Market/ Business Linkage

For large firms, globalization has generated both new markets and new competitive forces. Constant pressure to reduce costs, shorten lead times, and focus on core competencies has driven firms to change their supply chain management strategies. Most large manufacturing companies now buy significant percentages of their inputs of both goods and services from other firms, with some spending as much as half of their revenues this way. Managing the supply chain for an optimal mix of cost, quality, flexibility, and strategic advantage (such as access to innovation) is becoming an increasingly important source of competitive advantage.

Large firms operating in Bangladesh can forge linkages with local SMEs in many different areas of their own value chains. As the UNIDO-Harvard research outlines, these opportunities may include procurement, agricultural outgrowers schemes, manufacturing subcontracting, outsourcing non-core functions and services, distribution and retail, franchising and leasing, and sales of financial services, information and communications technologies, and other productive inputs and tools. Key to these programs is developing the capacity of SMEs to meet the needs of the large firm.

Many large firms are, in principle, interested in developing relationships with local SMEs. However, such relationships can also be costly to form and maintain, and as a result, they rarely develop easily or smoothly.