Strategy and National Development

Strategic National Development

While strategies are being given great emphasis and serious focus by
organizations, individuals, and communities, nations are not excluded. A
nation is a community of peoples with similar divergent beliefs, aspirations,
and traditions, living in the same geographic area. The populations of these
nations engage in varied activities like trade, agriculture, mining, research,
and education to sustain the conventional routine of everyday living. lo lend
order and direction to these pursuits, good governance is necessary. The
institution that is tasked and responsible to do this job is the government. As a
fundamental unit with given ascendancy, control, and dominąnce, the
government declares rules, regulations, and policies with an earnest effort to
bring about national development.
National development may mean progress and growth, maturity, or simply
improvement. it s largely dependent on how a country Is propelled and
pushed toward positive nationwide change that leads to competitiveness and
a better life for its people. Thus, the Success of every county is dependent on
a convergence of two important basic components: structure and strategy.
Structure
In governance, structure refers to the operational framework that will serve as
a basis for national growth and development. It sets the context and outlines
the agenda on which a nation can drive itself toward national prosperity and
wealth. Without a structure, plans, and programs will be difficult to actualize.
There will be ambiguity in understanding, direction, and implementation, not to
mention, allocation, and usage of resources. Hence, given the structure,
strategies or action plans can be formulated and designed. These stratagems
are implemented in the light of spearheading a country's Journey toward
economic progress and wealth. Structure in any country is generally of three
kinds: political, economic, and institutional.
1. The political structure refers to the political system existing in the country.
There is democracy when social equality exists, autocracy when dictators rule
a nation, or communism when control is collective or socialist. Some countries
do not strictly espouse any one of the three. Rather, combinations of these
types are deliberately and conveniently adopted as in the case of China.
Although China has claimed to have a communist/socialist political structure,
it is not so as shown by the increase in its capitalist activities.
2. The economic structure refers to how business is conducted in a nation.
On a macro level, this includes consumption, investment, trade, and
government. In some developed countries like Europe and the United States,
consumption is more than 50 percent of the gross domestic product while
Japan's trade in terms of exports and imports is more than 100 percent of
GDP.
3. Lastly, the institutional structure is reflected in a country's banking
system, its justice system, military powers, and the rule of law. For example,
financial systems need to be sound, the justice system should be fair and just,
police powers should not be abused, bureaucracies should be efficient and
free from corruption, labor unions should be reasonable, and management of
resources should be monitored and controlled.
 
Strategy
Nations need strategies to achieve national advancement. Nevertheless, to
successfully achieve this, it needs a national structure. Both structure and
strategy should be aptly intercorrelated to create a good fit. In other words,
appropriate and correct correspondence plus the right combination can create
the best outcomes that can lead to positive national gains. Referring to this
framework, strategies for development on a national scale include the
country's policies, its resources, and government. All governments set goals.
To achieve these goals, policies have to be formulated and enforced. Policies
are needed to set ground rules for the people to follow. In this way, order and
efficient implementation of policies are ensured. More particularly, policies are
both macro and micro in perspective. Examples of macro policies include
fiscal policies, monetary policies, policy on the exchange rate, and income
policy.
 
Macro Policies
The macro policies of the government include fiscal policy, monetary
policy, policy on the exchange rate, and income policy.
1. The fiscal policy of a government can be any of the following: a balanced
budget. a surplus, or a deficit. A Surplus means excess in the budget while
a Deficit means a shortfall in the budget. Governments achieve Surpluses
and incur deficits depending on their spending policies.
For example, there are governments that mismanage, misallocate or
misspend their funds. Sometimes, they prioritize projects that do not generate
fiscal gains.
To deal with deficits in budgets, governments can reduce spending, increase
taxes, or generate higher incomes through business and investments. For
example, the Philippine government in its efforts to reduce its budget deficit
asked Congress to pass a law that would increase the value-added tax from
10 to 12 percent. This led to an increase of two percent tax on all products
and services and provided added income to the Philippine government,
consequently decreasing the current deficit in the budget. Take note that all
governments want to achieve a surplus in their budgets. In this way,
infrastructure projects, health care systems, education, and other important
government services can be provided to the people.
 
2. The monetary policy is the other important complement of fiscal
policy. Monetary policies are set by the country's central bank to make
possible the growth of the supply of money at a given rate. Governments are
generally engaged in buying and selling treasury bills to the public.  This is one
way of generating enough money to finance the economic growth of a nation.
Concomitantly, the government makes sure that the inflation rate is managed
appropriately and maintained at a single digit. In other words, it makes sure
that people do not merely keep their savings in the banks but instead, engage
in money-generating activities like business and other forms of investments.
In this way, the economy is energized and economic growth is enhanced.
Similarly, adequate foreign exchange reserves have to be maintained for
needed payments of loans and other financial obligations, acquisitions, and
spending on important government projects.

3. The policy on the exchange rate is another macro concern. Some

countries allow their currency to float freely at market rates. However, others
control or fix their currency rates to prevent undue appreciation or
depreciation. For example, the ringgit was, for many years, pegged at 3.99
ringgit to a US dollar. It was not allowed to devalue despite the depreciation of
almost all Asian currencies during the 1997 Asian crisis.
Similarly, the Chinese government has not agreed to the international
community's pressure to appreciate its yuan currency. It has remained
steadfast in keeping its currency at 6 yuan to a US dollar. Each nation has
reasons for adopting either a fixed or market-based exchange rate.
Appreciating the exchange rate may mean making exports less profitable,
commodities more expensive, and higher demands for wages. On the other
hand, depreciating the currency exchange rate may mean purchasing and
buying expensive imported goods and raw materials.
4. A country's income policy directly affects prices and wages. There is a
direct correlation between these two economic variables. When prices
increase, higher wages are demanded. When wages are increased, prices of
goods generally increase, too. This situation is a chicken-and-egg cycle where
one cannot pinpoint which one comes first. Is it the chicken or the egg?
Hence, the challenge is for governments to reach a level where both prices
and wages are managed in such a way that no destabilizing impact is created
or minimized. Oftentimes, governments declare price control policies. For
example, despite the continuous increase in the prices of oil or rice, they are
pegged to make them affordable to the people. A kilo of rice is sold at P25
when in fact the current price ranges from P30 to P35. In many cases, the
government subsidizes the price differences.
 
Micro Policies
While macro policies are fundamental to a country, micro policies are equally
as important. These micro policies include trade policy, policy on Foreign
investments, policy on privatization or nationalization, economic policy,
competition policy, and subsidy policy.
1. Since a nation belongs to the global community, it signs trade agreements
with other countries to promote mutual economic harmony and cooperation.
To be able to fulfill its part of the accord, it declares its own policies on trade.
The trade policy of a country involves the use of tariffs, quotas, and other
trade contracts that may carry certain limitations and restrictions. The more
popular trade agreements include NAFTA (North American Free Trade
Agreement), the AFTA (ASEAN Free Trade Area), and WTO (World Trade
Organization). In these agreements, tariffs were to be gradually lowered on
imported products. Tariffs of 100 to 200 percent were gradually decreased to
10 to 5 percent and eventually will end up as zero tax.
Attractive to developed nations, these trade policies are more
disadvantageous to developing countries like the Philippines. For example,
imported products come in less expensive to the point of"killing" local goods.
As a result, local companies will eventually close shop because of their
inability to compete with the pricing of imported goods. Aside from lowering
taxes, quotas are set by trade agreements when it comes to selling to other
countries. Limited quotas are allocated to local companies. This limits
business expansion, not to mention the difficulty of availing of these quotas.
Hence, nations should come up with trade policies that are not one-sided. It
should take care of the interests of its people to ensure equal opportunity and
fairness.
2. Foreign direct investments or investments from sources outside a nation
bring about economic development. With infused capital, jobs are generated
and business is energized. Compared to other nations that restrict the
entrance of foreign investments, almost all countries welcome these financial
outlays. Foreign investments are given attractive business packages and
financial incentives to entice them to engage in business activities,
infrastructure projects, and other national undertakings. To achieve these,
trade missions are sent, trade exhibits are set up, and trade negotiations are
closed.
3. Governments, for one reason or another, acquire businesses and these are
managed by civil servants. However, most of these investments are not
administered efficiently and effectively. Money leaks result from
mismanagement, corruption, lack of competence, and disregard. As a result,
government-owned corporations end up with huge unpaid loans, money
shortages, or worst, they go bankrupt. Thus, the government can come up
with a policy on this: continue their management or sell them to the private
sector. Selling to individuals other than the government is
called privatization.
On the other hand, a government may decide to confiscate, buy, or take over
an enterprise and manage it. This is called nationalization. Businesses are
nationalized for specific reasons like controlling price, making sure there is
equity, or seeing to it that there is no shortage.
4. Economic policies are formulated to ensure that the financial system of a
nation is robust and that it is able to provide livelihood, education, welfare,
and quality of life for its people. Nations invest in agriculture for food security.
At times, they subsidize it. They take care of the environment by preserving
marine waters and rainforests. They are sources of fish, lumber, oil, and other
resources.

New markets are targeted for exports of products. Entrepreneurs are

supported through microfinance and tax incentives. Loans are provided to
small businessmen. Expertise and other relevant skills and competencies are
provided through training and education. Roads and bridges, including
transportation like light railway transits and RORO ports and boats, are
constructed for efficient delivery of produce. All these are being implemented
to uplift the life of the people.
5. Competition policy zeroes in on the development of human and natural
resources. People are the greatest source of productivity in a nation. To make
them competitive, a county should make sure that quality education is
provided to its citizens. Hardworking intelligent, and nationalistic people propel
a country toward material prosperity. Thus, the emphasis is on knowledge
workers, speaking of global languages, information technology competence,
seafaring and tourism skills, leadership and managerial effectiveness, and
positive personal qualities. This policy creates in people a degree of
competitive advantage.
6 Lastly, the subsidy policy is used to help the population. The government
shoulders a part o the price or a commodity to make it affordable. In certain
instances, a country can do that when it has a surplus or it has funds for such
support
 
Resources
Resources are the most important supply of competitiveness. Oftentimes
scarce, they can make or break a nation or bring them to prosperity or dearth.
The resources in any nation include natural resources, human resources,
technology, and capital. Natural Resouces consist of arable lands, minerals,
energy fuels, aside from aquatic life and forestlands. These resources Should
be harnessed to give people a better life. Human resources include a
population with adequate, if not the best education and are highly skilled and
healthy. Likewise, the number of people in a country can be positive and
negative, positive in that there are more hands to till the land, to perform work,
and earn a living. It is negative, in that it will mean having more mouths to
feed, to shelter, to educate, and to spend on.
Technology is another resource. Research and development, advances in
science, communication, information technology. manufacturing, and
medicine, among others, significantly contribute to national advancement.
Lastly, Capital, if invested wisely, can generate more employment, provide a
better standard of living, and bring about an efficient exchange of goods,
services, and wealth Thus, there is a constant need to use resources
efficiently. Doing all these can make a nation compete with foreign businesses
and sustain itself comfortably.
 
Strategy Framework for National Growth
A living example of strategy in national development is China. To speed up its
growth and provide an economically sound government to its people, it has
undertaken growth strategies for national development. Successfully applied
by the other Asian countries like Japan after the Second World War, Korea,
and Taiwan, these phases in economic growth have proven to be successful
and advantageous to these nations. These growth strategies are sequential,
one step moving to the next
Phase 1: Imitation.
After many decades of isolation from the world, China is undergoing a rebirth.
Like a newborn, it is actively taking its first steps. Wobbly and uncertain, the
country has taken an attitude and behavior of copying the products and
services of other nations. Books are reproduced and shoes and bags are
imitated while ships are dismantled and replicated. Name any product or
service and China has or will have soon. While in this imitation phase, the
intellectual property rights of the original producers of imitated goods and
services are essentially infringed. As a result, cheaper selling prices are
generated due to cheap labor costs and non-payment of copyrights,
trademarks, patents, and other ownership rights. Hence, the products and
other "duplicable" services are sold although the quality is poor.
Phase 2: Development.
Since these goods and services are easily sold for their low prices, more
profits are generated. This increase in profits allows for provisions for
improvement. From being in a crude and rudimentary stage, the products are
Slowly refined and enhanced. Labor costs are still low, while the goods and
services are better this time. Prices are generally maintained. In this stage,
more sales are generated. After all, the goods are improved and sold at the
same prices.
Phase 3: Enhancement.
With enough capital, more investments are now set aside for serious
improvement. Better raw materials and equipment are purchased while
qualified Workers are hired to undertake product and service enhancement. In
effect, finished goods now carry a better quality. They have become a little
more expensive but still affordable, if not cheaper in relation to the same
products coming from developed Western and Asian countries. Sales are still
generated.
Phase 4: Differentiation.
Once a product or service is enhanced, serious competition creeps in due to
the increase in prices. Although the enhanced goods are sold, the assurance
for higher sales is not certain. The challenge now is for China's products to
undertake product research and development. Existing products and services
will have to be greatly improved. New or differentiated features will have to be
introduced, top-quality ràw materials have to be used, and highly efficient
processes and techniques have to be implemented to bring about more
superior and highly competitive goods. Consequently, the products will
become more expensive due to higher labor and production investments
infused for product and service differentiation.
Phase 5: Innovation.
As products and services become significantly more expensive, generating
sales become challenging. To ensure continuous business, innovation is the
only alternative. Inventions are undertaken through quality researches on
product and service development. The existence of very stiff competition is a
given. All nations encourage their organizations to be the first in any untreated
area. Singapore, twenty years ago, focused on biotechnology. This strategy
for national development is working for them. Creativity and originality are
indeed tough challenges.
 
In summary, this strategic framework for national growth is a process that has
been duplicated by other nations. Underdeveloped nations can learn from this
strategy and map their own road to development.
 
Competitive Advantage of Nations
Competitive advantage is a superior position gained by àn organization in
relation to its competitors. It happens when the organization develops a
feature or a combination of features that allows it to outperform its competitors
in a specific segment that is adequately and competitively catered to
compared to its competitors, or when a company operates in a more efficient
high-quality way.
Competitive advantage can be approached from both macro and micro
perspectives.
1. Macro perspective.
From a macro or external perspective, competitive advantage was expounded
and analyzed by Michael Porter. It is said that Michael Porter's Competitive
Strategy (1982) drew the attention of managers and corporate individuals to
strategy. However, in a later work titled Competitive Advantage of
Nations, published in 1990, Porter looked at strategy from the point of view of
a bigger social entity, a nation, arguing that it could create new advanced
factor endowments such as skilled labor, strong technology, and knowledge
base, government support, and culture

He used the diamond approach as a framework to illustrate the determinants

of national competitive advantage. In this diamond, Porter considered factor
conditions, demand conditions, firm strategy, structure, and rivalry, and
related and supporting industries as four important determinants of national
advantage.
In addition, Porter specified the role of chance and the
government. Chance refers to the right timing or enjoying the right break. He
adds that it is for the government to encourage companies and organizations
to raise their performance, stimulate early demand for advanced products,
focus on specialized factor creation, and stimulate local rivalry by limiting
direct cooperation and enforcing antitrust regulations. In short, Porter
emphasized that strategy is creating national competitive advantage or
building an edge over other nations through different approaches while using
unique schemes and maneuverings.

2. Micro perspective.
From a micro or internal perspective, competitive advantage refers to an
organization's resources and capabilities that have strategic value. This
internal competitive advantage may be due to an established superior
product/service features and quality, outstanding people and services, very
highly efficient processes and operations, and low-best competitive pricing.
The following conditions generally lend to achieving competitive advantage.
They are 
a. The resources and capabilities of the organization are valuable, unique,
and are difficult to imitate, thus, lessening potential competitors.
b. The structure and system of the organization are appropriate and adequate
to allow them to attain a competitive advantage.
c. The people in the organization are working deliberately toward creating a
competitive advantage.
d. There are no ready and easy substitutes to compete with the organization's
products. 
There are different types of resources and capabilities. They can be classified
as tangible and intangible assets. Tangible assets refer to physical resources
like buildings, facilities, equipment, and location, and financial resources like
cash flow, balance sheet, credit ratings, and financial performance. Intangible
assets refer to management and technology resources like highly performing
people, transformational leadership styles, global and local branding,
intellectual property, trademarks, and others