Giving life to CSME, Matalon says businesses should lead
Published:Sunday | October 3, 2010 | 12:00 AM
Joseph Matalon, president of the Private Sector Organisation of Jamaica (PSOJ), is urging Jamaican businesses to help give life to the CARICOM Single Market and Economy (CSME) by getting more aggressive about expanding their business dealings.
Matalon made the appeal while addressing the official launch of Facey Commodity Company Limited's new technology division, Productive Business Solutions (PBS).
"For there can be no single market and economy if there are no firms willing to spread their wings and create truly regional businesses," said Matalon.
"And it is only once we have created many such firms operating across the region that we will truly realise the ideal of a single market and economy."
The PSOJ head argued that only when the number and size of such firms have reached a threshold critical mass would the impetus be created for truly integrated economic development across the region.
Matalon said many well-managed businesses in Jamaica that have achieved significant market share quickly come to the realisation that further growth prospects are limited given the size of the local economy.
"The tendency when this point is reached has been to achieve growth by investing horizontally in related industries, which, though entirely separate, has some perceived synergy value - perhaps in shared group services with the existing business - and provides a level of scale for the group of enterprises," he said.
regional strategy
The PSOJ president also urged the private sector to emulate the example of Facey and the Musson Group in the development and execution of a regional strategy for their businesses.
Facey, which is headquartered in Kingston, has distribution operations in 28 countries. He said that PBS was an example in that it was growing the existing business regionally, and so creating scale within a single business line.
"I would suggest that such an approach has several advantages, not least of which is to allow management to maintain its focus on a single rather than multiple business lines," he said.
Matalon said one of the advantages of expanding regionally is that specialised technology investments may be leveraged across regional business units giving the series of smaller national business units the advantage of state-of-the-art systems and processes that reduce costs and improve competitiveness.
Another advantage he pointed to was that investments in working capital could be rationalised so that a broader range of products could be stocked.
He said additional scale also allowed for greater investments in human capital that might be deployed flexibly as needed across the region, and in response to market needs.
"But perhaps the most significant advantage of this business model in a developing market is the superior-value proposition that it can provide to local customers," he said.