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Some definitions: Vertical Networks

Problems of Suppliers. 1. Delay in delivery times. 2. Discrepancies in quality. 3. Inefficiency in delivery times. 4. Lack of support systems. Inadequate policies or purchasing practices. 1. Extended payment deadlines. 2. Inadequate specifications. 3. Lack of criteria to address disagreements. 4. Poor or lack of communication among those involved in the procurement process.

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Supplier Develpment Outputs

Improving the purchase department of the client company. Improvement of current suppliers and / or development of new domestic suppliers according to the situation of each client company. Modern methodology for operating and management the supply area of the client company. Methodology of evaluation and certification of suppliers, which will be transferred to the client company (SYECSU)

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Supplier Development for Hotels & Restaurants in Costa del Sol (El Salvador)
PRESENTAN: JOSE ANTONIO SANCHEZ RENE MAURICIO LEMUS JOSE MIGUEL SIFONTEZ MAURICIO ERNESTO CHAVEZ SEPTIEMBRE 2007

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BACKGROUND
There is no articulation of local producers that meet the business requirements for suppliers of Hotels and Restaurants. So that they need to travel to San Salvador to buy their products instead of obtaining from the local people. Therefore they increasing their transportation costs, time spent and getting their products at higher prices. Additionally, hotels and restaurants looking for products with consistent quality, supply in the required quantities and on time delivery.

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TOURISM VALUE CHAIN

Servicios Bsicos

Destino turistico

Hospedaje

Alimentacin

Transporte

Diversin

Operadores de turismo

Cliente Visitante/Turista

Agua Luz Drenaje Limpieza Ordenamiento

Playa Estero

Hotel Hostal Cuarto

Restaurante Malecn Merendero Ramada Comedor

Excursin Bus Carro Micrubus

Lancha Fiesta Deporte Jeski, Kayack Cultura

Local Perodico San Salvador Regional Internacional

Visitantes Turistas Nacionales Turistas Internacionales

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Suppliers

Wholesellers Collectors

Food & Brevages Restaurante HOTEL

Tourists Visitors

AREA OF INTERVENTION

Infraestructucture

Staffl
Waiters

Suppliers
Sea Food (FECOOPAZ) 50%

Entertainment

Manteniiance

Boat tours

Cleaning

Kittchen Staff

Vegetables (AGROLEMPA) 5%

Guides

Decoraction

General Services

Meet & Poultry 10%

Handcrafts

Equipment

Administrative Staff

Brevages 20%

Musical Groups

Security Staff

Dairy 2%

Promotion

RESTAURANTE VALUE CHAIN

Others 18%

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Supplier Development. Costa del Sol

q Date: 2007-2009. q Client Company: Hotel Pacific Paradise (Restaurante Acajutla). q Supplier Company: Cooperative Agrolempa.

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GENERAL OBJECTIVE Develop and implement a vertical chain of local certified suppliers to the corporate group of restaurants and hotels in the Costa del Sol to contribute to the consolidation of trade relations and provide better service in the area. SPECIFIC OBJECTIVES 1. - To develop the companies in the fishing groups and agribusiness associations in the area of the Costa del Sol, Department of La Paz, in order to have suppliers that contribute to improving productivity, meeting deadlines and improve quality . 2. - Improve the management capacity of the suppliers especially in areas of finance, human resources costs and the prospect of forming companies increased productivity, reliability, stability and projection in time. 3. - Improve coordination and communication of the hotels and restaurants in the Costa del Sol (Pacific Paradise Hotel and Restaurant Acajutla) with local suppliers.

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SUPPLIER DEVELPMENT SCHEDULE

Step 1 Promotion Step 2 Diagnostic EC -EP Step 3 Trust Development Step 4a Supplier Improvement Plan Step 4b Client Company Improvement Plan Step 5 Follow Up & Evaluation

Sep

Oct

Nov

Dic

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The Supplier Evaluation System

SYSTEM OF ASSESSMENT AND CERTIFICATION OF SUPPLIERS
CLIENT COMPANY SUPPLIER
Criterion Weighting of Criterion

PACIFIC PARADISE RESTAURANT AGROLEMPA

Evaluation Parameter Weighting of Parameter Calification of Parameter Score

Product Quality

40%

Freshness Flavor Texture SUBTOTAL Equal to Competence Price Less Than Comeptence Price Reference Price La Tiendona SUBTOTAL Delivery Time Served Percent of Compliance in Delivery Time Extraordinary Deliverys SUBTOTAL

70% 15% 15%

6 7 6

4.2 1.05 0.9 6.15 2.7 3.2 2.1 8 0.8 0.6 0.2 1.6 1 1

2.46

30% 40% 30%

9 8 7

Prices Competitiveness

40%

3.2

40% 30% 20%

2 2 1

Delivery Time

10%

0.16

Legal Situation TOTAL

10% 100%

Tax Registration SUBTOTAL

10%

10

1 6.82

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The Supplier Evaluation Score

Score 6.82

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The Supplier Evaluation Scale

MEASURING SCALE 96 100 INTERPRETATION The client company accepts the supplier for immediate purchase. Not need enter in to SDP. The supplier is accepted to get in to SDP. This not means that client company starts the purchase process with the potential supplier. It just mean that the supplier go in to a development program. The supplier is rejected. With this score range the supplier is not eligible to get in to SDP

Score 6.82

61 95

0 60

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Main recommendations for supplier improvement

Train staff on the issue of logistics: deliveries, packaging. Define quality criteria of the products used by the Hotel, to use the same criteria with its suppliers and avoid losses by rejection. Create policies or working in the area of special delivery of products since it has very little knowledge. Conduct a product costing considering, like the hotel, those products that have seasonality and often lost due to lack of demand. Stay constantly visiting the client company to assess the level of satisfaction of their products and services.

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Transport Supplier Development Services for The Association of Small Hotels in El Salvador

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GENERAL OBJECTIVE Develop transportation suppliers for hotels members of the Association of Small Hotels in El Salvador. (Aphoteles) SPECIFICS OBJECTIVES Create a supplier development model for the Association of Small Hotels in El Salvador. Using the model of development of efficient and competitive suppliers to meet demand transport detected by the hospitality industry.

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BACKGROUND
Small hotels have to compete with large chains that have structured quality systems and enormous financial and human resources. The challenge for small business hotel is on to develop different programs of high perceived value by customers, even with the limitation in terms of budget and staff.

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BACKGROUND
It is clear that improving the competitiveness implies an overall improvement in the entire value chain of the service, and now opens a new avenue of action implies that by collaborating with suppliers, it may well make them more efficient and able purchase goods and services improved. In this sense becomes important, the small hotels offer the tools necessary to achieve a level of suppliers that achieves a sustainable impact on their development and growth.

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BACKGROUND
APHOTELES

PROBLEM service taxis inadequate cleaning presentation

Transport

Meals

Maintenance

CLCR 2007

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Supplier Development Aphoteles

q Date: 2007-2009. q Client Company: Hotel Villa Serena. q Supplier Company: Cooperativa Correcaminos.

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SUPPLIER DEVELPMENT SCHEDULE

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The Supplier Evaluation System

SYSTEM OF ASSESSMENT AND CERTIFICATION OF SUPPLIERS
CLIENT COMPANY SUPPLIER
Criterion Wheighting of Criterion

HOTEL VILLA SERENA COOPERATIVA CORRE CAMINOS

Evaluation Parameter Weighting of Calification Parameter of Parameter 35% 20% 25% 10% 7% 3% 50% 30% 20% 50% 50% 9 6 7 8 6 6 8 8 9 8 7 3.15 1.2 1.75 0.8 0.42 0.18 7.5 4.0 2.4 1.8 8.2 4 3.5 7.5 7.731 1.05 Score

Taxi Driver Experience 53% Service Quality Knowledge of Tourist Information Response Speed Selfconfidence Languages Innovation SUBTOTAL Perssonal Apperance Equipment Used Performance SUBTOTAL Price Mantenance of Equipment SUBTOTAL

3.975

2.706

Image

33%

Economy

14%

TOTAL

100%

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The Supplier Evaluation Score

Score 7.7

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The Supplier Evaluation Scale

MEASURING SCALE 96 100 INTERPRETATION The client company accepts the supplier for immediate purchase. Not need enter in to SDP. The supplier is accepted to get in to SDP. This not means that client company starts the purchase process with the potential supplier. It just mean that the supplier go in to a development program. The supplier is rejected. With this score range the supplier is not eligible to get in to SDP

Score 7.7

61 95

0 60

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Main recommendations for supplier improvement

Develop a database to determine routes at peak times and peak times, knowledge of the territory by taxi drivers and road conditions and hazards. This to be exact response time to customers. Use the assessment tool to control vehicle maintenance and accessories that they should have for the safety of passengers. Strengthen knowledge of the tourist culture of each of the drivers.

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Main Benefits
Suppliers better trained and providing better service. Possibilities to offer the customer a benefit / discount in

transportation. Establishing relationships of mutual advertising. Availability of resources for investment in common. Economy more satisfied with his visit to the country and most likely to perform future visit. Increase your flexibility, by having better responsiveness through its supplier. Use of highly specialized skills and capabilities of the supplier.

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Conclusion
Company networks are a simple, flexible and adaptable tool to any development strategy and applicable to different situations and to all productive sectors

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Together we are stronger

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Thank you
Carlos Lpez Cerdn Ripoll clcripoll@yahoo.com.mx

Suppliers

Wholesellers Collectors

Food & www.unido.org Tourists Brevages Restaurante Visitors HOTEL

AREA OF INTERVENTION

Infraestructucture

Staffl
Waiters

Suppliers
Sea Food (FECOOPAZ) 50%

Entertainment

Manteniiance

Boat tours

Cleaning

Kittchen Staff

Vegetables (AGROLEMPA) 5%

Guides

Decoraction

General Services

Meet & Poultry 10%

Handcrafts

Equipment

Administrative Staff

Brevages 20%

Musical Groups

Security Staff

Dairy 2%

Promotion

RESTAURANTE VALUE CHAIN

Others 18%