Achieving better strategic fit and higher surplus for Australian beef value chains by recognising and countering chain failure
Stuart Mounter A , Garry Griffith A B C D and Euan Fleming AA UNE Business School, University of New England, Armidale, NSW 2351, Australia.
B Agriculture and Food Systems, University of Melbourne, Parkville, Vic. 3052, Australia.
C Global Food Studies Program, University of Adelaide, Adelaide, SA 5005, Australia.
D Corresponding author. Email: ggriffit@une.edu.au
Animal Production Science 57(8) 1767-1774 https://doi.org/10.1071/AN15460
Submitted: 18 August 2015 Accepted: 16 April 2016 Published: 22 August 2016
Abstract
Strategic fit is the nature of the link between the customer priorities that a value chain hopes to satisfy, and the capabilities that are available in the value chain to implement that objective. Usually, there is a trade-off between value chains that focus on being responsive to customer needs and those that focus on supplying at the lowest possible cost. If demand uncertainty is low, a low-cost value chain is the best strategic fit; conversely if demand uncertainty is high, a responsive value chain is the best fit. A poor fit means lower chain surplus to be shared among the chain participants. We provide an outline of an analytical framework for determining the optimal level of responsiveness for a food value chain. We then present and discuss two case studies. Both feature initiatives aimed at internalising positive chain externalities and capturing chain goods within the Australian beef value chain. We use our framework to show how these initiatives are predicted to promote responsiveness and thus achieve a better strategic fit and higher surplus for the whole chain. Verifying that such a move would indeed contribute to higher chain surplus would require some new measurements of whole-of-chain outcomes so that the economic relationships making up the framework could be estimated and analysed.
Additional keywords: agribusiness, chain externalities, chain goods, economics.
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