SWOT ANALYSIS

· STRENGTH

a)Large deposits of superior quality Marble in the country.

b)Large variety of types and colors.

c)Accessibility to major Marble deposits.

d)Significant number of mines.

e)Availability of hard working & low-cost granite processing labor.

g)Good entrepreneurial and mechanical skills available within the country

h)Availability of required infrastructure facilities

· WEAKNESSES

a)Untimely and inappropriate arrangement of finance.

b)Constraint of research and development and production capabilities due to absence of economies of large scale and research and development.

c)Use of Primitive method of quarrying

d)Lack of quality production

e)Incapability of meeting consistent supply

f)Low production because of non -scientific quarrying

g)Incapability of product grading

h)Poor infrastructure due to which trucks may not carry heavy loads in the hilly areas

I)unavailability of improved technology.

· OPPORTUNITIES

a)Rehabilitation in Afghanistan and need of the regional markets .

c)Large and established world markets.

d)Wide opportunity for exports.

e)Growing size of middle income

f)Export potential for Central Asian Republics and Middle East

g)high opportunity of investment in marbles industry in Afghanistan by foringe investor

· THREATS

a) Lack of high -skilled work force like Master Quarry.

b) Huge cost sophisticated equipment

c) Smuggling and dumping from Iran, India and China and Pakistan

The national diamond:

Afghanistan’s civil war had devastated the country’s economy.

It just started to recover in 2001 after the fall of Taliban regime. The four attributes that constitute the diamond of national advantage were similarly affected. Factor Conditions: Security is widely considered as the number one short-run issue for

Afghanistan’s reconstruction. There have been undoubted improvements, including

formation of the Afghan National Army, disarmament and demobilization of armed

militias. However, different types of insecurity remain endemic in many parts of the

country, ranging in severity up to outright conflict in some areas (World Bank, 2005) while certain other regions are wholly permissive such as north and west.

In terms of Infrastructure, road investments – both rehabilitation of Afghanistan’s main highways and building smaller and rural roads – have moved ahead, although

implementation has been in some cases slower than desired for various reasons including security and cost of highway rehabilitation. Progress has been much slower in other sectors such as power and irrigation. Financing of infrastructure is not on a sustainable basis (World Bank, 2005). However, the development in terms of both physical and technological infrastructures are promising and taking place by time. For example, the telecommunication sector has made extensive progress from scratch during the past six years, which is very considerable and important for the overall business environment. In terms of human resources, the country is making good progress. Based on the “Afghanistan Human Development Report (AHDR),” the country has great strides in raising its level of economic prosperity along with access to health and education. However, the needs of many still remain unfulfilled (CPHD, 2007). A fundamental change in the overall behavior and attitudes of Afghans towards education can be easily observed in different layers of communities in urban and rural areas. A number of private primary and higher institutes have been established that produce educated and professional graduates. This – to a great extent – helps in the scientific infrastructure, which is human capital in the country.

In terms of capital resources, “Afghanistan has been relying entirely on external

assistance to finance its fiscal deficit, including a large operating deficit as well as the entire development budget” (CPHD, 2007). Capital resources for financing businesses and supporting investments are happening in small and medium sizes through donors’ assistance e.g. Afghanistan Rural Investment and Enterprise Strengthening (ARIES) is a $76 million program funded by USAID that provides medium and long term loans to businesses. Banks also provide loans but with high interest rates, which is usually not affordable by businesses. Administrative systems in Afghanistan are being reformed. “Priority Reform and Restructuring (PRR)” is a process that was initiated by the government in 2004 and staff members of different ministries and government entities are being re-recruited through this process. Additionally, the government entities are also being restructured part of the transition from the old command economy to a market economy type of structure. Structures are getting simpler and more accessible now e.g. requirement for registering and setting up a business company is not so complicated. You can go through a simple process at the Afghanistan Investment Support Agency (AISA), which takes half a day by time to get your business registered. One of the important factors for the national diamond is availability of natural resources in Afghanistan. The country “possesses a wealth of mineral resources that remain largely undeveloped, including precious, base and rare metals, precious and semi precious stones, coal, oil, and gas and industrial minerals” (Mitchell, 2008). Marble is one of the natural resources that the country has comparative advantage in it. The country owns large resources of marble and other dimension stone that has the potential to supply Middle Eastern and Asian market with almost unlimited quantities (Mitchell, 2008). The country can become very productive and subsequently very competitive if managed well to utilize its natural resources. Demand Conditions: Overall, the nature of domestic demand of buyers is not so sophisticated in Afghanistan; however, it is different in urban and rural areas. In urban areas, the percentage of literate people is greater than rural areas. Literate people can easily learn to handle sophisticated products while illiterate people cannot do so easily and therefore, the less sophisticated the better for them to handle. People in the rural areas are mostly illiterate, simple and less complicated, maybe because of their low standard of living and/or the simple life style they have. Given all this, it is difficult for them to manage complicated products and/or go through a complicated process while receiving a service. Therefore, they prefer simple systems and simple products. For the businesses in any clusters, it is very essential to consider the desire of the majority of the people (who would be the potential consumers) in the domestic market and address their nature of demand. One way is to create relevant market segments for both, the urban and the rural populations, and this way cover almost all the potential consumers/customers. Related and supporting industries: Afghanistan lacks access to internationally competitive locally based suppliers – especially when it comes to machinery and technology for its industries, which is considered as the main related support industry to the rest of the industries in the country. In terms of technology and machinery, the country is fully dependent on outside suppliers including the neighboring countries as well as other countries. More dependency is to Pakistan, Iran, and China, however, the trend in the past recent years has been more towards China for most of the supplying industries in terms of machinery and technology. Financial institutions remain limited to international donors. Banks provide loans with high interest rates, which constrain development with limited investment and working capital. However, related clusters are available that supports each other e.g. crush gravel industry; mosaic and ceramic industries, machinery repair service industry, etc. are the clusters in relation to the marble industry. Context for firm strategy, structure, and rivalry: The conditions that govern how companies are created, organized and managed is literally addressed by two laws namely the “Partnership Law of Afghanistan” and the “Corporations and Limited Liability Companies Law of Afghanistan.” In practice the process of creation and management of companies is realistic and easy to handle. The constraints start with the relevant governmental entities for particular clusters and industries. The institutional support from the relevant technical ministries is very poor e.g. surveying capacity is lacking, moreover, murky procedures for quarrying rights, land titling issues, etc. are lengthy and corrupted that constraints the development process. Afghanistan has signed several agreements with its Central Asian neighbors. Since the inception of the new regime – after the Taliban – trade and transportation agreements have become more prevalent as Afghanistan seeks to integrate itself in the regional economy and take advantage of its key geographic position in the region (PRAGMA, 2003). Since then, many efforts have been made to that direction. This, in fact, paves the way for domestic and foreign companies to invest in the field of business and trade. Rivalry amongst the domestic business companies are stronger at the top level within several big companies, who are dominant in particular clusters, while it remains moderate at the medium level amongst the small and medium enterprises (SMEs). The market in the big picture seems to be dominated by limited number of players, who are politically connected with the government. This makes the situation a bit difficult for the SMEs to grow.

The diamond works as a system: Literally, “each of the four attributes defines a point on the diamond of national advantage; the effect of one point often depends on the state of others” (Porter, 1998). The Afghan national diamond shows both advantages and disadvantages in each of the above four attributes, that interlinks their impacts on each other. For example security is a cross-cutting factor that contributes to the context of firm strategy, the supporting industries as well as the conditions for demand. Similarly, presence of physical and technological infrastructures – as a positive factor – contributes throughout the diamond. Advantages/disadvantages of the above diamond include the following:

Factor Conditions Advantages:

• Physical and technological infrastructures are improving rapidly.

• Positive attitude towards human development, despite many challenges.

• Several donors e.g. USAID is implementing large loan programs for SMEs.

• Administrative systems are being reformed to become simpler and less complicated.

• Availability of vast and diversified amounts of natural resources.

Factor Conditions Disadvantages:

• Security is good only in certain parts of the country.

• Despite considerable progress throughout the past several years, the scientific

infrastructure still has rooms for a lot of improvement.

Demand Conditions Advantages:

• Less sophisticated nature of domestic demand.

• Domestic population can be targeted in urban areas for sophisticated products and

services, while rural populations can be targeted for less complicated products and

services in terms of use and procedures to go through.

Demand Conditions Disadvantages:

• Lack of sophisticated nature of domestic demand would cause less initiative and

competition.

1.Related and Supporting Industries Advantages:

• Related clusters are available that supports each other.

• International donors provide business loans to SMEs.

2.Related and Supporting Industries Disadvantages:

• Afghanistan lacks access to internationally competitive locally based supplying

industries for machinery and technology.

• Financial Institutions are limited to international donors.

• Banks provide loans with high interest rates.

3.Context for Firm Strategy, Structure and Rivalry Advantages:

• Laws that govern creation, organization, and management of companies exist.

• Easy and simple process for registering companies in the real world.

• Trade agreements are available to facilitate free trade with neighboring countries.

4.Context for Firm Strategy, Structure and Rivalry Disadvantages:

• Technical governmental entities are problematic being bureaucratic and corrupted.

• Rivalry remains in hands of limited players.

Date: 2015-01-29; view: 686