Structural analysis of selected Ghanaian micro-enterprises

In an attempt to adapt Porter"s (1990) "industry and competitive analysis methodology", the study identified five competitive or structural forces for the Ghanaian wood products industry: threat of entry into the industry; intensity of rivalry among current competitors; pressure from substitute products; bargaining power of buyers; and bargaining power of suppliers. Based on this typology, more than 1,000 questionnaires were administered in 8 of Ghana"s 10 administrative regions in summer 1994; 502 usable responses were obtained. Results show that Ghana"s small-scale wood products firms are male-dominated and, especially in rural areas, the source of training for a significant number of young males is through apprentice relationships. Most small-scale furniture manufacturers operate with small, locally produced, technologically inefficient hand tools. The higher standards required by initiatives such as ISO 9000 will dictate significant technology upgrades. With rare exceptions, microentrepreneurs in the industry have no access to formal business financing. Most small-scale furniture manufacturers do not export any of their products, although there is widespread interest in doing so. The common practice whereby customers prefinance orders and raw materials places small manufacturers in an unusually weak bargaining position, which is compounded by a general lack of access to better grades of lumber and other raw materials. In sum, the key competitive forces in the Ghanaian wood products industry are the bargaining powers of suppliers and buyers. The authors conclude that the acute fragmentation of the industry indicates the need for a pilot program in "production disintegration", whereby certain firms become dedicated producers of standardized furniture, most likely in affiliation with foreign manufacturers.