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Module: Entrepreneurship and Innovation

Anglia Ruskin MBA North Campus

Date Submitted: 04/01/11

Submitted by: 0660665/2

Word Count: 2500

Module Leader: Patrick Samuel


INTRODUCTION

According to Ernst and Young Caribbean (2010) concerns of a ‘double dip’ recession have been
surfacing worldwide. Moreover, Trinidad and Tobago has for a third consecutive year, projected
a larger budget deficit for its 2010 – 2011 Budget. Ernst and Young Caribbean (2010) on
evaluation of the country’s economic position and the 2010 – 2011 Budget strongly suggest that
the country take immediate steps to stimulate the level of economic activity.

With the harsh reality, identified by Ernst and Young Caribbean (2010) that the driving force in
the economy – the energy sector, is not producing and not expected to produce anything close to
the record revenues produced of approximately TT$23billion in 2008. There have been current
attempts by the Government of Trinidad and Tobago to make fundamental changes to the
developmental path of the country.

1.2 Diversification

According to the UNDP and UNCTAD (2008 cited Persad 2010) there was a strong case for the
development of creative industries particularly in developing countries. Persad (2010) also notes
that the most advanced countries are using the creative industries as a strategic choice for
reinvigorating economic growth, employment and social cohesion. As shown by table 1.1 the so-
called creative cities are thriving in Europe and North America. Conversely, UNDP and
UNCTAD (2008 cited Persad 2010) iterate that the large majority of developing countries
including countries in the Caribbean region are not yet able to harness their creative capacities
for development gains as illustrated in table 1.2.
While it is evident that the development of creative and innovative industries will be an asset to
Trinidad and Tobago the right policies and infrastructure must be comprehensively put in place
with clear cut targets and measurable timeframes. The Global Competitiveness Report (2010)
ranks Trinidad and Tobago 84th out of 139 nations.

However, figure 1.2 shows that Trinidad and Tobago is currently ranked 138th in Innovation and
is transitioning from an Efficiency Driven Economy to a more Innovative Economy. One
solution offered by Persad (2010) to increase the country’s tendencies toward innovative
thinking and thus its Global Competitiveness is that of incorporation of stakeholders within the
education system.

One creative industry that can help increase both the innovative standing and creative standing of
the Trinidad and Tobago economy is the fashion industry.

1.3 The Fashion Industry

According to Reis (2007) the fashion industry represents an avenue for phenomenal economic
growth and an alternative form of industrial development, job creation and can generate income
for entrepreneurs as well. One such example is the United States whereby according to The
University of Delaware (2010) 250 Billion US dollars is spent on fashion in the United States
alone with over 20 Billion US dollars generated in revenue annually. The industry also employs
4 million people.
Figure 1.2 Trinidad and Tobago Stage of Development

Source: World Economic Forum (2010)


According to Francis (2010), the Permanent Secretary in the Trade and Industry of Trinidad and
Tobago, the Trinidad and Tobago fashion industry has earned TTD26M in gross revenue from
2005-2008; a mere USD4.2M in a USD100B industry. Francis (2010) the current Minister of
Trade and Industry for Trinidad and Tobago has recognised that the small and developing
countries such as Trinidad and Tobago may be able to yield opportunities in the fashion industry.

Already, the industry employs about 3,700 people who include apparel designers (the main focus
of this paper) factory workers, sales and administrative staff. The current government in its
attempts to diversify the revenue of the country has identified the Fashion Industry as a main
sector with the potential of earning greater revenue.

1.3.1 The Way Forward

With recent ventures such as the establishment of Fashion Week Trinidad and Tobago (FWTT)
the country is beginning its drive towards transitioning from the more Efficiency Driven
Economy to a more Innovation Driven Economy as evident by figure 1.2.

Notwithstanding, the Minister has affirmed that although the country is making attempts to
become the leader in the regional garment industry, the way forward is not only about
showcasing clothing designs but by recognising that this venture is more like a business
opportunity and ‘in reality a manufacturing and service business’.

“Practitioners who wish to succeed must follow sound


business and corporate practices, and the industry itself
must be competitive and relevant in a demanding global
environment.”

Francis (2010)

The above quotation by Francis (2010) echoes the sentiments of Porter ( 1990 ) in his Diamond
theory figure 1.3, whereby he argued that a nation can create new advanced factor endowments
to seek to have a more comparative advantage.
2.0 THEORETICAL FRAMEWORK – PORTER’S DIAMOND

Figure 1.3 Porter’s Diamond of National Advantage

Source: http://www.rotman.utoronto.ca/research/competitive_table2.gif

While Porter (1990) identified four ingredients that lead to a national comparative advantage as
shown in figure 1.3 which are:

1. Firm Strategy, Structure, and Rivalry

2. Factor Conditions

3. Demand Conditions and

4. Related and Supporting Industries


This paper will focus more on the related and supporting industries (support, training and
assistance) which will enable Trinidad and Tobago to use the fashion industry to become more
competitive.

Porter (1990) used the diamond to graphically depict the national and regional environment for
competition (figure 1.1). This section of the diamond addresses the information, incentives,
pressures and access to supporting firms, institutions and infrastructure. According to Porter
(1990) merely using the resources available or assembling more resources is not enough for
prosperity. It is with this in mind the Government of Trinidad and Tobago is seeking to improve
other industries so as to diversify the economy.

Porter (1990 cited O’Connel and O’Donnell 1997) believed that to understand competitive
advantage the basic unit of analysis should be particular industries within the nation or clusters
which affect competition in three (3) broad ways. These are:

1. Increasing productivity

2. Driving the direction and pace of innovation

3. Stimulating the formulation of new businesses

Stemming from this he also argued that countries that have a competitive advantage in one
industry segment will have a competititive advantage in a set of related industries.

Porter (1990 cited O’Donnell and O’Connell 1997) suggest that there are two (2) residual
influences related to the diamond, these are:

1. Government – reinforces or works against the four determinants.

2. Chance events – events that can also affect teh four determinants.

According to (O’Donnell and O’Connell 1997) teh geographic proximity of international


competitive supplier industries facilitates the process of innovation and upgrading in downstream
industries in several ways:
∗ Efficient, early and rapid access to the most cost effective inputs.

∗ Facilitation of on-going co-ordination of firms and their suppliers

∗ Access to valuable sources of information and insights.

Stemming from this last pointer the competitive advantage in related industries that is those that
can share technology or skills or which involve products that are complementary, providing
opportunity for information flow and technological interchange often leads to new competitive
industries like for example the fashion industry.

DIAMOND ATTRIBUTE DESCRIPTION


The nation’s position in factors of production such
FACTOR CONDITIONS as skilled labour, infrastructure, physical resources
and technologies, necessary to successfully
compete in a given industry
The nation’s position in factors of production such
FIRM STRATEGY, STRUCTURE AND as skilled labour, infrastructure, physical resources
RIVALRY and technologies, necessary to successfully
compete in a given industry
The presence or absence in the nation of supplier
RELATED AND SUPPORTING INDUSTRIES industries and related industries and institutions
(research, education) that are internationally
competitive.
DEMAND CONDITIONS The nature (from qualitative and/or quantitative
point of view) of home demand for the industry’s
products or services.
Table 1.1 Attributes that create or impede the creation of Competitive Advantage

Source: Adapted from Porter (1990 cited Gugler and Brunner 2007)
ANALYSIS

As shown in table 1.1 above Porter (1990 cited Gugler and Brunner 2007) defined related
industries as:

“The presence or absence in the nation of supplier industries


and related industries and institutions (research, education etc.)
that are internationally competitive.”

From the above definition this paper will seek to understand the support, training and assistance
institutions involved in making the nation of Trinidad and Tobago internationally competitive.
The author will seek to classify each section and give a detailed analysis on their effect on the
entrepreneurship, innovative and competitive capabilities.

3.1 Support

It is the collection of all institutions and mechanisms (public and private) that interact to
stimulate and support innovations. According to King (2010) the Cabinet of Trinidad and
Tobago has approved what is to be called a National Innovation System to be guided by a
council of Ministers. It is to consist of an Economic Development Board and Competition and
Innovation Council.

The main purpose of this system is to make the country more competitive and innovative. The
Government acts as facilitators of this process it is the collection of all institutions and
mechanisms (public and private) that interact to stimulate and support innovation.
Figure 3.1 National Innovation System

Source:

3.1.1 Trinidad and Tobago Coalition of Services Industries (TTCSI)

TTCSI is a national umbrella body that brings together all services sector organizations and
associations.

Basically it is an alliance of professional services associations and organizations.

Its goals are:

To provide national service providers with knowledge of export opportunities;

To identify and exploit market opportunities;

To encourage national service providers to engage in developing export programmes and


promotional activities through collaboration locally, regionally and internationally;

To promote the further development and competitiveness of the national services sector;

To support and facilitate the development of industry standards;


To educate the national service providers on relevant aspects of trade agreements that affect trade
in services;

To represent the interests of the national services sector, including lobbying Government and
promoting fair multilateral rules for trade in services.

3.1.2 Fashion Association of Trinidad and Tobago

Accepted and Registered with the TTCSI as the umbrella body with the interests and
development goals of the Trinidad and Tobago Fashion Industry. In addition to the FATT there
are a host of other support institutions available to SMEs these include:

 Trinidad Chamber of Industry and Commerce

 American Chamber of Commerce

 Energy and South Chamber of Commerce

 Trinidad and Tobago Manufacturers Association

 Ministry of Trade and Industry

 Designovators Ltd.

3.2 Training

Governments both past and present of Trinidad and Tobago have implemented many training
and assistance programs to assist in the development and competitiveness of the country.
According to Hegarty (2006) all modern economies entrepreneurial activity is a policy priority
because new businesses are a source of innovation and new ideas and thus create wealth,
increase competition and allow people of varying social and educational backgrounds to realise
their potential.
The current government of the day intends to build centres of excellence within the universities
or even tagged to our universities with the aim according to King (2010) to develop innovators
and entrepreneurs among those who have done their Masters and doctorates. The country has a
myriad of educational institutions as seen in figure 3.2 which not only develop entrepreneurial
skills but other skills as well.

Figure 3.2 Education and Training Institutions Trinidad and Tobago

3.2.1 University of Trinidad and Tobago (UTT)

Currently operating an Industrial Innovation Entrepreneurship and Management course it is well


on its way to fulfilling its mandate to discover and develop entrepreneurship. With its mission to
aspire to be an entrepreneurial university designed to discover and develop entrepreneurs,
research and development, spawn competition, wealth and job creation.

This is achieved through the University’s Ideas Competition which looks at business ideas that
have commercial possibilities. The winners of this competition have beaten out submissions
from Harvard University, Georgia Tech, and other Global Universities in a global competition.
Thompson (2009 cited Contact 2009) has lamented that despite the success of their students in
this global Competition none of their students make the bold move to convert their plans into
action.

Of the 19 students who graduated eight have started their own businesses which were not related
to their entrepreneurship proposal which they submitted for the Ideas Competition. Thompson
warrants this to the lack of transitioning from the reality of academic to the reality

3.3 Assistance

There have been a number of agencies that assist in achieving the Government’s vision of

• Contributing significantly to the national economy and national development

• Serve as the main catalyst in the reduction of unemployment and poverty and the
production of sustainable employment and wealth

• Underpin and enhance national competition.

The Government has offered a series of loan Guarantees and Tax relief for a period of 5 years
under the Corporation Tax Act (1988) and has implemented a credit support system for start ups.

3.3.1 Business Development Company Ltd. (BDC)

Established in 2002 the BDC is the implementing agency for the Government of Trinidad and
Tobago’s policy for enterprise development. The BDC provides SMEs assistance to be better
equipped to compete locally as well as internationally and offers a wide range of business
solutions which include:

• Trade Assistance

• Trade Certification
• Trade Services

• The BDC Trade Portal

The BDC Trade portal is an online business platform launched in 2006 containing more than 900
registered companies across the globe. It is a premier online market space that allows SMEs to
access the online e-business guide, e-commerce and e-learning

3.1.2 NEDCO the National Entrepreneurship Development Company Ltd.

NEDCO has been established with the prime responsibilities of developing a competitive and
robust SME sector that clearly contributes to socio-economic national development whilst
simultaneously boosting and harnessing the latent entrepreneurial capacity of the people of
Trinidad and Tobago.

This has been done through a series of tailored training programs their business advisory Support
whereby the company has Business Development Officers at all its 14 locations to offer real time
relevant information to critical issues and through ETIIC

ETIIC Entrepreneurial Training and Incubation Centres have been designed by NEDCO to
provide specialised knowledge/advisory services in all areas of entrepreneurship and SME
development. Some of these services include:
3.1.3 Mentoring and Business Advisory Services

NEDCO also offers promotional Assistance whereby access to marketing and promotional
channels which provide real opportunity to SMEs to foster growth and innovation are accessed.
They facilitate for their customers participation in marketing and distribution based initiatives
such as its Annual Trade shows and Trade and Investment Convention (TIC).

The government has also implemented a number of laws and initiatives to further assist SMEs

These include:

• Fair Trade Legislation – To protect local firms from unfair competition and easier market
access.

• Increased Bilateral Agreements – With nations such as Cuba, Costa Rica, Colombia,
Dominican Republic and Venezuela, making these markets an excellent platform to build
upon for the launch into the global marketplace.

• The Customs Act – Import duty Concessions whereby manufacturing enterprises are
allowed duty free treatment on their raw materials, machinery and equipment and in some
cases packaging material.

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