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“New Development of a Better Business Model for OTOP in Thailand”
Presented to Chairman : Associate Professor Dr. Yothin Sawangdee Director : Associate Professor Dr. Jongkolbordin Saengasaphawiriya Adivisor : Dr. Kitti Setavoraphan
By Mr. Kitin Sripuachareon Student ID: 5371100237 MBA in Retail Business Management Panyapiwat Institute of Management April 22, 2012
TABLE OF CONTENTS ABSTRACT………………………………………………………………………………………………………………3 INTRODUCTION……………………………………………………………………………………………………...3 1. Background of the study 3 2. Significance of the study 5 2.1 Characteristics and Achievements of the OVOP movement 5 2.2 The Japanese OVOP structure 6 2.3 The Movement of Thai OTOP program 7 3. Research Objective 8 4. Research Questions 9 5. Research Scope 10 LITERATURE REVIEW………………………………………………………………………………………………10 1. The movement of Thai OTOP program 11 2. An Endogenous Development and An Endogenous growth Theory 11 3. New business development 12 4. Knowledge Management 12 5. Innovative Technology 13 6. Gear train system 13 7. Business Network 14 8. Networking and Business networking 14 9. The Market Role of Pricing, delivery, and service 15 10. The Differentiation of OVOP and OTOP functions 15 11. Quality of Human resource in community 16 12. Business Model & Ontology Model Definitions 16 13. Cloud Computing Model 17 THEORETICAL FRAMEWORK………………………………………………………………………………….18 METHODOLOGY…………………………………………………………………………………………………….19 1. OVOP and OTOP Basic Conceptual Principles Diagrams 20 2. The Nine Components of OVOP Framework 22 3. The Nine Components of OVOP and OTOP Basic Conceptual Models 24 4. Basic Components of Business Model Framework 27 5. OVOP and OTOP Business Model Frameworks 28 6. Comparison OVOP and OTOP Framework by Main Characteristics 30 EXPECTED OUTCOME OF THE STUDY………………………………………………………………………..33 TIMELINE…………………………………………………………………………………………………………………34 REFERENCES…………………………………………………………………………………………………………… 34
Abstract Business development and business model have been involved in many different types of businesses, especially in the developing world where developing markets and many type of business organizations are competing in the marketplace for more success. For small businesses, the biggest threat mostly comes from big businesses that have better infrastructures and finances. The key to be able to stand up against them is having a good business plan. One part of business plan is a business model which has been an important topic of today’s business. Then, this study aims to compare and illustrate the functions of two own-creative with same conceptual principles’ OVOP & OTOP ’models. By drawing up frameworks and comparing the two different business model frameworks. The outcome introduces a twofold result: firstly, propose a better understanding of both business models. Secondly, allow the comparison of two different performance business models in order to improve the performances, representations, designs, and analysis of both business models. By generating a better operational infrastructure for OTOP program. Keywords: Business model, Conceptual Principles, OTOP & OVOP models and Framework. Introduction 1. Background of the study Business development and business model have been incorporated into many different types of business. Today both terms play important roles in the way we conduct business. That is especially true in developing world where markets are still emerging and business organization are fiercely competing in the current economy. Recently, Small and Medium Enterprises (SMEs) take a very important role in the economy. Most governments, as facilitator, are supporting clusters through initiate supports and encouraging SMEs' linkage to reach the concept of industry cluster (Porter, M.E. 1990, 1998). Knowledge sharing becomes a vital part of our professional and personal lives. Plus in the last two decades technology has become inseparable from business and social life. However, it has not been fully integrated into the field of all careers. The integration of technology in living and working is still challenging and developing in many circumstances. The conceptualization of OTOP’s Business model is based upon logic of earning money, focusing on the business problems in Thailand. Based on t he poverty situation is the majority problem in Thailand. Part of handling poverty reduction is operated by the rural development project in Thailand called “One Tambon One Product” or OTOP.
Unfortunately, after performing for many years, OTOP never really showed its achievement in term of real development. In the opposite of the original one “One-Village-One-Product” or OVOP project which has been successfully performed. Regarding the government policy, OTOP project is a self-help development concept that was created to promote the development of the local community and empower the community strength. OTOP has encouraged rural communities to depend on their local material and local resources. OTOP is considered a way to create prosperity for the community in the upgrading of rural livelihood through producing or managing local resources to become more value-added products. OTOP is based on the Japanese One-Village-One-Product (OVOP) concept which began in Oita and was initiated by local people at Oyama village in the Oita prefecture of Japan in 1961. It was promoted by former Oita Governor Morihiko Hiramatsu since 1979 (Oita OVOP International Exchange Promotion Committee, 2006). OVOP is an endogenous development model and a community based model. It is based on three conceptual principles: 1) Local to global: To encourage rural entrepreneurs to produce at least one globally accepted product using available rural natural resources, local craftsmanship and develop globally marketable products by adding values to them. The product based on global standards. 2) Self-reliance and Creativity: To promote self-reliance from government subsidies, they are not provided directly to OVOP group, but in term of technical assistance and R&D support for product development, assist marketing and distribution. Also help reduce the transaction costs that local entrepreneurs have to carry if they are to execute product development and penetrate market themselves. 3) Human resource development: To have leadership training development, building up community in order to sustain the community, help the local people become stronger with challenge and creative enthusiasm. The OVOP and OTOP concepts are very much in line with that proposed in economic development literature. Friedman (1987) and Mackenzie (1992) state that one of the primary measures to boost economic development and hence economic well-being in rural areas is by enhancing rural entrepreneurship. Wortman (1990) defines rural entrepreneurship as “the creation of a new organization that introduces a new product, serves or creates a new market, or utilizes a new technology in a rural environment”. However, the craft-based manufacturing sector was identified as a source of competitive advantage that was not being properly valued and did not transform into either price premium or customer loyalty because the topic of Trustworthy brand. (Takano, 2007) Unfortunately, so far in international development practice it appears that the OVOP movement is being promoted as a quick fix for community development by focusing on
product development and marketing whilst virtually ignoring community capacity issues.(UNHABITAT,2006) Whether OTOP program will survive in the long term depends on continued government support of product development initiatives by people in local communities. However, the Thai government is primarily interested in high-end products for export and it has not shown any interest in promoting products that are connected to the domestic market or domestic consumption patterns. All the information and details about OTOP and OVOP can be illustrated by using a model. A model is an abstraction of something that represents some object or activity, which is called an entity. Basically, there are four types of models; physical, narrative, graphic, and mathematic models (McLeod and Schell, 2000). This study proposes an OVOP basic conceptual model and compares the OVOP and OTOP models to understand the similarities and differences between these two models. The models were developed based upon the same conceptual principles, different business perspectives, and relevant literatures relating to OVOP and OTOP program. The comparison of the two different models under the same conception is to find the cause what has missed out on the transformation from the original OVOP concepts. And this study has created the models by using their conceptual principles, functions, and objects in drawing up the OVOP model and OTOP model for understanding all the characteristics that effect to the business. This comparison of two different models which same conceptual principles by outlining a framework to compare the OVOP and OTOP characteristics. The focus of this study is on the logics and concepts of value creation, plus the efficiency and difference of two business models. Will using some technology tools to modify the government’s OTOP model, which is expected to change the business strategies of OTOP in fundamental ways. The methodology developed in this research must therefore take these two models and original OVOP concepts into a better OTOP’s business model. As well as, for being possibly use in the future and making a new development policy in the future use. In order to do this, the model should be perfectly completely defined. 2. Significance of the study 2.1 Characteristics and Achievements of the OVOP movement The original OVOP movement was launched in 1979 in Oita prefecture by Governor Dr. Morihiko Hiramatsu. He encouraged residents in villages and towns to select a possible product or industry distinctive to their village or town and foster it to be a nationally, or even globally marketable one. Previously, local people had worked as woodcutters or seasonal migrant laborers to make ends meet. The challenging attempt of Oyama Town, whose motto was “let’s plant plums and chestnuts to go to Hawaii!” proved to be
successful. As their income increased thank to the new products. After the movement that started in Oita prefecture has spread to other rural Japanese areas that have been left out of the nation’s economic development and suffer from out-migration and an aging population.1. The OVOP concept shares its focus on quality with other Japanese concepts like Kaizen or the 5S-process. Yujiro Okura, one of the most prominent analysts of the Oita OVOP movement, points out that the success of OVOP was due to the continuous support given by local governments (Okura, 2007). By the motivation of local residents promotes ‘Local Produce Consumption Campaigns’ such as the Toyo-no-kuni Fresh Produce Campaign (which was given Oita’s traditional name, which literally means the land of abundance) and the “One Village One Fish” Fair2. Even national public entities help strengthen the OVOP movement’s promotion and marketing. Michi-no-Eki (roadside station) is one such initiative. Launched in 1993 as a joint project between national highway administrators, regional governments and local groups, it aims to facilitate travel and tourism in the era of motorization. Local communities along main highways desired to provide retail goods and dining services to motorists who pass by their communities. The roadside stations serve as outlets for OVOP goods and as entrance points for OVOP services such as cultural events and eco tourism. As of July 2009, there are 917 Michi-no-Eki stations in Japan (World Bank, 2004). 2.2 The Japanese OVOP structure The most important component of the Japanese OVOP structure is the initiative and practical innovation of local residents. Daily activities, nature and local entertainment can be turned into valuable products or services to be marketed. Activities such as “big voice” or shouting contests in Yufuin town and pond cleaning in Ajimu town attract people from outside Oita. Sometimes, ideas from outside are implemented as local events or activities that fully or partially make use of local resources, both material and human. Public offices, mainly local governments, but sometimes even national public entities, serve as facilitators of OVOP activities by helping with technical innovation, production, and marketing for developments (JICA Research Institute, 2010). To illustrate the procedures and the supporters of OVOP and OTOP movement in two countries by the difference frameworks of OVOP and OTOP procedures and supporters
Even in developing countries like China and Thailand, rapid urbanization and aging are becoming major constraints in rural areas. This is one of the reasons we should take a fresh look at the One Village
One Product movement as a universal rural development policy.
In addition, as many as 34 local private companies sympathetic to the OVOP movement have established a joint stock company called Oita One Village One Product Co. Ltd. to promote OVOP
products nationally through direct and internet marketing .
have been drawn up (see figure 1 and 1.2). These indicate to OVOP procedures & supporters framework based on JICA Research Institute (2010) and Fujioka (2006), who conducted a comparative study of Japanese OVOP and Thai OTOP implementation, concluded that the former operates from the bottom up while the latter is run from the top down.
OVOP promotion councils
OTOP Sub committees
Local Gover nments
Figure 1. OVOP-Procedures & Supporters
Figure 1.2. OTOP-Procedures & Supporters
The OVOP program started 30 years ago in a small village of Oita Prefecture, Japan as a community centered and rural economic development program now has been reached to different countries of Asia, Africa and Latin America. This program has given a good lesson of utilization of local resource, local skills and local leadership in order to revitalize the poor condition of the village community. It has emphasized on self-reliance and creativity whereas attempt to discouraged the dependency nature. The Structure of Japanese OVOP is a cooperative, village or district level movement and not a central government program. Now, OVOP is not officially supported by Oita Prefectural Government. The local people of Towns and villages themselves are responsible for promoting OVOP with their own fund. The success or failure of the program depends upon the commitments and dedication of the local community. Identification of potential local resources and utilization of local skills for promoting the globally accepted products and services are the main themes of Japanese OVOP.
Movement of Thai OTOP program
Commonalities and differences between Japanese OVOP and Thai OTOP concepts are Thai OTOP aims at building more jobs and incomes to the community with government subsidies and conducts, then likely less in Self-reliance not like OVOP who aims at encouraging the development of rural economies through the use of local resources with
community member’s participation, by achieving self-reliance is based on teaching communities how to successfully develop and market their unique and distinctive products. The Thai OTOP Projects have been emphasizing the global markets for their locally capability of producing products as knowledge of local conditions is available at local level only, even the direct supports still from central government but is not imperfect deployment. Fujioka (2006) examined the Thai OTOP and found out that it is different from the Japanese prototype in the sense that the Thai OTOP is a top-down scheme led by the central government while the Japanese OVOP is bottom-up led by the strong community and local government supporters (see Figure 1 and 2). There are two development methods-‘spontaneous’ and ‘extraneous’ method by using the extraneous method means developing countries (or growing areas) tried to pursue its modernization by outside resources introduction and commercial invitation, such as energy development, automobile and electric appliance industries as to spontaneous method, it means to develop the district economy through maximizing the latent resources and capital in the area, such as economic activities between Primary Industry and Second Industry‐the farmers process the harvest for products of higher value-added. “OVOP” movement has the same definition with ‘Spontaneous Method’. (Mr.Kimoto Shoji, 2008) After gathering and analysis of all information and all related factors that have been involved with OVOP and OTOP project since they were operated in Thailand, then should be able to determine and configure fundamental system of both projects. Plus, after many studies have been done in different areas of OTOP’s business perspectives and business ideas. Some studies have referred to OVOP and OTOP as a suitable business project, some not. This implies that business components still play an important role in today’s business. Given the fact that business model is the most important component in business plan which aim to bring about economic independence or self-reliance and innovative ideas to rural communities. But in Thailand the OVOP’ transformation might not be fully corrected or missed in some part of it, cause OTOP is not fully functional if compares with the original OVOP one. And this paper limit the comparison to the important part of the two frameworks for verifying what has been missing or should be needed. 3. Research Objective Specific objective of this research is the directing and developing of OTOP business model in Thailand for sustainable local economic development. The main structure of this research is to conduct and analyze an ideological concern about the primary determinants in the relationship of OTOP business performance with environment characteristics, business characteristics, information and communication technology adoption and related
entrepreneurial networks. As well as the research aims at understanding the major factors affecting the business performance of OTOP entrepreneurs. With specific objective of this research is to: 1. Modify and create a fitting OTOP business model to the OTOP program. 2. Defend and develop the Government Business Model on the OTOP project management. 3. Optimize and provide the suitable theoretical frameworks for further research. 4. Perform an error analysis and default process on the resulting outcome to determine the effectiveness of the business approach 5. Create a new government policy and support the future development plans. 4. Research Questions After the modification of OTOP business model, what will happen to OTOP? 1. How will OTOP project create more value? This first question is concerned with the value offering of OTOP program. It includes the particular products or services being sold. In addition, the value proposition is defined by whether the firm provides access to the product or service, or sells the actual product or service by itself, or sells the product or service as part of a franchise. Other issues include whether the firm makes the product or service, outsources product manufacture or service delivery, licenses others to make and sell, acquires the product and re-sells it, or acquires the product and then modifies and re-sells it. Finally, the value proposition is affected by whether the product or service is provided directly to customers or through customers. 2. For whom will the OTOP create more value? This question focuses on the nature and scope of the market in which OTOP will compete. Whether OTOP will mainly sell to consumers (b-to-c), businesses (b-to-b), or both, and where it falls in the value chain. When selling to businesses, the entrepreneur must further distinguish where in the value chain the firm’s customers will be such as wholesaling, retailing, or some combination. The geographic scope of the market should also be specified, such as local, regional, national or international. Ventures also vary in the extent to which their success is driven by a focus on discrete transactions to a range of customers, or by ongoing relationships with particular customers. 3. What is OTOP’s internal source of advantage? The term core competency is used to capture an internal capability or set of skills that enables OTOP to provide a particular benefit to customers. Therefore, OTOP will get benefits based on its competency at logistics management. While OTOP might attempt to build operations around any number of competencies, sources of advantage can be organized into several areas. These include the production/operating system, capabilities in
technology development/innovation, selling /marketing knowledge, mastery of supply chain management, and skills at managing organization, networks and leveraging resources. 4. How will OTOP differentiate itself? Depending on how they are applied, core competencies can enable OTOP program to distinguish itself, or produce something perceived to be unique in the marketplace. The challenge of differentiation is to identify remarkable points of the difference that can be maintained overtime. Sustainable strategic positions tend to be designed around one of the following five bases of differentiation: operational excellence, product quality and features, innovation leadership, low cost, and intimate customer relationships and experiences. 5. How will OTOP make more money or a better profit? A core element of OTOP business model is its economic model. The economic model provides a consistent vehicle for earning profits. It has four sub-components. The first of these is the OTOP operating leverage, or the extent to which the underlying cost structure is dominated by fixed costs, or is driven more by variable costs. The second sub-component is volumes, and whether the firm is organized for high, medium or low volumes in terms of both the market opportunity and internal capacity. The third consideration is whether the firm will be able to charge high, medium or low margins. Finally, the economic model considers whether the revenue sources are fixed or flexible. An example of the former would be a company that sells ten items based on a fixed price list. Alternatively, a firm that sold a number of value-added services at varying prices depending on the customer segment and market conditions has more flexible revenue sources. This latter factor is the sources of the creative revenue models found in today businesses. 5. Research Scope Due to the limitations of time, this research mainly focuses on Conceptual model of OVOP & OTOP program which are represented by concepts or related concepts and form after a conceptualization processed in the mind and illustrate into a model framework. After, qualitative analysis was conducted in order to ascertain the potential for communitybased based model to serve as a tool for the development of OTOP business model and OTOP’s Ontology components. This research will not attempt to make a quantitative analysis of community-based model, as this approach would not be as suitable for a ‘conceptual schema or conceptual data model’. This research attempts to apply related of OVOP and OTOP concepts, Theory of Gear Trains, Business Model Ontology, and Cloud Computing in the new concepts and details. They include definitions of terms: OVOP nine components, Spur gear, Idler gear, Business model canvas, Ontology system, Nine building blocks and Cloud system. Moreover, it will include an Ideology of OVOP business model.
Literature Review The Research for this study is grouped in thirteen different categories below; 1. The movement of Thai OTOP program The commonalities and differences have been staying between Japanese OVOP and Thai OTOP concepts since the beginning of time. The Thai OTOP program is a community based enterprise program. From Thai OTOP’s structure, tambon is the basic administrative unit in Thailand. Therefore, OTOP is more or less equivalent to the Japanese OVOP although the “village” in OVOP is not necessarily confined to an administrative unit and can be geographically more flexible. Both programs aim at encouraging the development of rural economies through the use of local resources with community members' participation. “The Government plays a supporting role, assisting on supply chain issues, giving advice, networking, and opening up new markets. The benefits of OTOP have not only been economic. Local community leadership and pride have also grown as a result” (Wattanasiri, 2005). The OTOP program also has provided opportunities for participation in community activities, which allowed villagers to work together, applying ‘local wisdom’ in their production, facilitating learning about other communities’ products and skills. The OTOP program is mainly aimed at making a profit. By contributing to increasing villagers’ income, fewer villagers were forced by economic circumstance to migrate to cities (OSMEP, 2008). It is in the opposite direction of the Japanese OVOP model, which mainly aim at improvement of people’s social life and community revitalization. 2. An Endogenous development and An Endogenous growth Theory The original concept of an endogenous development appeared in the late 1970s, advocated by Friedman and Weaver (1979) and Stohr and Taylor (1979). Endogenous development theorists take the view that local economic development can be determined not by the capacity of the region to attract foreign firms, but the capacity of the region to generate the conditions of transformation of its own productive structure (Dinis 2006). The concept of regional development has evolved to include more social life, technological, environmental, cultural, and human elements. Like, Friedman (2007) identified seven elements of regional assets necessary for endogenous development: basic human needs, organized civil society, the heritage of an established environment and popular culture, intellectual and creative assets, regional resource ability, quality of its environment, and infrastructure. In addition, the endogenous development concept influences practical movements for local development by non-governmental organizations (Compass, 2007). Endogenous growth theory believes that economic growth is primarily the result of endogenous and not external forces (Romer, P.M. 1994). Endogenous growth theory believe
the investment in human capital, innovation and knowledge are significant contributors to economic growth and also believe that subsidies for research and development or education increase the growth rate in some endogenous growth models by increasing the incentive for any innovation. According to One Village One Product (OVOP) movement aims to encourage rural development through community-oriented activities by employing local resources and knowledge and beginning from the grassroots. Endogenous development is a means to achieving the social, cultural and economic transformation of society, based on the revitalization of traditions, cultures, environment, and equitable relation of production. And the natural resources can turn into useful products or services, distributed and exported to the whole world. 3. New business development It is a new way of concerning all the activities involved in realizing new business opportunities, including product or service design, business model design, and marketing. When splitting business development into two parts: ‘business’ and ‘development’. The first things that come into mind when looking at business are: marketing, economics, finance, managerial activities, competition, prices, etc. All of these keywords are related to risk and entrepreneurship and clearly indicate the primary scope of the term ‘business development’. Development is very abstract and can be linked with some of the following keywords: technological improvement, cost reduction, general welfare, improved relations, and movement in a right direction. In the traditional definition of Business development, Business Development is mostly seen as growing an enterprise, with a number of techniques. The mentioned techniques differ, but in fact all of them are about traditional marketing. The main question in these issues is: how to find, reach and approach customers and how to make/keep them satisfied, possibly with new products. (Kotler, 2006) Since this definition is limited and lacks some essential factors in business developing, a complete new definition of Business Development will be introduced. Absolutely, when supplying a solution, it is very important to focus on the total offering you give instead of only focusing on the product or service. An offering is a package consisting of different proportions of physical product, service, trustworthy, advice, delivery and the costs, including price that are involved in using it. Hereby the advice, adaptation to the customer and the costs are the most important factors to get the right combination within the offering. 4. Knowledge Management This Research related to knowledge management (KM) success can be classified into four focus areas: KM success factors and KM outcomes. KM success factors can be viewed as facilitating factors for a KM initiative. KM developing model of community organizations is the main focus of this article of KM. There have been efforts to identify organization factors
for KM frame work, Panich Vicharn (2004) research conceptual framework model of the community organization, Jennex and Olfman (2004) present a KMS success model, recommend that developing a successful KMS would involve designing a technical infrastructure for the enterprise, gaining senior management support, and building motivational factor into the system. Vittal S. Anantatmula (2005) a source of competitive advantage, will continue to gain strategic importance, and organizations will be compelled to implement KM initiatives to improve organizational performance. Nonaka and Takeuchi (1995) knowledge as a dynamic human process of justifying personal belief toward the truth. Other research indicates that establishing leadership, investing in people, and developing supporting organizational conditions are critical to achieving success in a KM program (Chorides, longbotton, & Murphy, 2003). Similar success factors were suggested based on a study of several projects define knowledge in an evolving mix of framed experience, values, contextual information, and expert insight the provided framework for evaluating and incorporating new experiences and information (Davenport & Prusak, 1998), and Wiig's KM cycle addresses how knowledge is built and used as individuals or as organizations are building knowledge, holding knowledge, pooling knowledge and applying knowledge in process knowledge management (Wiig 1993), a framework for assessing knowledge management system (KMS) success model (Jennex & Olfman 2005). A model of knowledge management success knowledge management (KM) success model that is derived from observations generated through a longitudinal study of KM in an engineering organization and KM success factors which were modified by the application of these observations and success factors in various project. 5. Innovative Technology A noticeable difference between the Japanese and Thai models is the functions of their main infrastructure and technology. Innovative technology provides important opportunities for new business development. For a company it is important to keep products and processes up to date, to stay competitive (Ford et al., 2006). Continuous investment in innovation for both products and processes makes it more difficult for others to offer a large technological functionality advantage (Schilling, 2003). Many companies need technological development to stay competitive. Technological development can occur through making decisions about acquiring, exploiting and managing technologies. These decisions should be made by involving the research and development staff, purchasing staff and marketers. Furthermore technology can be analyzed by the concept/framework of value configuration as introduced by Stabell Fjedstad (1998). The framework consists of three value configurations, which are an extension of the value chain model by Porter: the value chain (transformation of inputs in products), the value shop (solving customer problems) and the value network (linking customers). These configurations overcome some of the issues
with the traditional value chain model, which is only helpful for traditional manufacturing companies. In practice firms are not pure instances of a single distinct value configuration, multiple combinations of configurations can be found within one firm (Stabell & Fjeldstad 1998). The value creation process can also be understood from the perspective of Schilling. Schilling talks about value in the sense of technological functionality, installed base and complementary goods of a product (Schilling, 2003). It may be clear that technology plays an important role in this value creation process, and in general contributes to the process of renewing the match between problem and solution. 6. Gear train system A gear train is formed by mounting gears on a frame so that the teeth of the gears engage. Gear teeth are designed to ensure the pitch circles of engaging gears roll on each other without slipping, this provides a smooth transmission of rotation from one gear to the next ( Uicker, Pennock and Shigley, 2003 ). Spur gears are the most common type of gears used in market. Engineering a system of gears that transmits power from one shaft to another can save lots of labor, time, and money if processing and handling the right way. 7. Business Network Traditional marketing is usually based on economic models. In those pure economic models there is no room for negotiations and special treatments for different companies. A technological environment can be very uncertain and therefore competitors have to rely on their business networks. Then, the special treatments and negotiations are very necessary. It is important to recognize the effect social relations have on economic action, including business development (Ford et al., 2006). Companies therefore increasingly concentrate their investment and their activities on only a few activities which they believe to be their core business, otherwise their competitive advantage is easily lost. Because they concentrate on just a few activities, they need business relations for the other activities (Ford et al., 2006). Relationships are usually based on resource ties, activity links and/or actor bonds (Ford et al., 2006). A company should therefore analyze their firm itself, their relationships and their business networks in terms of activities, actors and resources. In this way, a company can determine where there are new opportunities for relationships and where resources, technologies and/or skills can be developed, integrated or exploited from other companies (Ford et al., 2006). In this way, business development can be established with help of this business network. Nowadays, marketing is about the exchange of heterogeneous resources between dynamic, cooperating partners in network-like structures (Hakansson et al., 2004). It is about relationships, not about selling products. So, business marketers should be busy finding, developing and managing of relationships within the complex network that surrounds them (Ford et al., 2006).
8. Networking and Business networking Networking means having connection between entrepreneurs and government officers in charge of business assistance besides establishing networks with financial institutions and other business associations (Kader et al., 2009). Networking is an essential skill for most business people, but especially for entrepreneurs. The strong association between the entrepreneurs as a person business demands that entrepreneurs get out into the world and create as well as maintain business relationships is compulsory. Being able to build a network of relationships and resources has become the most important asset for every entrepreneur in order to grow their business, to gain visibility and to achieve competitiveness. The entrepreneur has to be an excellent “networker” on a local, regional as well as on an international scale. Boyer et al. (2008) concluded that one of the greatest challenges seems to be gaining market access and building networks for distribution of products and services. The establishment of these is one good indication that the enterprise is moving towards success. Business networking is a socioeconomic activity by which groups of likeminded businesspeople recognize, create, or act upon business opportunities. A business network is a type of social network whose reason for existing is business activity. There are several prominent business networking organizations that create models of networking activity that, when followed, allow the business person to build new business relationships and generate business opportunities at the same time. Business networking can be conducted in a local business community, or on a larger scale via the Internet. Business networking websites have grown over recent years due to the Internet's ability to connect people from all over the world. Internet companies often set up business leads for sale to bigger corporations and companies looking for data sources. 9. The Market Role of Pricing, delivery, and service Simpson et al. (2004) in their statistical analysis found that success factors unique to industry is positively related to competitive pricing and quality, in manufacturing to competitive pricing and knowledge of competitors, and in services to employee relations issues such as training, staff involvement in decision making, and job satisfaction. It has also been suggested that one of the main success factors relates to the interaction of the entrepreneur with the delivery of the service (Beaver, 2002). Many owner-managers were more interested in providing quality services and products than making large profits and there was a reluctance to take risks (Bellamy at al., 2003). One outcome was that their initial objectives were often just to survive, but once they had succeeded they progresses to the next level and pursued “success”, as they perceived it. There are five dimensions that are important for time or delivery includes dependable promises, right quality, on agreed time and fast delivery (Phusavat and Kanchana, 2007). Delivery measure how fast an organization is capable of making
improvements in products and services (Krajewski et al., 2007). A danger for SMEs is from those large firms that enter the market and can compete on price. Thus, SMEs operate in classic perfect competition. There are few SMEs that compete in slim market niche whereby it show little competition. These firms may influence price or quality sold (Burn, 2001). 10. The Differentiation of OVOP and OTOP functions Fujioka (2006) examined the Thai OTOP and found out that it is different from the Japanese prototype in the sense that the Thai OTOP is a top-down scheme led by the central government while the Japanese OVOP is bottom-up led by the strong community and local government supporters (see Figure 1 and 2). There are two development methods-‘spontaneous’ and ‘extraneous’ method by using the extraneous method means developing countries (or growing areas) tried to pursue its modernization by outside resources introduction and commercial invitation, such as energy development, automobile and electric appliance industries as to spontaneous method, it means to develop the district economy through maximizing the latent resources and capital in the area, such as economic activities between Primary Industry and Second Industry‐the farmers process the harvest for products of higher value-added. “OVOP” movement has the same definition with ‘Spontaneous Method’. (Mr.Kimoto Shoji, 2008) 11. Quality of Human resource in community Rose et al. (2006) have been study that human resources are considered an important factor in business success. Human resource includes recruiting and retaining employees, human resource policies and compensation plan, training and development, delegating and relinquishing control, develop performance appraisal and finally, employees’ motivation. Moreover, human resources are found to have significant relationship with venture growth. Entrepreneurs who have the necessary competencies especially in the area of operations, finance, marketing and human resources, and management skills required for the business are more likely to be successful at start-up (Prahalad & Hannel, 1990; Swiercz & Spencer, 1992). According to Sen (2007), human resource equipped with real knowledge, know-how, and experiences and infrastructure development such as transportation, electricity, telecommunication, and information technology will support OVOP in order to link the local products to national and international markets are among the key factors for ensuring the success of the OVOP. As refer to above literature, the entrepreneurs which getting involved in OTOP program should have an effective teamwork. Effective teamwork is essential to the success of any business. An essential ingredient to effective teamwork is attracting and keeping the right team members. No matter how hard a group of people try to work together and create an effective team, without the right people for the job, the team will inevitably fail.
According to Thailand Productivity Institute (FTPI), emphasis on human capital development and knowledge-based economy becomes more important as Thailand climbs the ladder of development. The key to a company’s competitive advantage in the new era lies in its human capital. It is imperative for heads of any company to harness their people’s full potential. They must compete and win the right type of people to work with them, and not solely focus on customers to buy from them. With the right quality moving the business, customers will come. Successful businesses are very often those with leaders who know how to mobilize their human resource (HR) to produce better products and services compared to their competitors. 12. Business Model and Ontology Model Definitions Business models can be described in a more or less formal way. It is a simplified representation of its business logic. It describes what a company offers its customers, how it reaches them and relates to them, through which resources, activities and partners it achieves this and finally, how it earns money. The business model is usually distinguished from the business process model and the organization model. According Timmers, Weill and Vitale (Weill and Vitale 2001) define a business model as a description of the roles and relationships among a firm’s consumers, customers, allies and suppliers and it identifies the major flows of product, information, and money, as well as the major benefits to participants. In their business model definition Linder and Cantrell (2000) from the Accenture Institute for Strategic Change differentiate between three different types of models: the components of a business model, real operating business models and change models. They define a business model as an organization’s core logic for creating value. Similarly, Petrovic, Kittl et al. (2001) perceive business models as the logic of a business system for creating value. They specify that this is in opposition to a description of a complex social system itself with all its actors, relations and processes. Like Petrovic, Kittl et al. (2001) Applegate (2001) perceives a business model as a Ontology description of a complex business that enables the study of its structure, of the relationships among structural elements, and of how it will respond to the real world. In this regard Stähler (2002) reminds that a model is always a simplification of the complex reality. It helps to understand the fundamentals of a business or to plan how a future business should look like. Magretta (2002) adds that a business model is like a story that explains how an enterprise works. There for, a business model is a conceptual tool that contains a set of elements and their relationships and allows expressing a company's logic of earning money. It is a description of the value a company offers to one or several segments of customers and the architecture of the firm and its network of partners for creating, marketing and delivering this value and relationship capital, in order to generate profitable and sustainable revenue streams.
The Nine Building Blocks are originated from four main areas that constitute the essential business model issues of a company, then broken down into a set of nine interrelated building blocks that allow conceiving a business model. All influenced by the Balanced Scorecard approach (Kaplan and Norton 1992). Basically, the nine elements of the ontology cover all the business model building blocks. The business model ontology is a set of elements and their relationships that aim at describing the money earning logic of a firm. As outlined above the ontology contains nine business model building blocks, so-called business model elements. Every business model element can be decomposed into a set of defined sub elements. 13. Cloud Computing Model Cloud Computing is the combination of virtualization, distributed computing and the service-oriented architecture creates a new computing model. Cloud computing embraces cyber infrastructure which is one the key elements of successful information technology (IT) (Vouk, M. 2008). Cloud computing is a relatively recent “buzzword” that has been described as the next logical step in the evolution of computing (Vouk, M. 2008), as the new paradigm for providing computing infrastructure (Vaquero et al.,2009) and as a highly disruptive technology ( Rimal et al., 2009) According to Marin Litoiu, Cloud Computing is an “emerging computational model in which applications, data, and IT resources are provided as services to users over the Web” (Erdogmus, H. 2009). It builds on previous research in virtualization, distributed computing, utility computing, networking and web and software services (Vouk, M. 2008). Although several academic attempts at defining Cloud Computing have been made, some confusion and disagreement as to its exact nature still exists (Geelan, J 2009). Fundamentally, Cloud Computing is a model for service delivery and consumption, a new computing paradigm which aims to reduce the cost of both development and deployment. Theoretical Framework Theoretical framework is the set of terms and relationship within which the problem is formulated and solved, by focusing on specific variables and defining the specific framework for analyzing and interpreting the data to be gathered. Theoretical framework must demonstrate an understanding of theories and related concepts. About this research conceptual framework is a brief description (Graphic or Visual depiction) to present a preferred approach to all ideas. Plus, it is the major variables operating within the arena of the problem to be pursued together with how significant variables interact to produce a better business model. This segment provides diagrams, frameworks and models; how the two businesses with same conceptual principles are alike, different and related to each other in order to achieve the main objectives of this research. This research presents grounded theories, reviewed theories and information from published
books, theses, journals, and other reports. By bringing out the relationships of both OVOP/OTOP’s variables and another supported components in the past fifteen years and creating a better business model. Accordingly, all the diagrams will be able to emphasize in the efficiency of new OVOP/OTOP business model. The model development process in this research approach for the original OVOP conceptual principles, business models and frameworks, comparison of both frameworks, and research’s conceptual framework (see figure 2). In additional, the other diagrams and frameworks have been created and designed to merge all their business components as same as the integrating and transferring of OVOP & OTOP’s principles, components and strategies into a blueprint of new OVOP/OTOP business revitalization plan.
Find the OTOP’s 9 components; -Specification -Classification -Relationship -Function -Description -Framework
Procedure for establishing OTOP new business model; -Collecting all related information -Comparing, adjusting, adapting, and modifying all the components of OVOP/OTOP and nine building blocks for new business model -In-Depth Interview with experts -Focus Groups -Ladder Interview (“Why-Because” Conversations)
Find the OTOP’s 9 building blocks; -Specification -Classification -Relationship -Function -Description -Framework
Creating of New O-cloud Simulator -Experiment -Testify -Discussion -Finish up -Build-up
New OCloud Business Model
Cloud Ideology -Specifications -Concepts -Benefits
Figure 2 . A Conceptual framework of the research
Methodology Qualitative approach will be involved in the method of this research and analysis. A qualitative research will be aimed to gather an in-depth understanding of action and the reasons of that action by investigating the “why and how” of decision making, not just “what, where, when”. The research process will start from focusing on the meanings, perceptions, description of all components and subject matter, then emphasizing the socially constructed nature of OVOP’s components and reality, the intimate relationship between OVOP business model and its development, and the situational constraints that shape and direct the inquiry. The primary data are acquired from relevant theories and businesses’ web sites. The secondary data source comes from relevant theses and publications. Plus, focus group discussions, and in-depth interviews will be use in this research for conducting and managing all business models and theirs components. Both new and existing structures will be use and integrate into a creating of new OVOP/OTOP business model. By building up the frameworks and diagrams below; 1. OVOP and OTOP Basic Conceptual Principles Diagrams OVOP and OTOP model originally presented in this paper are based on the same OVOP’s conceptual principles and basic components. However, when environment, purposes, and business structure has changed, the type of OVOP became in a difference way like OTOP. Figures below are illustrated by using the concepts of ‘Mechanical Gears or Gear ratio’ it is easily to explain how OVOP’s principles and components are related. In figure 3 below, it has been drawn up to show the first original OVOP principles, then combining with the gear system concept, it became the original OVOP conceptual principle diagram in figure4 (see below) and OTOP’s diagram in figure 5 (see below)
Figure 3 . First Original OVOP principles From Figure 3, The original OVOP basic conceptual principles diagram begins from ‘self-reliance & creativity’ to ‘human resource development’ and to ‘local to global’. The diagram uses the three ‘spur gears’ to show the labels for the interlocking conceptual principles and the ‘arrow shapes’ show how they relate and affect one another
Local to global
Human resource develop
Figure 4 .The original OVOP basic conceptual principle diagram After merging OVOP’s principles with spur gear concept they become the original OVOP conceptual principle diagram above in figure 4. There are three sectors or gears: starting from a ‘self-reliance & creativity’ biggest gear (see the black arrow) to a’ Human resource development’ the middle gear use less power and more less in a ‘local to global’ while the smallest gear turns at the same speed. The reason is the more self reliance and creativity run the more of human resources development or villagers become powerful as well as challenges. Then the smallest gear ‘local to global’ component is turning faster to keep up, meaning that a community easily to offer the globally standardized products because they have their own supports from the community. Having more self-reliance and better creativity help economics grow faster, means that any business problem would solve with the more capabilities and flexibilities. Also it is better for the innovative products with costs less. In the meantime, it helps save operating costs. As well, the wasted costs. Then OVOP has achieved the purpose ‘Local to global’
Self reliance Creative
Human resource develop ment
Local to global
Figure 5 .The OTOP basic conceptual principle diagram From figure 5 OTOP project starts from turning a ‘self-reliance & creativity’ small spur gear same the black arrow’s direction, to turn other bigger gears with the same speed, it needs more power than turning the equal-sized gears. Next turning ‘human resource
development gear’ (Idler gear) is done by fostering villagers with more know ledges and creative spirits to operate this gear. Then, the bigger local to global’s gear; it is too big component for OTOP’s project that starts from a small source of ‘self-reliance & creativity’ it is not enough own capabilities power to turn the bigger gears. Thus, the projects or villages need more supports from government in order to adding more facilities, subsidies and other supports. On the other hand, if the community or village required more outside supporters, the self-reliance has less to run itself. 2. The Nine Components of OVOP Framework The nine components of OVOP project based on community , urban area, local materials, local labors, environments, villagers, cultures and traditions, society, behavior, governments, strategy and many more components. By using nine jigsaw puzzles and three triangle layers to explain the nine components of OVOP framework right after selecting the importantly nine components then classify them into three layers, which are: 1) Essential layer is required a set of a local material resource (LMR), local labor resource (LLR) and local skills & capabilities (S&C). 2) Structure layer is required a set of Community based model (CM), Endogenous structure (ES), and Strong community (SC). 3) Maintenance layer is require a set of Awareness of OVOP (AO), Initiative and Practical Innovation (I&PI), and Trustworthy and Value added (T&V). The nine jigsaws of OVOP component below are related and supported to each other, as well as classified the three layers component. (see figure 6)
Figure 6 . The Nine Components of OVOP framework within three layers
From figure 6 (see above), after combining the nine jigsaws and became OVOP framework, those classifications of three layers are organized the nine components in order to facilitate the systems. See also figure 7; an alternative choice or a replacement plan help fixing and solving any challenges. Here are some descriptions of the relationships among the nine components; LMR required LLR to operate and manage with quality of S&C for better offers; CM motivates and organizes ES to be better structure with the supports of SC; AO helps and reminds about OVOP’s purposes, operates by I&PI and becomes T&V; S&C makes better & built SC represent through T&V; LLR needs more I&PI to facilitate by ES; LMR is a resources for needed CM and AO to understand and maintain OVOP ‘s perception; S&C makes LLR and LMR become more value; SC supports by ES to be better in quality and easier with CM; T&V will be better with I&PI for understanding all problems under AO (OVOP’s motto); AO will support and control CM to manage how to use LMR; I&PI motivates ES with efficiency of LLR; T&V will fascinate new comer and delights the present members make SC stronger with S&C and more funds for improving S&C too. According to the conceptual framework, the relationship among the dependent variable (Business Performance) and the independent variables (Essential Layer, Structure Layer, and Maintenance Layer) can be explained as follow: Business performance (OVOP project) is influenced by essential layer, structure layer, and maintenance layer. 1. Essential layer is influenced by Local material resources (LMR), Local labor resources (LLR), and Local skills and capabilities (S&C). 2. Structure layer is influenced by Community based model (CM), Endogenous structure (ES), Strong community (SC). 3. Maintenance layer is influenced by Awareness of OVOP (AO), Initiative and practical innovation (I&PI), Trustworthy and value added (T&V). According to the details on the above will be able to influenced by demonstrate a shortlist of the Resources that indicates ‘Where do they come from’, the Usefulness indicates ‘What are their benefits’ and the Importance indicates ‘Why they are needed’ (in the table 1).
‘Table 1. A description of the nine OVOP components’ Layer Component Resource Local material Rural areas (all or part of it), Work resources in process or Goods in process from other resources. Essential Layer Maintenance Layer Structure Layer
Usefulness Importance Supporting local Marketingeconomies opportunity, Reducing cost structure Local labor Local residents / Villagers More job Revitalization, resource opportunities Less moving out Local skills & Traditions, Cultures, Life style Valuable and Product quality, capability (sociology), Knowledge, Practices impressive Singularity, products Employability Community Community development plans Understanding Stabilization, Easy based model (www.ovop.jp/en/index.html), the real and well Community’s problems problems realization Endogenous OVOP’s infrastructure, Local Ability to plan & Flexibility and structure government (Self-governing towns) control Agility Strong Their cooperative, Local Independence & Manageability, community governments, Mayors and Councils more flexibility Dominance Awareness of Maintenance status, Motto and Sustainable Internal controls, OVOP Business plan by JICA business, Controllable Limitation business Initiative & Economic revitalization, Local Motivation and New creativities, Practical government and Community, Economic Innovative ideas, innovation Social life incentives Singularity Trustworthy & Proudness, Meticulous procedures , Royalties and Longevities and Value added Honesty, Motivation, Business Valuable Sustainability systems, Customer services products
The table 1 above indicates the sources of nine components, the essential and benefits of the nine components. These results will be useful information and beneficial processes to perform any similar OVOP projects at a later time. 3. The Nine Components of OVOP and OTOP Basic Conceptual Models The purpose of creating a model is help to understand, describe and forecast by exploring a simplified representation of a particular entity. Business model is representing how a company earns money from buying and selling goods and services (Osterwalder, 2004)/1. According to figure 7 and 8 (see below), after combining the figure 4 with figure 6
(from the above) into an OVOP model (figure 7) and figure 5 with figure 6 into an OTOP model (figure 8). The small ovals indicate OVOP/OTOP components, the three spur gears indicate original OVOP conceptual principles, the black-arrow indicates a starting gear/concept, the big oval indicates OVOP/OTOP structures, and the curved arrows indicate the rolling direction of the OVOP’s conceptual principles under the spur gears concept. Figure 7 below shows the development process of OVOP business model. Starting from the nine ‘OVOP’s components’ into ‘OVOP structure’ by transferring all component into OVOP structure. It is operated by three gears ‘OVOP conceptual model’. The structure begins to perform with a self-reliance and creativity concept. It helps motivating a human resource development concept to operate a local to global concept. The concept of local to global is originated from traditional knowledge and local skills to meet with the global standard concept.
ES CM SC
Selfreliance & creativity
Human Resource Develop
Local to Global
Figure 7. The Components of OVOP Basic Conceptual Model (based on MetaphysicsOntology) Figure 7 illustrates after defining what an OVOP business model is, what the business directions are, where they are coming from, how importance they are and the values of model. Below are the listed of OVOP model’s benefits; The process performs faster, easier and more efficiency; Cost and time saving as not necessarily to reprocess of each steps; Ability to manage all components and prioritize all of the works; Saving costs of operations in each steps as they are related to each other; Being able to use other strategies to modify with OVOP’s business like Porter five force analysis, Seven wastes (Muda), CRM, KM and more;
Being able to control and forecast as well as having more an opportunities in the market; Being able to identify each problems and easy to fix it; Helping sustain the business because of the flexibility in any business environment.
ES CM SC
Human Resource Develop ment
Local to global
Figure 8 . The Components of OTOP Basic Conceptual Model (based on MetaphysicsOntology) The above figure 8 is an OTOP basic conceptual model process, its similar with OVOP, begins with the nine ‘OTOP’s components’ go into ‘OTOP structure’ by transferring all components into OTOP structure. It is operated by three gears ‘basic OVOP conceptual model’. The model has first performing based on a tiny self-reliance & creativity concept to run a human resource development concept, then human resource development concept operated the model by turning a local to global concept, the concept mostly supports by local and central governments including a few traditional skills, knowledge and global standards. Lastly, the main differences between the two business models are: ‘OVOP’ is good because the outcome grow up very fast, able to catch up market’s needs in due time with the high quality products, but OVOP model is not very good yet because it really cannot process the big orders or transactions. The reason is the whole processes needed a specific time frame for the meticulous products. But this case may have already been fixed by using a franchise strategy. ‘OTOP’ is good because its goal local to global, expected lot of orders, running the small gear of ‘self-reliance and creativity’ would probably affect the quality of product. The
government tries more support in generating and supporting. So, the community is not being able to improve their products. 4. Basic Components of Business Model Framework The conceptualization and formalization of business model is based on offering, target needs, material productions, marketing, logistics, relationships, socialization, and other essential subjects. Table 2 below contains the business model nine building blocks (elements) based on the business model canvas, structured into three levels of disintegrations: 1) Type: Demand-side Issue (Offers, Customer interface, and Financial-revenues, Supply-side Issue (Infrastructure and Financial-costs) (see figure 10 and 11 for the depiction of components.) 2) Pillar: Four pillars are Offers (the products and services), Customer interfaces (the relationship with customers), Infrastructure management (necessary infrastructure in order to provide better offers to customers), and the Financial aspects; the stream of revenue and all production costs of the whole processes. (Osterwalder, 2004)/2 3) Element: The Nine Building Blocks (Elements) (see figure 9) are value proposition, customer segments, customer relationship, customer’s channels, key partners, key activities, key capabilities, revenue streams, cost structure.
Figure 9. A set of Nine Building Blocks
‘Table 2. The nine business model building blocks and their descriptions’ Type The 4 Pillars The 9 Building Block Description Offers 1.Value Proposition Gives an overall view of the valuable products and services a business offers. Customer 2.Customer Segments The Target Customer is a segment of customers a Interface company wants to offer value to. 3.Customer Relationship Explains the kind of links a company establishes between itself and its different customer segments. 4.Channel of Distribution Describes the various means of the company to get in touch with its customers. Financial 5.Revenue Stream Describes the way a company makes money. Aspect- Rev. Aspect-Cost 6.Cost Structure Sums up the monetary consequences of the funds used in the business model. Infrastructure 7.Key Activities Describes the arrangement of activities and resources. Management 8.Key Capabilities Outlines the competencies necessary to execute the company’s business model. 9.Key Partners Other necessary companies to efficiently offer value. Source: Integration of Osterwalder (2004) and Research’s own
5. OVOP and OTOP Business Model Frameworks Business model framework provides a reader an overview of the business model ontology and the processing of specific elements. The OVOP and OTOP business models are a set of elements. The two frameworks are describing the project’s earning logical, business longevity and revitalization purpose. These are based on the initiative and practical innovation of local residents. In the part of business model elements can be decomposed into a set of defined sub- elements, the differences are depending on the four-pillars, their infrastructure, environment and other more components. The four pillars are value proposition, customer interface, infrastructure management and financial aspects. First, system is starting from infrastructure management segment; key capabilities, key activities, key partners by producing the products. Second, offering the products to customer; value proposition. Third, transferring the products to customer interfaces; customer relationship, customer segments, and distribution channels. Last, handling the financial aspects; cost structure, revenue stream.
The both frameworks combine with nine ovals and indicate a key partners, key activities, key capabilities, value proposition, customer relationship, customer segment, distribution channels, cost structure, and revenue streams. For example; the more of key capabilities the less you required the key partner. Thus, the outcome is the value proposition with the trustworthy brand of their products. As illustrated in the framework descriptions and defined in the elements are related to each other through the ‘curved arrow’. For example; ‘key partners’ support ‘key capabilities’, it help building up a strong community. The more of key capabilities will increase more of self-reliance and innovation as same as adding more valuables to the products. In additional, ‘Customer relationship’ is passing the word of mouth through ‘customer segments’ and will encourage more customer needs and loyalty in return. The illustration will work the same as OTOP framework in figure 10. The description of figure 10 and 11 below are as follows;
‘Up-pentagons’ indicate the supply-side characteristics, ‘Down-pentagons’ indicate the demand-side characteristics, ‘Small ovals’ indicate the model elements (nine building blocks), ‘Trapezoid’ indicates the main offering, ‘Can shape’ indicates the OVOP/OTOP project, ‘Rectangle’ indicates the financial result, ‘Curved arrow’ indicate the relationship between the elements.
=Supply-side Issue =Demand-side Issue =Model Element =Offer
Figure 10. OVOP business model framework (based on Business model ontology) Source: Integration of Business Model Canvas and Research’s own
=Supply-side Issue =Demand-side Issue =Model Element =Offer
Figure 11. OTOP business model framework (based on Business model ontology) Source: Integration of Business Model Canvas and Research’s own
6. Comparison OVOP and OTOP Framework by Main Characteristics In this category is comparing of two business frameworks based on theirs characteristics and functions, to have more understanding in factors and problems, the analysis and improvement of both business models. The study is aims to identifying the similarities and differences of both frameworks in order to find out about their transformations throughout the process. However, it is necessary to have a true understanding of both frameworks for knowing their differences and overlaps in their organizations (see table 3).
‘Table3. The Comparison nine building blocks of OVOP and OTOP frameworks by theirs Characteristics and Benefits.’ Pillars Shared Main Benefits of Characteristics OVOP model Value Differentiation, Popular-trendy Traditional Knowing what to Proposition Proudness, Meticulous products/services , knowledge, Local offer to customer. products, Innovative Too many brands in skills& capabilities, offers ,Trustworthy same category, Product quality brand name Competitive pricing control Key Partners Strong community, Central government Local government Knowing how to Villagers, Local banks agencies, Outsider agency, SMEs manage the and cooperatives, supports, Nation Bank systems. Regional training Schools Key Activities The initiative and A self-help Local government Knowing what practical innovation, A development supports, should replace or community based program, Exogenous Residential adjust the system model, Endogenous structure, Central participants, for more flexibility. structure, Cooperative, government control, Logistics Strong community SMEs, Supporters, organizing, Own R&D, R&D by supporters Word of mouth Key Awareness of OVOP, A Customer(market) ’s Local material and Knowing what Resources community needs/interested, labor resources, business should revitalization purpose, Government &Others Local wisdom, look for or have it Self-reliance and directed supports, Skills & knowledge, with, and why. creativity, Trustworthy New entrepreneurs& Culture, & Value added customers Distributions ways Customer Website& own surveys, Government & Website, Events, Knowing what/how Relationships Business advisors, Supporter’s Surveys (feed back) to do with your Training Program & researches and customer Dispatch lecturers, surveys, Websites relationship Word of mouth management (CRM) OVOP OTOP
Customer Local customer, Regular Middlemen Segments customer, Exports, (Wholesalers, Franchise customer. Retailers agents), Channels of Antenna shops, Local Distribution festivals (matsuri), Micho no eki, Franchises Cost Research Structure &Development cost Revenue Stream OTOP shops, Direct selling, Middleman (reseller) Middleman costs,
Regular customers, Visitors, traders, Royalty customers, Middlemen Franchises Source: Partially based on Kimoto Shoji (2008), JICA Research Institute and Research’s Own.
Tourists, Exports, Knowing who SMEs, Online should business customers have relationship with Trade fairs, Knowing how to get Exhibitions, Micho in touch w/ no eki (roadside customer, reduce stations) logistics costs Local material & Knowing more ways labor costs, logistic to save costs costs Affairs, Online, Knowing more Traders, SMEs business channel
The above table 3 is to compare between OVOP and OTOP characteristics framework and the main benefits of OVOP model that had been missing during the process of transferring to become OTOP. Both models based on Metaphysics-Ontology which are related to environments, society, traditions, cultures and much more. Then the design of their models rely on their information some are same some not, it depends on their business purposes. In spite of, they have the same conceptual principles; the outcome will be difference. The most important structure of frameworks is the differentiation between two frameworks. The differences are; orderly, methodology and the purpose of creating a framework. On the other hand, the challenges of OTOP need to resolve in a right place and way. Otherwise, it will be wasted more time and cost. The research of this paper is provided OVOP & OTOP’s information as well as the classification between the two. It will also be useful and very beneficial of this project in the near future.
Expected outcome of the study This study focused on business model and cloud system model that, as a topic, has received intensive attention over the last several years. The tools have been used for stopping a longstanding default in OTOP business development research: the comparison and discussion of eventual integration of different business model concepts. To achieve this objective by selected three business model approaches, the OVOP, OTOP and Cloud which will illustrate through applying these ontology to the same ideology scenario (value added). Then I will propose a framework to compare the different conceptual approaches of business model. Finally, I proposed this case study should be study further more for truly understanding the model structure. It should be possible to consider the actual integration of the three business models. Further research would include the way to adjust and integrate the difference among those three business model concepts. The purposes of future research are as the follows; enabling the flexibility of business model and adjusting the configurations to develop more models. ; Unveiling the full capabilities and the relationships between business model and ontology theory and finally improving the way we do business. A better OTOP project will: 1) no longer having to worry about steady government organizations, community will be able to concentrate on innovations and operations. 2) be able to separate the business process from the infrastructure needed in order to effectively run the project. 3) have more flexibility to choose multiple vendors and that provide reliable and scalable business services, development environments, and infrastructure that can be leveraged out of the box and billed on a metered basis with no long term contracts like a franchise. 4) have more an elastic infrastructure to rapidly allocate and de-allocate massively scalable resources to business services on a demand basis. 5) reduce the actual costs due to the operational efficiencies, and more rapid deployment of OTOP business services and products.
Timeline Description Compilation of Information Data Collection Draft Preparation Draft Presentation Data Analysis & Integration Submission of proposal Defense Proposal Formulation of strategies Writing up of thesis Revision and editing Submission of thesis Thesis defense Nov Dec Jan Feb Mar Apr May Jun July
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