Linkages
“Companies are just beginning to learn what nations have always known: in a complex, uncertain world filled with dangerous opponents, it is best not to go it alone”(Omae, 1989).
The century has seen increase strategic linkages that have taken the form of mergers, acquisitions, equity partnerships, consortia, joint ventures, technology licensing and development agreements, supply agreements, manufacturing collaborations and marketing agreements. The above have been apparent in the following sectors: aviation, automobiles, biotechnology, pharmaceuticals, and telecommunications, among others.
ACL wishes to bridge the gap by being the linkages master. The following constraints attend to the SMEs and hence underscore the need for strategic linkages:
- Excessive government involvement in the economy which prevented indigenous entrepreneurs from gaining managerial experience in dynamic medium and large-scale enterprises.
- Monopolies and subsidies given to public enterprises, and rules and regulations which stifled entrepreneurship.
- SMEs have been starved of capital and other inputs with credit directed to larger enterprises, even when practical experience has shown that it is possible to lend profitably and effectively to MEs. ˆ
- SMEs have scant access to foreign funds and foreign direct investment, reducing their ability to upgrade their technology and managerial know-how
The whole spectrum of linkages has been studied and contextualized by ACL and the wealth of knowledge gathered is applied for the benefit of the SMEs. SMEs play a key role in transition and developing countries. These firms typically account for more than 90% of all firms outside the agricultural sector, constitute a major source of employment and generate significant domestic and export earnings. As such, SME development emerges as a key instrument in poverty reduction efforts.
Government-SME linkages as spearheaded by ACL include the following elements:
- Improving the flow of information about potential local suppliers to potential purchasers (local and global), and about supply opportunities to potential suppliers through the development of a national Website and/or business directories, supplemented by ‘meet-the-buyer’ events.
- Targeting suppliers on the basis of proven abilities and commitment to future improvements,
- Working closely with Multinational Corporations (MNCs) by inviting them to help potential suppliers to:
- Understand their supply requirements
- Identify areas in which they have good opportunities to supply and
- Draw attention to weaknesses they must overcome in order to succeed
Such an intermediary role helps to build mutual understanding and trust between MNC and potential supplier.
- Helping SMEs/suppliers identify needs and then to access the public and private support services they need.
- Developing capacity building programmes that include supply chain and cluster initiatives, which recognize the potential for developing tiers of suppliers to maximize trickle down effects, including to micro enterprises as lower tier suppliers