Difference between revisions of "CPA"

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The national-level FACI consists of three pillars; (I) basic requirements, (II) efficiency enhancers, and (III) innovation and sophistication. In contrast to the firm-level FACI, the national-level FACI yields a weighted overall score for each country, as well as a weighted score for each pillar and the sub-indexes contain therein. Basic requirements weigh 30% of the total score, efficiency enhancers 50% and innovation and sophistication 20%.
 
The national-level FACI consists of three pillars; (I) basic requirements, (II) efficiency enhancers, and (III) innovation and sophistication. In contrast to the firm-level FACI, the national-level FACI yields a weighted overall score for each country, as well as a weighted score for each pillar and the sub-indexes contain therein. Basic requirements weigh 30% of the total score, efficiency enhancers 50% and innovation and sophistication 20%.
 
  
 
[[File:NationalLevelFaci.jpg|center|Overall structure of the national-level FACI.]]
 
[[File:NationalLevelFaci.jpg|center|Overall structure of the national-level FACI.]]
 
  
 
The first pillar – basic requirements – comprises elements that are essential if firms are to thrive in a competitive, international world. As noted by Acemoglu and Robinson (2012), economic prosperity depends above all on the inclusiveness of economic and political institutions, where inclusiveness is defined as the situation where a large number of people have a say in political decision-making. By contrast, extractive institutions allow a certain elite to rule over and exploit others, thus preventing firms from enjoying competition on a level playing field. As shown in Table 1, there are two subsections within the first pillar, institutions and infrastructure. Institutions are then further subdivided into public institutions and management of fisheries and aquaculture. Public institutions are then finally divided into property rights and public sector performance. There is just one indicator for property rights, namely property rights, but within public sector performance there are three indicators. Well defined and secure property rights are essential for any market-based activity, as are well functioning courts and legal system that make it easy for firms to challenge government actions and/or regulations. Transparent government policy making is also important. The burden of government regulation must however not become too great. For firms operating within the fisheries and aquaculture sectors, it is also important how well these activities are managed by policy makers.
 
The first pillar – basic requirements – comprises elements that are essential if firms are to thrive in a competitive, international world. As noted by Acemoglu and Robinson (2012), economic prosperity depends above all on the inclusiveness of economic and political institutions, where inclusiveness is defined as the situation where a large number of people have a say in political decision-making. By contrast, extractive institutions allow a certain elite to rule over and exploit others, thus preventing firms from enjoying competition on a level playing field. As shown in Table 1, there are two subsections within the first pillar, institutions and infrastructure. Institutions are then further subdivided into public institutions and management of fisheries and aquaculture. Public institutions are then finally divided into property rights and public sector performance. There is just one indicator for property rights, namely property rights, but within public sector performance there are three indicators. Well defined and secure property rights are essential for any market-based activity, as are well functioning courts and legal system that make it easy for firms to challenge government actions and/or regulations. Transparent government policy making is also important. The burden of government regulation must however not become too great. For firms operating within the fisheries and aquaculture sectors, it is also important how well these activities are managed by policy makers.
  
 
+
 
  
 
''Table 1 Structure of the first pillar, Basic requirements.''
 
''Table 1 Structure of the first pillar, Basic requirements.''
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+
 
  
 
Table 1 also shows the weighing structure of the FACI. As noted above, the first pillar, Basic requirements, carries a weight of 30%, with institutions thereof weighing 75% and infrastructure weighing 25%. Within institutions, public institutions weigh 33%, fisheries management 33% and aquaculture management 33%. Within public institutions, property rights weigh and public sector performance each weigh 50%. Finally, each of the three indicators of public sector performance weighs 33%. The weight of each section and indicators is shown in the second-last column of Table 1, while the sources are shown in the last column of the table. WEF refers to the 2016-2017 Global Competitiveness Index carried out by the World Economic Forum, data refers to data collected from official sources, and survey refers to the survey carried out among experts in each country.
 
Table 1 also shows the weighing structure of the FACI. As noted above, the first pillar, Basic requirements, carries a weight of 30%, with institutions thereof weighing 75% and infrastructure weighing 25%. Within institutions, public institutions weigh 33%, fisheries management 33% and aquaculture management 33%. Within public institutions, property rights weigh and public sector performance each weigh 50%. Finally, each of the three indicators of public sector performance weighs 33%. The weight of each section and indicators is shown in the second-last column of Table 1, while the sources are shown in the last column of the table. WEF refers to the 2016-2017 Global Competitiveness Index carried out by the World Economic Forum, data refers to data collected from official sources, and survey refers to the survey carried out among experts in each country.
 
  
 
''Table 2 Structure of the second pillar, Efficiency enhancers. Subsections A-C.''
 
''Table 2 Structure of the second pillar, Efficiency enhancers. Subsections A-C.''
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+
 
  
 
The structure of the second pillar, efficiency enhancers, is similarly shown in Tables 2. This is a much more complex pillar than the first one, with nine subsections and 88 indicators. While some of the subsections here refer to areas mostly within the reach of government, such as higher education and training, other subsections deal with areas over which the firm themselves have more control, such as the access to and utilisation of inputs. Table 2 shows higher education and training, goods market efficiency and labour market efficiency, specific inputs used in fisheries, fish processing and aquaculture, financial market development, technological readiness and market size.
 
The structure of the second pillar, efficiency enhancers, is similarly shown in Tables 2. This is a much more complex pillar than the first one, with nine subsections and 88 indicators. While some of the subsections here refer to areas mostly within the reach of government, such as higher education and training, other subsections deal with areas over which the firm themselves have more control, such as the access to and utilisation of inputs. Table 2 shows higher education and training, goods market efficiency and labour market efficiency, specific inputs used in fisheries, fish processing and aquaculture, financial market development, technological readiness and market size.
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The structure of pillar III – innovation and business sophistication – is far simpler than that of the other two pillars. Here there are only two subsections, business sophistication and R&D innovation. There are 16 indicators within the former subsection and 10 within the latter. Most of these indicators refers to areas over which the firms have good control, but some are also related to areas there the government is more involved.
 
The structure of pillar III – innovation and business sophistication – is far simpler than that of the other two pillars. Here there are only two subsections, business sophistication and R&D innovation. There are 16 indicators within the former subsection and 10 within the latter. Most of these indicators refers to areas over which the firms have good control, but some are also related to areas there the government is more involved.
  
 
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== Models ==
 
== Models ==
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The concept of competitiveness can be traced back to early writing on economics in the 17th and 18th centuries, but has become ever more urgent in the last decades with rapid improvements in transport and communication and a higher level of globalisation. Although competitiveness may be measured by single indicators, such as productivity of labour, a deeper understanding of the competitive standing of firms and countries can be gained by employing multi-dimensional measurements. Currently, the Global Competitiveness Index (GCI), developed and compiled by the World Economic Forum, is probably the most comprehensive index of its kind. The choice of methods depends on a variety of factors, including the perceived need for complexity, data availability and how the results are to be used.
 
The concept of competitiveness can be traced back to early writing on economics in the 17th and 18th centuries, but has become ever more urgent in the last decades with rapid improvements in transport and communication and a higher level of globalisation. Although competitiveness may be measured by single indicators, such as productivity of labour, a deeper understanding of the competitive standing of firms and countries can be gained by employing multi-dimensional measurements. Currently, the Global Competitiveness Index (GCI), developed and compiled by the World Economic Forum, is probably the most comprehensive index of its kind. The choice of methods depends on a variety of factors, including the perceived need for complexity, data availability and how the results are to be used.
  
The Fisheries and Aquaculture Competitiveness Index (FACI) developed in this deliverable is modelled on the Fisheries Competitive Index (FCI) developed by the Directorate of Fresh Fish Prices in Iceland and the Norwegian College of Fishery Science at the University of Tromsø in 2004-2005. The FACI though expands on the FCI in two directions. First, by developing a national-level FACI that also includes aquaculture. Second, by designing a firm-level FACI that is intended to capture the views of operators of individual firms and is therefore less complex. The national-level FACI consists of 144 items, whereof 44 are taken from the WEF Global Competitiveness Index, 19 are based on data obtained from national, public sources and 81 are based on answers from a survey conducted among specialists in each country. Whereas the information taken from the GCI analyses the overall competitiveness of the nation, the other sources will throw light on the competitiveness of the fisheries and aquaculture sectors. The firm-level FACI is based on a survey which in the case of firms engaged in the harvesting, processing or marketing of wild capture fish consists of 40 questions, and in the case of aquaculture firms consists of 45 questions.
+
The Fisheries and Aquaculture Competitiveness Index (FACI) developed in this deliverable is modelled on the Fisheries Competitive Index (FCI) developed by the Directorate of Fresh Fish Prices in Iceland and the Norwegian College of Fishery Science at the University of Tromsø in 2004-2005. The FACI though expands on the FCI in two directions. First, by developing a national-level FACI that also includes aquaculture. Second, by designing a firm-level FACI that is intended to capture the views of operators of individual firms and is therefore less complex. The national-level FACI consists of 144 items, whereof 44 are taken from the WEF Global Competitiveness Index, 19 are based on data obtained from national, public sources and 81 are based on answers from a survey conducted among specialists in each country. Whereas the information taken from the GCI analyses the overall competitiveness of the nation, the other sources will throw light on the competitiveness of the fisheries and aquaculture sectors. The firm-level FACI is based on a survey which in the case of firms engaged in the harvesting, processing or marketing of wild capture fish consists of 40 questions, and in the case of aquaculture firms consists of 45 questions. In PrimeFish, a computerised decision support system (CPA) was developed that can be used by the industry and/or policymakers. The CPA is based on the FACI and a suit of simulation/forecasting models to be compiled in WP5 and developed as an operational web-based software tool. A computerised version of the FACI will therefore form a part of the PrimeDSS software.
In PrimeFish, a computerised decision support system (CPA) was developed that can be used by the industry and/or policymakers. The CPA is based on the FACI and a suit of simulation/forecasting models to be compiled in WP5 and developed as an operational web-based software tool. A computerised version of the FACI will therefore form a part of the PrimeDSS software.
 
  
 
The FACI was employed to analyse the competitiveness of three fisheries firms in Norway, one in Iceland and one in Newfoundland, and assess the competitive standing of Spain, Iceland, Norway and Vietnam. Newfoundland was also included in the national study, but the comparison is incomplete due to some gaps in the information collected. The firms in Newfoundland and Iceland were found to have a competitive edge over their Norwegian competitors, mostly due to their ability to fend of new entrants, flexible value-chains and high level of R&D development and innovation. At the national level, Iceland, Norway and Spain all ranked close to one another, with Vietnam at a competitive disadvantage. While some of the issues standing in the way of improved competitiveness can be traced to the general social issue facing firms, e.g. poor institutions and infrastructure, and can only be addressed through government, others lie within the realm of the firms, e.g. poor financial performance and inability to take advantage of economies-of-scale.
 
The FACI was employed to analyse the competitiveness of three fisheries firms in Norway, one in Iceland and one in Newfoundland, and assess the competitive standing of Spain, Iceland, Norway and Vietnam. Newfoundland was also included in the national study, but the comparison is incomplete due to some gaps in the information collected. The firms in Newfoundland and Iceland were found to have a competitive edge over their Norwegian competitors, mostly due to their ability to fend of new entrants, flexible value-chains and high level of R&D development and innovation. At the national level, Iceland, Norway and Spain all ranked close to one another, with Vietnam at a competitive disadvantage. While some of the issues standing in the way of improved competitiveness can be traced to the general social issue facing firms, e.g. poor institutions and infrastructure, and can only be addressed through government, others lie within the realm of the firms, e.g. poor financial performance and inability to take advantage of economies-of-scale.
  
 +
 
  
 
== Reports &Data ==
 
== Reports &Data ==
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----
  
 +
 
  
====Firm-level FACI - Fisheries====
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==== Firm-level FACI - Fisheries ====
 
 
  
 
As mentioned above, the firm-level FACI can both be applied to firms engaged in fisheries and aquaculture. This section only deals with the former, and compares results from one firm Iceland, one from Newfoundland and three Norwegian firms engaged in harvesting and processing of wild capture fish. Each firm’s scoring of individual indicators is presented in the table below:
 
As mentioned above, the firm-level FACI can both be applied to firms engaged in fisheries and aquaculture. This section only deals with the former, and compares results from one firm Iceland, one from Newfoundland and three Norwegian firms engaged in harvesting and processing of wild capture fish. Each firm’s scoring of individual indicators is presented in the table below:
  
 +
 
  
 
  ''Questions and responses – firm level FACI – Threat of new entrants''
 
  ''Questions and responses – firm level FACI – Threat of new entrants''
 +
 
{|
 
{|
 
|-
 
|-
!Theme
+
! Theme
!Question
+
! Question
!Ice.1
+
! Ice.1
!New1
+
! New1
!Nor1
+
! Nor1
!Nor2
+
! Nor2
!Nor3
+
! Nor3
 
|-
 
|-
|Institutional barriers||There are significant institutional barriers (f. ex. licenses, quotas, regulations) to entry in my industry (1=not at all; 7=make entry impossible)||7||7||3||5||7
+
| style="width: 10%;" | Institutional barriers
 +
| style="width: 65%;" | There are significant institutional barriers (f. ex. licenses, quotas, regulations) to entry in my industry (1=not at all; 7=make entry impossible)
 +
| style="width: 5%;" | 7
 +
| style="width: 5%;" | 7
 +
| style="width: 5%;" | 3
 +
| style="width: 5%;" | 5
 +
| style="width: 5%;" | 7
 
|-
 
|-
|Real capital barriers||Entry into my industry requires investment in capital (vessels, equipment, buildings) that (1=does not deter entry at all; 7=deters entry completely)||5||7||4||4||5
+
| Real capital barriers
 +
| Entry into my industry requires investment in capital (vessels, equipment, buildings) that (1=does not deter entry at all; 7=deters entry completely)
 +
| 5
 +
| 7
 +
| 4
 +
| 4
 +
| 5
 
|-
 
|-
|Other investment barriers||Entry into my industry requires other forms of investment (marketing, R&D, knowledge) that (1=does not deter entry at all; 7=deters entry completely)||5||6||4||3||6
+
| Other investment barriers
 +
| Entry into my industry requires other forms of investment (marketing, R&D, knowledge) that (1=does not deter entry at all; 7=deters entry completely)
 +
| 5
 +
| 6
 +
| 4
 +
| 3
 +
| 6
 
|-
 
|-
|Scale economics||Does this type of production enjoy economies of scale (1=not at all; 7=to a huge degree)||7||6||5||6||2
+
| Scale economics
 +
| Does this type of production enjoy economies of scale (1=not at all; 7=to a huge degree)
 +
| 7
 +
| 6
 +
| 5
 +
| 6
 +
| 2
 
|-
 
|-
|Firm scale economics||The firm takes advantage of its economies of scale (1=not at all; 7=completely)||7||6||5||5||1
+
| Firm scale economics
 +
| The firm takes advantage of its economies of scale (1=not at all; 7=completely)
 +
| 7
 +
| 6
 +
| 5
 +
| 5
 +
| 1
 
|-
 
|-
|Location||The firm is well geographically located in terms of costs and ability to meet customer demand (1=not at all; 7=very well located)||4||5||5||3||7
+
| Location
 +
| The firm is well geographically located in terms of costs and ability to meet customer demand (1=not at all; 7=very well located)
 +
| 4
 +
| 5
 +
| 5
 +
| 3
 +
| 7
 
|-
 
|-
|Uncertainty||How large uncertainty is there in your business environment? (1=none at all; 7=very great)||4||4||4||4||5
+
| Uncertainty
 +
| How large uncertainty is there in your business environment? (1=none at all; 7=very great)
 +
| 4
 +
| 4
 +
| 4
 +
| 4
 +
| 5
 
|-
 
|-
|Labour availability||High skilled labour in your company’s locations is (1=not readily available; 7=readily available)||6||2||6||6||6
+
| Labour availability
 +
| High skilled labour in your company’s locations is (1=not readily available; 7=readily available)
 +
| 6
 +
| 2
 +
| 6
 +
| 6
 +
| 6
 
|-
 
|-
|Expert availability||Qualified experts are (1=not readily available; 7=readily available)||6||6||2||3||5
+
| Expert availability
 +
| Qualified experts are (1=not readily available; 7=readily available)
 +
| 6
 +
| 6
 +
| 2
 +
| 3
 +
| 5  
 +
''Table 21 Questions and responses – firm level FACI – Bargaining power of suppliers''
  
 
''Table 21 Questions and responses – firm level FACI – Bargaining power of suppliers''
 
 
{|
 
{|
 
|-
 
|-
!Theme
+
! Theme
!Question
+
! Question
!Ice.1
+
! Ice.1
!New1
+
! New1
!Nor1
+
! Nor1
!Nor2
+
! Nor2
!Nor3
+
! Nor3
 
|-
 
|-
|Supplier power||The bargaining power of suppliers is (1=weak; 7=strong)||5||6||5||6||4
+
| Supplier power
 +
| The bargaining power of suppliers is (1=weak; 7=strong)
 +
| 5
 +
| 6
 +
| 5
 +
| 6
 +
| 4
 
|-
 
|-
|Supplier competition||Competition among the firm‘s major suppliers is (1=nonexistent; 7=fierce)||5||6||6||5||7
+
| Supplier competition
 +
| Competition among the firm‘s major suppliers is (1=nonexistent; 7=fierce)
 +
| 5
 +
| 6
 +
| 6
 +
| 5
 +
| 7
 
|-
 
|-
|Quality raw material||Quality of raw material is currently (1=poor; 7=excellent)||1||4||4||6||5
+
| Quality raw material
 +
| Quality of raw material is currently (1=poor; 7=excellent)
 +
| 1
 +
| 4
 +
| 4
 +
| 6
 +
| 5
 
|-
 
|-
|Quality and price||How well do prices for raw materials reflect changes in Quality (1=not at all; 7=completely)||5||6||4||7||3
+
| Quality and price
 +
| How well do prices for raw materials reflect changes in Quality (1=not at all; 7=completely)
 +
| 5
 +
| 6
 +
| 4
 +
| 7
 +
| 3
 
|-
 
|-
|Quantity and price||How well do prices for raw materials reflect changes in Quantity (1=not at all; 7=completely)||5||6||4||5||2
+
| Quantity and price
 +
| How well do prices for raw materials reflect changes in Quantity (1=not at all; 7=completely)
 +
| 5
 +
| 6
 +
| 4
 +
| 5
 +
| 2
 
|-
 
|-
|Timing and price||How well do prices for raw materials reflect changes in Timing (1=not at all; 7=completely)||6||4||4||5||6
+
| Timing and price
 +
| How well do prices for raw materials reflect changes in Timing (1=not at all; 7=completely)
 +
| 6
 +
| 4
 +
| 4
 +
| 5
 +
| 6
 
|-
 
|-
|Access raw materials||Compared to your most important competitors, your access to raw material is currently (1=very difficult; 7=very easy)||5||4||3||5||4
+
| Access raw materials
 +
| Compared to your most important competitors, your access to raw material is currently (1=very difficult; 7=very easy)
 +
| 5
 +
| 4
 +
| 3
 +
| 5
 +
| 4
 
|-
 
|-
|Supplier networks||The firm has access to supplier networks (1=not at all; 7= very good access)||6||5||5||4||6
+
| Supplier networks
 
+
| The firm has access to supplier networks (1=not at all; 7= very good access)
 +
| 6
 +
| 5
 +
| 5
 +
| 4
 +
| 6  
 +
''Table 21 Questions and responses – firm level FACI – Bargaining power of buyers''
  
''Table 21 Questions and responses – firm level FACI – Bargaining power of buyers''
 
 
{|
 
{|
 
|-
 
|-
!Theme
+
! Theme
!Question
+
! Question
!Ice.1
+
! Ice.1
!New1
+
! New1
!Nor1
+
! Nor1
!Nor2
+
! Nor2
!Nor3
+
! Nor3
 
|-
 
|-
|Product price sensitivity||My customers are sensitive to changes in product price (1=not at all; very much so)||5||7||6||6||7
+
| Product price sensitivity
 +
| My customers are sensitive to changes in product price (1=not at all; very much so)
 +
| 5
 +
| 7
 +
| 6
 +
| 6
 +
| 7
 
|-
 
|-
|Brand value||The brand of my product is valuable ?(1=not valuable at all; 7=immensely valuable)||4||6||4||5||5
+
| Brand value
 +
| The brand of my product is valuable ?(1=not valuable at all; 7=immensely valuable)
 +
| 4
 +
| 6
 +
| 4
 +
| 5
 +
| 5
 
|-
 
|-
|Loyalty buyers||The buyers of my product are loyal (1=not at all; 7=very much so)||7||7||3||4||5
+
| Loyalty buyers
 +
| The buyers of my product are loyal (1=not at all; 7=very much so)
 +
| 7
 +
| 7
 +
| 3
 +
| 4
 +
| 5
 
|-
 
|-
|Buyer power||The bargaining power of buyers is (1=weak; 7=strong)||5||4||4||5||3
+
| Buyer power
 +
| The bargaining power of buyers is (1=weak; 7=strong)
 +
| 5
 +
| 4
 +
| 4
 +
| 5
 +
| 3
 
|-
 
|-
|Quality and price||How well do prices for your output reflect changes in Quality (1=not at all; 7=completely)||5||6||2||6||3
+
| Quality and price
 +
| How well do prices for your output reflect changes in Quality (1=not at all; 7=completely)
 +
| 5
 +
| 6
 +
| 2
 +
| 6
 +
| 3
 
|-
 
|-
|Quantity and price||How well do prices for your output reflect changes in Quantity (1=not at all; 7=completely)||5||6||5||6||4
+
| Quantity and price
 +
| How well do prices for your output reflect changes in Quantity (1=not at all; 7=completely)
 +
| 5
 +
| 6
 +
| 5
 +
| 6
 +
| 4
 
|-
 
|-
|Timing and price||How well do prices for your output reflect changes in Timing (1=not at all; 7=completely)||5||4||3||5||4
+
| Timing and price
 +
| How well do prices for your output reflect changes in Timing (1=not at all; 7=completely)
 +
| 5
 +
| 4
 +
| 3
 +
| 5
 +
| 4
 
|-
 
|-
|Diversification||How diversified are the marketing options (does the firm depend on one buyer or many) (1=not at all; 7=very diversified)||6||5||5||4||6
+
| Diversification
 +
| How diversified are the marketing options (does the firm depend on one buyer or many) (1=not at all; 7=very diversified)
 +
| 6
 +
| 5
 +
| 5
 +
| 4
 +
| 6  
 +
''Questions and responses – firm level FACI – Threat of substitute products or services''
  
 
''Questions and responses – firm level FACI – Threat of substitute products or services''
 
 
{|
 
{|
 
|-
 
|-
!Theme
+
! Theme
!Question
+
! Question
!Ice.1
+
! Ice.1
!New1
+
! New1
!Nor1
+
! Nor1
!Nor2
+
! Nor2
!Nor3
+
! Nor3
 
|-
 
|-
|Niche market||The firm is producing to a niche market (1=not all; 7=completely)||4||5||2||5||4
+
| Niche market
 +
| The firm is producing to a niche market (1=not all; 7=completely)
 +
| 4
 +
| 5
 +
| 2
 +
| 5
 +
| 4
 
|-
 
|-
|Substitute availability||There are substitutes to my products available in the market (1=not at all; 7=many substitutes exist)||5||5||5||4||3
+
| Substitute availability
 +
| There are substitutes to my products available in the market (1=not at all; 7=many substitutes exist)
 +
| 5
 +
| 5
 +
| 5
 +
| 4
 +
| 3  
 +
''Questions and responses – firm level FACI – Rivalry of existing competitors''
  
 
''Questions and responses – firm level FACI – Rivalry of existing competitors''
 
 
{|
 
{|
 
|-
 
|-
!Theme
+
! Theme
!Question
+
! Question
!Ice.1
+
! Ice.1
!New1
+
! New1
!Nor1
+
! Nor1
!Nor2
+
! Nor2
!Nor3
+
! Nor3
 
|-
 
|-
|R&D collaboration||Research and development within the firm is done in close collaboration with technology firms (1=not at all; 7=completely)||6||4||5||1||3
+
| R&D collaboration
 +
| Research and development within the firm is done in close collaboration with technology firms (1=not at all; 7=completely)
 +
| 6
 +
| 4
 +
| 5
 +
| 1
 +
| 3
 
|-
 
|-
|R&D importance||How important is R&D for your operation and possibility to increase value added? (1=not important; 7=very important)||6||4||6||1||3
+
| R&D importance
 +
| How important is R&D for your operation and possibility to increase value added? (1=not important; 7=very important)
 +
| 6
 +
| 4
 +
| 6
 +
| 1
 +
| 3
 
|-
 
|-
|Innovation impact||Innovation makes it possible for my firm to retain a competitive advantage (1=not at all; 7=highly)||6||6||5||3||3
+
| Innovation impact
 +
| Innovation makes it possible for my firm to retain a competitive advantage (1=not at all; 7=highly)
 +
| 6
 +
| 6
 +
| 5
 +
| 3
 +
| 3
 
|-
 
|-
|Response market condition||How capable is your part of the value chain of responding to changes in market conditions? (1=not capable; 7=very capable)||6||6||4||3||4
+
| Response market condition
 +
| How capable is your part of the value chain of responding to changes in market conditions? (1=not capable; 7=very capable)
 +
| 6
 +
| 6
 +
| 4
 +
| 3
 +
| 4
 
|-
 
|-
|Value chain response||How capable is your whole value chain of responding to changes in market conditions? (1=not capable; 7=very capable)||6||6||4||4||5
+
| Value chain response
 +
| How capable is your whole value chain of responding to changes in market conditions? (1=not capable; 7=very capable)
 +
| 6
 +
| 6
 +
| 4
 +
| 4
 +
| 5
 
|-
 
|-
|Importance audited labels||How important are third-party audited labels to your operation (1=not important; 7=very important)||5||7||6||6||3
+
| Importance audited labels
 +
| How important are third-party audited labels to your operation (1=not important; 7=very important)
 +
| 5
 +
| 7
 +
| 6
 +
| 6
 +
| 3
 
|-
 
|-
|Competitive strategy||The competitive strategy of my firm is (1=weak; 7=powerful)||6||5||5||4||3
+
| Competitive strategy
 +
| The competitive strategy of my firm is (1=weak; 7=powerful)
 +
| 6
 +
| 5
 +
| 5
 +
| 4
 +
| 3
 
|-
 
|-
|Market share||The market share of the firm is (1=less than 1%; 7=larger than 10%)||4||3||4||4||1
+
| Market share
 +
| The market share of the firm is (1=less than 1%; 7=larger than 10%)
 +
| 4
 +
| 3
 +
| 4
 +
| 4
 +
| 1
 
|-
 
|-
|Cost leadership||The firm is a cost leader (1=not at all; 7=very much so)||4||3||4||1||1
+
| Cost leadership
 +
| The firm is a cost leader (1=not at all; 7=very much so)
 +
| 4
 +
| 3
 +
| 4
 +
| 1
 +
| 1
 
|-
 
|-
|Technology sophistication||How sophisticated is your production technology compared to best practice (1=not at all; 7=very sophisticated)||6||3||1||4||2
+
| Technology sophistication
 +
| How sophisticated is your production technology compared to best practice (1=not at all; 7=very sophisticated)
 +
| 6
 +
| 3
 +
| 1
 +
| 4
 +
| 2
 
|-
 
|-
|Production sites||The firm has access to good sites for its production facilities (1=agree completely; 7=disagree completely)||6||5||5||4||6
+
| Production sites
 +
| The firm has access to good sites for its production facilities (1=agree completely; 7=disagree completely)
 +
| 6
 +
| 5
 +
| 5
 +
| 4
 +
| 6
 
|-
 
|-
|Flexibility||How much flexibility does your firm have in adapting to unpredictable events? (1=none at all; 7=complete flexibility)||4||3||5||3||4
+
| Flexibility
 +
| How much flexibility does your firm have in adapting to unpredictable events? (1=none at all; 7=complete flexibility)
 +
| 4
 +
| 3
 +
| 5
 +
| 3
 +
| 4
 
|-
 
|-
|Risk management||To what extent does risk management and insurance protect against unpredictable negative shocks? (1=not at all; 7=completely)||5||5||2||4||3
+
| Risk management
 +
| To what extent does risk management and insurance protect against unpredictable negative shocks? (1=not at all; 7=completely)
 +
| 5
 +
| 5
 +
| 2
 +
| 4
 +
| 3
 
|}
 
|}
  
 +
 
  
 +
Total competitiveness The scores for aggregated competitiveness for each of the sampled firms are presented in Figure 4. The Newfoundland and Icelandic firms receives scores of 5.2 and 5.1, while the Norwegian firms received considerably lower scores, or in the range 4.1-4.6.
  
Total competitiveness
+
 
The scores for aggregated competitiveness for each of the sampled firms are presented in Figure 4. The Newfoundland and Icelandic firms receives scores of 5.2 and 5.1, while the Norwegian firms received considerably lower scores, or in the range 4.1-4.6.
 
 
 
  
 
== The tool ==
 
== The tool ==
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Revision as of 00:24, 6 February 2018

Competitive Position Analyser



Introduction


The Competitive Position Analyser tool is the computerised version of the FACI survey and it is the implementation of the models described in this page. The concept of competitiveness can be traced back to early writing on economics in the 17th and 18th centuries, but has become ever more urgent in the last decades with rapid improvements in transport and communication and a higher level of globalisation. Although competitiveness may be measured by single indicators, such as productivity of labour, a deeper understanding of the competitive standing of firms and countries can be gained by employing multi-dimensional measurements.

The choice of methods depends on a variety of factors, including the perceived need for complexity, data availability and how the results are to be used. The Fisheries and Aquaculture Competitiveness Index (FACI) developed in this deliverable is modelled on the Fisheries Competitive Index (FCI) developed by the Directorate of Fresh Fish Prices in Iceland and the Norwegian College of Fishery Science at the University of Tromsø in 2004-2005. The FACI though expands on the FCI in two directions. First, by developing a national-level FACI that also includes aquaculture. Second, by designing a firm-level FACI that is intended to capture the views of operators of individual firms and is therefore less complex. The national-level FACI consists of 144 items, whereof 44 are taken from the WEF Global Competitiveness Index, 19 are based on data obtained from national, public sources and 81 are based on answers from a survey conducted among specialists in each country. . Whereas the information taken from the GCI analyses the overall competitiveness of the nation, the other sources will throw light on the competitiveness of the fisheries and aquaculture sectors. The firm-level FACI is based on a survey which in the case of firms engaged in the harvesting, processing or marketing of wild capture fish consists of 40 questions, and in the case of aquaculture firms consists of 45 questions.

The FACI was employed to analyse the competitiveness of three fisheries firms in Norway, one in Iceland and one in Newfoundland, and assess the competitive standing of Spain, Iceland, Norway and Vietnam. Newfoundland was also included in the national study, but the comparison is incomplete due to some gaps in the information collected. The firms in Newfoundland and Iceland were found to have a competitive edge over their Norwegian competitors, mostly due to their ability to fend of new entrants, flexible value-chains and high level of R&D development and innovation. At the national level, Iceland, Norway and Spain all ranked close .

Methods


Currently, the Global Competitiveness Index (GCI) is probably the most comprehensive index of its kind. The index defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. The most recent analysis covers 138 countries, with a combined output representing 98% of the world GDP. The index, which is compiled annually by the World Economic Forum, combines 114 indicators that capture concepts that matter for productivity and long-term prosperity. As shown in the figure below, these indicators are grouped into 12 pillars: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation. These pillars are in turn organised into three sub-indexes: basic requirements, efficiency enhancers, and innovation and sophistication factors. The three sub-indexes are given different weights in the calculation of the overall Index, depending on each economy’s stage of development, as proxied by its GDP per capita and the share of exports represented by raw materials.

The structure of the Global Competitiveness Index. Source: WEF 2016.

 

Fisheries and Aquaculture Competitiveness Index (FACI)

As outlined above, competitiveness can be measured in a number of ways, using both simple and more complex analytical tools. The choice of methods depends on a variety of factors, including the perceived need for complexity, data availability and how the results are to be used.

he FACI must be flexible enough to meet the needs of the two different end-users; industry and policymakers. With this in mind it was decided to develop two different kinds of competitiveness indexes; a firm-level FACI and a national-level FACI. The firm-level FACI is only intended to capture the views of operators of individual firms and therefore less complex. It is based on a survey which in the case of firms engaged in the harvesting, processing or marketing of wild capture fish consists of 40 questions, and in the case of aquaculture firms consists of 45 questions. The firms are able to access the firm-level FACI, complete the survey and then compare their answers to those provided by other operators. The degree of comparison will, of course, depend on the number of firms using the PrimeDSS, but provided the number of users is large enough, it would be possible to undertake comparison between firms in the same sectors both in the same country as well as between countries, as well as between different sectors. By thus benchmarking themselves against others, firms could gain a better understanding of their competitive standing.

The national-level FACI is modelled on the Fisheries Competitive Index (FCI) developed by the Directorate of Fresh Fish Prices in Iceland and the Norwegian College of Fishery Science at the University of Tromsø in 2004-2005 (Verðlagsstofa skiptaverðs, 2005). The FCI consists of 139 questions and observations which are split between six sub-indexes that make it possible to calculate scores both for the FCI as a whole as well as for individual sub-indexes. This further expands the use of the FCI. The index was applied to the Icelandic and Norwegian fish industries. The national-level FACI consists of 144 items, whereof 44 are taken from the WEF Global Competitiveness Index, 19 are based on data obtained from national, public sources and 81 are based on answers from a survey conducted among specialists in each country. Whereas the information taken from the GCI analyses the overall competitiveness of the nation, the other sources will throw light on the competitiveness of the fisheries and aquaculture sectors. The national-level FACI will therefore yield a comprehensive measure of competitiveness which takes both into account general conditions in the country as well as those that deal specifically with the sectors of interest.

According to Porter (1998, 2008), the nature of competition is embodied in five competitive forces; (1) the threat of new entrants, (2) the threat of substitute products or services, (3) the bargaining power of suppliers, (4) the bargaining power of buyers, and (5) the rivalry among the existing competitors. As shown in the figure below, these forces do interact with each other. Their strength may also vary but together they determine long-term industry profitability.

The five competitive forces that determine industry competition. Source: Porter (1998).

The threat of entry puts a cap on the profit potential of an industry. When the threat is high, incumbents must keep prices low or increase production capacity to deter new competitors. Within each industry there are usually some entry barriers that deter new firms from entering the market, and give the incumbents some advantages. These may include economies of scale, network effects, customer switching costs, capital requirements, unequal access to distribution channels, restrictive government policy, expected retaliation of incumbents, and some other advantages not related to size, such as favourable geographic locations, and established brand identities.

The power of suppliers varies between industries, but in general a supplier is more powerful if is more concentrated than the industry it sells to, the supplier group does not depend heavily on the industry it is selling to, the firms face switching costs for changing suppliers and the products offered by suppliers are somewhat differentiated.

Buyers can capture more value by forcing down prices, demanding better quality or improved service, and play industry partners against each other. Analogous to suppliers, buyers have more leverage if they are few and large, the industry’s products are similar so that there are ample substitution possibilities, and there are low switching costs.

A high threat of substitutes will reduce profitability by placing a ceiling on prices. A firm can, however, distance itself from others through product performance, marking or other means. High rivalry among existing competitors will reduce the profitability of the firms in an industry. The rivalry can take many forms, including price discounting, new product innovations, advertising campaigns and service and quality improvements. Rivalry will be especially high in cases where there are many competitors and no clear industry leader, industry growth is slow and exit barriers are high. Although some market/firm/industry characteristics may be regarded as only belonging to one specific force category, other characteristics could plausible be classified in two or more different ways. Thus, the value of an output brand could impact on the bargaining power of buyers, threats of substitutes and rivalry among existing competitors. The firm-level FACI builds heavily on the theories of Porter (1998), taking into considerations all five aspects of competition outlined above. As stated earlier, this index is mostly intended for operators of fisheries and aquaculture firms who wish to analyse the competitive standing of their firm. The index consists of 40 questions – 45 in the case of aquaculture – that together yield a solid measure of competitiveness. This deliverable yields the results of a survey that was put to firm operators, but once the PrimeDSS becomes operational it will be possible to access a computerised version of the firm-level FACI, complete the survey online and then obtain a measure of the competitiveness of the firm, both by analysing the data and comparing the competitive standing of the firm to that of other firms. Each questions uses a seven-level Likert scale. Nine of the survey questions refer to the category threat of new entrants. They are as follows

  • Institutional barriers (f. ex. licenses, quotas, regulations, location restrictions, water treatment)
  • Investment barriers in capital (vessels, equipment, buildings)
  • Other form of barriers (marketing, R&D, knowledge)
  • Economies-of-scale in production
  • Utilisation of economies-of-scale
  • Geographical location
  • Level of uncertainty in business environment
  • Local availability of highly skilled labour
  • Availability of qualified experts

The first three items all refer to concrete barrier to entry, such as licenses, quotas, investment, and R&D. The next two refer to the existence and utilisation of economies-of-scale, but companies that produce at a large scale enjoy a cost advantages that new entrants may have difficulties in matching. Geographical location refers to the fact that some firms are well located in terms of cost and ability to meet customer demand. An uncertain business environment may make entry less attractive, and the availability of skilled employees will certainly impact on the threat of entry. The bargaining power of suppliers is analysed on the basis of the following eight questions for fisheries firms (10 for aquaculture firms):

  • Bargaining power of suppliers
  • Competition among the major suppliers (fisheries)
  • Current quality of raw material (fisheries)
  • Ability of prices for raw material to reflect changes in (fisheries)
  • Quantity
  • Quality
  • Timing
  • Ability of prices for seed to reflect changes in (aquaculture)
  • Quantity
  • Quality
  • Timing
  • Ability of prices for feed to reflect changes in (aquaculture)
  • Quantity
  • Quality
  • Timing
  • Comparative access to raw material (fisheries)
  • Comparative access to seed (aquaculture)
  • Comparative access to feed (aquaculture)
  • Access to supplier networks

The term “raw material” refers to landings of catch sourced by processors. Catches are by far the most important input for firms engaged in processing and marketing of wild capture fish, while for aquaculture firms the most important inputs are seed and feed. The interest here is in how well prices for these inputs reflect changes in quantity, quality and timing. The term “comparative access” refers to how firms regards their access to inputs (raw material, feed, seed) compared to their competitors. The bargaining power of suppliers is also assessed using a direct question on that issue. The bargaining power of buyers is analysed in terms of eight characteristics:

  • Customers´ sensitivity to changes in product price
  • Value of brand
  • Loyal buyers
  • Bargaining power of buyers
  • Ability of output prices to reflect changes in
  • Quantity
  • Quality
  • Timing
  • Diversification of marketing options

Good brand value and loyal buyers will combine to make customers rather insensitive to changes in product prices. The survey also has questions on how firms view the price sensitivity of product prices, i.e. whether the firms regard their product price inelastic or elastic, as well as whether the bargaining power of buyers is weak or strong. Diversification of marketing options refers to whether the firm depends on a single buyer for its product or many buyers. The bargaining power of buyers may also be affected by how well output prices reflect changes in quantity, quality and timing of sale

The bargaining power of buyers is very closely linked to the threat of substitute products or services. Some of the items listed under the bargaining power of buyers, such as customers’ sensitivity to price changes, brand value and consumer loyalty, could just as easily have been listed under substitutes. Here, only two items are classified in this category, namely:

  • Production to a niche market
  • Availability of substitutes

Customers in niche markets are often willing to pay a premium price for a product that well satisfies their needs. These markets are often characterised by a strong brand and consumer loyalty. The two survey questions here refer to whether the firm is producing to a niche market, and whether substitutes to the product are available in the market. Most of the survey questions in the firm-level FACI are here grouped under the heading “rivalry among existing competitors”. However, many of these items could equally well have been categorised differently. These questions are on the following topics:

  • R&D collaboration with technology firms
  • Importance of R&D for operation and possibility to increase value added
  • Importance of innovation for competitive advantage
  • Ability of firm’s part of the value chain to respond to changes in market conditions
  • Ability of the whole value chain to respond to changes in market conditions
  • Importance of third-party audited labels
  • Strength of competitive strategy
  • Market share of firm
  • Level of cost leadership
  • Sophistication of production technology compared to best practice
  • Quality of sites for production facilities
  • Flexibility to adapt to unpredictable events
  • Ability of risk management and insurance to protect against unpredictable negative shocks
  • Comparative seed costs (aquaculture)
  • Comparative feed costs (aquaculture)
  • Comparative production losses due to diseases or other causes (aquaculture)

The first three questions refer to R&D and innovation activities within the firm, to which degree they are done in close collaboration with high-tech firms, and how important they are for increased value added and competitive advantage. Flexibility of the value chain – both as regards the firm itself and the whole value chain – is also important for firms facing competition. Third-party labelling has become very important in the food industry, not least for fisheries and aquaculture. Labelling may open access to markets and also indicate sustainable and environmental friendly production. The market share of firms is important, as is the level of cost leadership. Firms are also asked to indicate how sophisticated their production facilities are compared to their competitors, and assess the quality of the sites used for their production facilities. Two questions refer to the ability of the firms to adjust to unpredictable events, and three questions focus on the costs of feed and seed relative to the firm’s competitors, and comparative production losses due to fish diseases and other causes.

The firm-level FAC yields both an overall score as well as a score for each of the five competitive forces where the former is calculated as the simple average of the other five scores.

National-level FACI

The national-level FACI is a comprehensive measure that includes both factors influencing each country’s overall competitiveness as well as factors that specifically relate to the fisheries and aquaculture sectors. Most of the indicators related to overall competitiveness are taken from the Global Competitiveness Index, published by the World Economic Forum (2016), but information on the other, more specific indicators was obtained through surveys and from public data collection agencies.

The national-level FACI consists of three pillars; (I) basic requirements, (II) efficiency enhancers, and (III) innovation and sophistication. In contrast to the firm-level FACI, the national-level FACI yields a weighted overall score for each country, as well as a weighted score for each pillar and the sub-indexes contain therein. Basic requirements weigh 30% of the total score, efficiency enhancers 50% and innovation and sophistication 20%.

Overall structure of the national-level FACI.

The first pillar – basic requirements – comprises elements that are essential if firms are to thrive in a competitive, international world. As noted by Acemoglu and Robinson (2012), economic prosperity depends above all on the inclusiveness of economic and political institutions, where inclusiveness is defined as the situation where a large number of people have a say in political decision-making. By contrast, extractive institutions allow a certain elite to rule over and exploit others, thus preventing firms from enjoying competition on a level playing field. As shown in Table 1, there are two subsections within the first pillar, institutions and infrastructure. Institutions are then further subdivided into public institutions and management of fisheries and aquaculture. Public institutions are then finally divided into property rights and public sector performance. There is just one indicator for property rights, namely property rights, but within public sector performance there are three indicators. Well defined and secure property rights are essential for any market-based activity, as are well functioning courts and legal system that make it easy for firms to challenge government actions and/or regulations. Transparent government policy making is also important. The burden of government regulation must however not become too great. For firms operating within the fisheries and aquaculture sectors, it is also important how well these activities are managed by policy makers.

 

Table 1 Structure of the first pillar, Basic requirements.

Level Weight Source
1st pillar: Basic requirements 30%  
. A. Institutions 75%  
.. I. Public institutions 33%  
... 1. Property rights 50%  
.... 1.01 Property rights 100% WEF
... 2. Public sector performance 50%  
.... 2.01 Burden of government regulation 33% WEF
.... 2.02 Efficiency of legal framework in challenging regulations 33% WEF
.... 2.03 Transparency of government policy making 33% WEF
.. II. Fisheries management 33%  
... 3. Stability 33%  
.... 3.01 Transparency of fisheries management 33% Survey
.... 3.02 Objectives of fisheries management 33% Survey
.... 3.03 Stability of the allocation of fishing rights 33% Survey
... 4. Research and advice 33%  
.... 4.01 Actual vs recommended fishing mortality 20% Data
.... 4.02 Extent of information gathering by marine research 20% Survey
.... 4.03 Information gathering by marine research 20% Survey
.... 4.04 Accuracy of forecasts of marine research 20% Survey
.... 4.05 Impact of marine research on investments and operation 20% Survey
... 5. Monitoring and inspection 33%  
.... 5.01 Efficiency of the management system 50% Survey
.... 5.02 Illegal/excess catches 50% Survey
.. III. Aquaculture management 33%  
... 6. Stability 50%  
.... 6.01 Transparency of aquaculture management 25% Survey
.... 6.02 Objectives of aquaculture management 25% Survey
.... 6.03 Stability of the allocation of the aquaculture licenses 25% Survey
.... 6.04 Efficiency of management - aquaculture 25% Survey
... 7. Research and advice 50%  
.... 7.01 Extent of information gathering by research for aquaculture 100% Survey
. B. Infrastructure 25%  
.. I. Transport infrastructure 100%  
.... 8.01 Quality of overall infrastructure 20% WEF
.... 8.02 Communication network needs 20% Survey
.... 8.03 Communication network restrictions 20% Survey
.... 8.04 Cost of domestic transportation 20% Survey
.... 8.05 Cost of cross-border transportation 20% Survey

 

Table 1 also shows the weighing structure of the FACI. As noted above, the first pillar, Basic requirements, carries a weight of 30%, with institutions thereof weighing 75% and infrastructure weighing 25%. Within institutions, public institutions weigh 33%, fisheries management 33% and aquaculture management 33%. Within public institutions, property rights weigh and public sector performance each weigh 50%. Finally, each of the three indicators of public sector performance weighs 33%. The weight of each section and indicators is shown in the second-last column of Table 1, while the sources are shown in the last column of the table. WEF refers to the 2016-2017 Global Competitiveness Index carried out by the World Economic Forum, data refers to data collected from official sources, and survey refers to the survey carried out among experts in each country.

Table 2 Structure of the second pillar, Efficiency enhancers. Subsections A-C.

Level Weight Source
2nd pillar: Efficiency enhancers 50%  
. A. Higher education and training 5  
.. I. Quality of education 25%  
.... 1.01 Quality of the education system 33% WEF
.... 1.02 Quality of math and science education 33% WEF
.... 1.03 Quality of management schools 33% WEF
.. II. On-the-job training 75  
.... 2.01 Local availability of specialized training services 10% WEF
.... 2.02 Extent of staff training 10% WEF
.... 2.03 Training and education fisheries 30% Survey
.... 2.04 Training and education fish processing 30% Survey
.... 2.05 Training and education aquaculture 30% Survey
. B. Goods market efficiency 10%  
.. I. Competition 67%  
... 3. Domestic competition 50%  
.... 3.01 Intensity of local competition 5% WEF
.... 3.02 Extent of market dominance 5% WEF
.... 3.03 Effect of taxation on incentives to invest 8% WEF
.... 3.04 Total tax rate 8% WEF
.... 3.05 Competition for fishing rights (quota) 15% Survey
.... 3.06 Market for fresh fish - fisheries 15% Survey
.... 3.07 Market for fresh fish - fish processing 15% Survey
.... 3.08 Competition between marketing/distributors - marketing 15% Survey
.... 3.09 Competition between companies that market and distribute seafood products 15% Survey
... 4. Foreign competition 50%  
.... 4.01 Prevalence of non-tariff barriers 15% WEF
.... 4.02 Trade-weighted average tariff rate 15% WEF
.... 4.03 Current markets - free trade agreements 45% Survey
.... 4.04 Potential markets - free trade agreements 25% Survey
.. II. Quality of demand conditions 33%  
.... 5.01 Degree of customer orientation 10% WEF
.... 5.02 Buyer sophistication 10% WEF
.... 5.03 Product development - fish processing 40% Survey
.... 5.04 Product development - aquaculture processing 40% Survey
. C. Labour market efficiency 10%  
.. I. Flexibillity 25%  
.... 6.01 Flexibility of wage determination 33% WEF
.... 6.02 Hiring and firing practices 33% WEF
.... 6.03 Effect of taxation on incentives to work 33% WEF
.. II. Efficient use of talent 25%  
.... 7.01 Pay and productivity 10% WEF
.... 7.02 Reliance on professional management 10% WEF
.... 7.03 Productivity of fishermen 30% Data
.... 7.04 Wage system fisheries 30% Survey
.... 7.05 Productivity of employees fish processing 30% Data
.... 7.06 Wage system fish processing 30% Survey
.... 7.07 Productivity of labor aquaculture 30% Data
.... 7.08 Labour skills and productivity - aquaculture 30% Survey
.. III. Supply of labour 25%  
.... 8.01 Supply of qualified officers 20% Survey
.... 8.02 Supply of skilled fishermen 20% Survey
.... 8.03 Supply middle management fish processing 20% Survey
.... 8.04 Supply of skilled labour fish processing 20% Survey
.... 8.05 Supply middle management aquaculture 20% Survey
.... 8.06 Supply of skilled labour aquaculture 20% Survey
.. IV. Cost of labour 25%  
.... 9.01 Labour cost fisheries 50% Data
.... 9.02 Labour cost fish processing 50% Data
. D. Fisheries specific inputs 15%  
.. I. Property rights 20%  
.... 10.01 Permanency of fisheries rights. 50% Survey
.... 10.02 Transfers of fishing rights between firms 50% Survey
.. II. Capacity utilization 20%  
.... 11.01 Transfers of fishing rights between vessels 25% Survey
.... 11.02 Impact of quota system on capacity utilisation 25% Survey
.... 11.03 Stability of catch for the 5 most important species. 25% Data
.... 11.04 Impact of authorities on investment decisions 25% Survey
.. III. Cost items 30%  
.... 12.01 Special taxation fishing 50% Data
.... 12.02 Oil price 50% Data
.. IV. Profitability 30%  
.... 13.01 Profit margin 35% Data
.... 13.02 Capital turnover 20% Data
.... 13.03 Financial strength 15% Data
.... 13.04 Ability to use economies of scale 20% Survey
.... 13.05 Ability to use economies of scope 10% Survey
. E. Fish processing specific inputs 15%  
.. I. Capacity utilization 20%  
.... 14.01 Distribution of the catch within the year 50% Data
.... 14.02 Timing of wetfish availability 50% Survey
.. II. Cost items 30%  
.... 15.01 Cost of electricity 50% Data
.... 15.02 Supply and cost of fresh water - fish processing 50% Survey
.. III. Profitability 30%  
.... 16.01 Profit margin 35% Data
.... 16.02 Capital turnover 20% Data
.... 16.03 Financial strength 15% Data
.... 16.04 Ability to use economies of scale 20% Survey
.... 16.05 Ability to use economies of scope 10% Survey
. F. Aquaculture specific inputs 15%  
.. I. Property rights 20%  
.... 17.01 Transfers of licenses between firms - aquaculture 100% Survey
.. II. Capacity utilization 20%  
.... 18.01 Impact of regulations on capacity utilisation - aquaculture 100% Survey
.. III. Cost items 30%  
.... 19.01 Cost of electricity - aquaculture 15% Data
.... 19.02 Supply and cost of seedstocks 30% Survey
.... 19.03 Supply and cost of feed 55% Survey
.. IV. Profitability 30%  
.... 20.01 Profit margin 35% Data
.... 20.02 Capital turnover 20% Data
.... 20.03 Financial strength 15% Data
.... 20.04 Ability to use economies of scale 20% Survey
.... 20.05 Ability to use economies of scope 10% Survey
. G. Financial market development 5%  
.. I. Efficiency 100%  
.... 21.01 Financial services meeting business needs 33% WEF
.... 21.02 Financing through local equity market 33% WEF
.... 21.03 Ease of access to loans 33% WEF
. H. Technological readiness 15%  
.. I. Technological adoption 10%  
.... 22.01 Availability of latest technologies 50% WEF
.... 22.02 Firm-level technology absorption 50% WEF
.. II. Fisheries technology 30%  
.... 23.01 Technical level of vessels and mechnical equipment 33% Survey
.... 23.02 Fishing technology 33% Survey
.... 23.03 Processing technology on board 33% Survey
.. III. Fish processing technology 30%  
.... 24.01 General technology - fish processing 100% Survey
.. IV. Aquaculture technology 30%  
.... 25.01 General technology - aquaculture 100% Survey
. I. Market size 10%  
.. I. Domestic market size 50%  
.... 26.01 Domestic market size index 100% WEF
.. II. Foreign market size 50%  
.... 27.01 Foreign market size index 100% WEF

 

The structure of the second pillar, efficiency enhancers, is similarly shown in Tables 2. This is a much more complex pillar than the first one, with nine subsections and 88 indicators. While some of the subsections here refer to areas mostly within the reach of government, such as higher education and training, other subsections deal with areas over which the firm themselves have more control, such as the access to and utilisation of inputs. Table 2 shows higher education and training, goods market efficiency and labour market efficiency, specific inputs used in fisheries, fish processing and aquaculture, financial market development, technological readiness and market size.

The structure of pillar III – innovation and business sophistication – is far simpler than that of the other two pillars. Here there are only two subsections, business sophistication and R&D innovation. There are 16 indicators within the former subsection and 10 within the latter. Most of these indicators refers to areas over which the firms have good control, but some are also related to areas there the government is more involved.

 

Level Weight Source
3rd pillar: Innovation and sophistication 20%  
. A. Business sophistication 50%  
.... 1.01 Local supplier quantity 3% WEF
.... 1.02 Local supplier quality 3% WEF
.... 1.03 State of cluster development 3% WEF
.... 1.04 Nature of competitive advantage 3% WEF
.... 1.05 Value chain breadth 3% WEF
.... 1.06 Control of international distribution 3% WEF
.... 1.07 Production process sophistication 3% WEF
.... 1.08 Extent of marketing 3% WEF
.... 1.09 Official marketing support - marketing 3% Survey
.... 1.10 Marketing operations - wild fisheries 11% Survey
.... 1.11 Marketing operations - aquaculture products 11% Survey
.... 1.12 Competition among major suppliers - fisheries 11% Survey
.... 1.13 Cooperation in the value chain - fisheries 11% Survey
.... 1.14 Cooperation in the value chain - fish processing 11% Survey
.... 1.15 Competition among major suppliers - fish processing 11% Survey
.... 1.16 Cooperation along the value chain - aquaculture 11% Survey
. B. R&D Innovation 50%  
.... 2.01 Capacity for innovation 8% WEF
.... 2.02 Quality of scientific research institutions 8% WEF
.... 2.03 Company spending on R&D 5% WEF
.... 2.04 University-industry collaboration in R&D 8% WEF
.... 2.05 Availability of scientists and engineers 8% WEF
.... 2.06 PCT patent applications 5% WEF
.... 2.07 R&D Fishing technology fisheries 15% Survey
.... 2.08 R&D Processing technology fisheries 15% Survey
.... 2.09 R&D Processing technology fish processing 15% Survey
.... 2.10 R&D - aquaculture equipment 15% Survey

 

 

Models


The concept of competitiveness can be traced back to early writing on economics in the 17th and 18th centuries, but has become ever more urgent in the last decades with rapid improvements in transport and communication and a higher level of globalisation. Although competitiveness may be measured by single indicators, such as productivity of labour, a deeper understanding of the competitive standing of firms and countries can be gained by employing multi-dimensional measurements. Currently, the Global Competitiveness Index (GCI), developed and compiled by the World Economic Forum, is probably the most comprehensive index of its kind. The choice of methods depends on a variety of factors, including the perceived need for complexity, data availability and how the results are to be used.

The Fisheries and Aquaculture Competitiveness Index (FACI) developed in this deliverable is modelled on the Fisheries Competitive Index (FCI) developed by the Directorate of Fresh Fish Prices in Iceland and the Norwegian College of Fishery Science at the University of Tromsø in 2004-2005. The FACI though expands on the FCI in two directions. First, by developing a national-level FACI that also includes aquaculture. Second, by designing a firm-level FACI that is intended to capture the views of operators of individual firms and is therefore less complex. The national-level FACI consists of 144 items, whereof 44 are taken from the WEF Global Competitiveness Index, 19 are based on data obtained from national, public sources and 81 are based on answers from a survey conducted among specialists in each country. Whereas the information taken from the GCI analyses the overall competitiveness of the nation, the other sources will throw light on the competitiveness of the fisheries and aquaculture sectors. The firm-level FACI is based on a survey which in the case of firms engaged in the harvesting, processing or marketing of wild capture fish consists of 40 questions, and in the case of aquaculture firms consists of 45 questions. In PrimeFish, a computerised decision support system (CPA) was developed that can be used by the industry and/or policymakers. The CPA is based on the FACI and a suit of simulation/forecasting models to be compiled in WP5 and developed as an operational web-based software tool. A computerised version of the FACI will therefore form a part of the PrimeDSS software.

The FACI was employed to analyse the competitiveness of three fisheries firms in Norway, one in Iceland and one in Newfoundland, and assess the competitive standing of Spain, Iceland, Norway and Vietnam. Newfoundland was also included in the national study, but the comparison is incomplete due to some gaps in the information collected. The firms in Newfoundland and Iceland were found to have a competitive edge over their Norwegian competitors, mostly due to their ability to fend of new entrants, flexible value-chains and high level of R&D development and innovation. At the national level, Iceland, Norway and Spain all ranked close to one another, with Vietnam at a competitive disadvantage. While some of the issues standing in the way of improved competitiveness can be traced to the general social issue facing firms, e.g. poor institutions and infrastructure, and can only be addressed through government, others lie within the realm of the firms, e.g. poor financial performance and inability to take advantage of economies-of-scale.

 

Reports &Data


 

Firm-level FACI - Fisheries

As mentioned above, the firm-level FACI can both be applied to firms engaged in fisheries and aquaculture. This section only deals with the former, and compares results from one firm Iceland, one from Newfoundland and three Norwegian firms engaged in harvesting and processing of wild capture fish. Each firm’s scoring of individual indicators is presented in the table below:

 

Questions and responses – firm level FACI – Threat of new entrants
Theme Question Ice.1 New1 Nor1 Nor2 Nor3
Institutional barriers There are significant institutional barriers (f. ex. licenses, quotas, regulations) to entry in my industry (1=not at all; 7=make entry impossible) 7 7 3 5 7
Real capital barriers Entry into my industry requires investment in capital (vessels, equipment, buildings) that (1=does not deter entry at all; 7=deters entry completely) 5 7 4 4 5
Other investment barriers Entry into my industry requires other forms of investment (marketing, R&D, knowledge) that (1=does not deter entry at all; 7=deters entry completely) 5 6 4 3 6
Scale economics Does this type of production enjoy economies of scale (1=not at all; 7=to a huge degree) 7 6 5 6 2
Firm scale economics The firm takes advantage of its economies of scale (1=not at all; 7=completely) 7 6 5 5 1
Location The firm is well geographically located in terms of costs and ability to meet customer demand (1=not at all; 7=very well located) 4 5 5 3 7
Uncertainty How large uncertainty is there in your business environment? (1=none at all; 7=very great) 4 4 4 4 5
Labour availability High skilled labour in your company’s locations is (1=not readily available; 7=readily available) 6 2 6 6 6
Expert availability Qualified experts are (1=not readily available; 7=readily available) 6 6 2 3 5

Table 21 Questions and responses – firm level FACI – Bargaining power of suppliers

Theme Question Ice.1 New1 Nor1 Nor2 Nor3
Supplier power The bargaining power of suppliers is (1=weak; 7=strong) 5 6 5 6 4
Supplier competition Competition among the firm‘s major suppliers is (1=nonexistent; 7=fierce) 5 6 6 5 7
Quality raw material Quality of raw material is currently (1=poor; 7=excellent) 1 4 4 6 5
Quality and price How well do prices for raw materials reflect changes in Quality (1=not at all; 7=completely) 5 6 4 7 3
Quantity and price How well do prices for raw materials reflect changes in Quantity (1=not at all; 7=completely) 5 6 4 5 2
Timing and price How well do prices for raw materials reflect changes in Timing (1=not at all; 7=completely) 6 4 4 5 6
Access raw materials Compared to your most important competitors, your access to raw material is currently (1=very difficult; 7=very easy) 5 4 3 5 4
Supplier networks The firm has access to supplier networks (1=not at all; 7= very good access) 6 5 5 4 6

Table 21 Questions and responses – firm level FACI – Bargaining power of buyers

Theme Question Ice.1 New1 Nor1 Nor2 Nor3
Product price sensitivity My customers are sensitive to changes in product price (1=not at all; very much so) 5 7 6 6 7
Brand value The brand of my product is valuable ?(1=not valuable at all; 7=immensely valuable) 4 6 4 5 5
Loyalty buyers The buyers of my product are loyal (1=not at all; 7=very much so) 7 7 3 4 5
Buyer power The bargaining power of buyers is (1=weak; 7=strong) 5 4 4 5 3
Quality and price How well do prices for your output reflect changes in Quality (1=not at all; 7=completely) 5 6 2 6 3
Quantity and price How well do prices for your output reflect changes in Quantity (1=not at all; 7=completely) 5 6 5 6 4
Timing and price How well do prices for your output reflect changes in Timing (1=not at all; 7=completely) 5 4 3 5 4
Diversification How diversified are the marketing options (does the firm depend on one buyer or many) (1=not at all; 7=very diversified) 6 5 5 4 6

Questions and responses – firm level FACI – Threat of substitute products or services

Theme Question Ice.1 New1 Nor1 Nor2 Nor3
Niche market The firm is producing to a niche market (1=not all; 7=completely) 4 5 2 5 4
Substitute availability There are substitutes to my products available in the market (1=not at all; 7=many substitutes exist) 5 5 5 4 3

Questions and responses – firm level FACI – Rivalry of existing competitors

Theme Question Ice.1 New1 Nor1 Nor2 Nor3
R&D collaboration Research and development within the firm is done in close collaboration with technology firms (1=not at all; 7=completely) 6 4 5 1 3
R&D importance How important is R&D for your operation and possibility to increase value added? (1=not important; 7=very important) 6 4 6 1 3
Innovation impact Innovation makes it possible for my firm to retain a competitive advantage (1=not at all; 7=highly) 6 6 5 3 3
Response market condition How capable is your part of the value chain of responding to changes in market conditions? (1=not capable; 7=very capable) 6 6 4 3 4
Value chain response How capable is your whole value chain of responding to changes in market conditions? (1=not capable; 7=very capable) 6 6 4 4 5
Importance audited labels How important are third-party audited labels to your operation (1=not important; 7=very important) 5 7 6 6 3
Competitive strategy The competitive strategy of my firm is (1=weak; 7=powerful) 6 5 5 4 3
Market share The market share of the firm is (1=less than 1%; 7=larger than 10%) 4 3 4 4 1
Cost leadership The firm is a cost leader (1=not at all; 7=very much so) 4 3 4 1 1
Technology sophistication How sophisticated is your production technology compared to best practice (1=not at all; 7=very sophisticated) 6 3 1 4 2
Production sites The firm has access to good sites for its production facilities (1=agree completely; 7=disagree completely) 6 5 5 4 6
Flexibility How much flexibility does your firm have in adapting to unpredictable events? (1=none at all; 7=complete flexibility) 4 3 5 3 4
Risk management To what extent does risk management and insurance protect against unpredictable negative shocks? (1=not at all; 7=completely) 5 5 2 4 3

 

Total competitiveness The scores for aggregated competitiveness for each of the sampled firms are presented in Figure 4. The Newfoundland and Icelandic firms receives scores of 5.2 and 5.1, while the Norwegian firms received considerably lower scores, or in the range 4.1-4.6.

 

The tool


References & Readings