6 keys to competitive craft businesses

| December 20, 2018 | Articles

Handicrafts, aside from being elements of the collective identity of societies and a way to preserve the most important cultural and ethnic heritage, also stand out for their contribution to local, regional and national economies.

As a productive activity, handicrafts are not alien to the strong development of Information and Communications Technologies (ICT) and market globalization, which has opened up many new possibilities for this sector and will do so even more across the different business processes. Globalization also offers new opportunities to collaborate and be present in foreign markets waiting to be explored.

At an international level, UNESCO provides the following definition: “Artisanal products are those produced by artisans, either completely by hand, or with the help of hand tools or even mechanical means, as long as the direct manual contribution of the artisan remains the most substantial component of the finished product.  These are produced without restriction in terms of quantity and using raw materials from sustainable resources. The special nature of artisanal products derives from their distinctive features, which can be utilitarian, aesthetic, artistic, creative, culturally attached, decorative, functional, traditional, religiously and socially symbolic and significant.”

The search for a competitive sector 

Business competitiveness is a multidimensional and dynamic concept that refers to a company’s capacity to maintain and increase its share in the market; and it is very much tied to its competitive advantage, a concept which takes the form of lower costs than those of the competition or product differentiation.

Better competitiveness in the handicrafts sector can translate into more consolidated and profitable businesses, interested in growing and in exploring different ways to achieve this. In the medium to long term, competitiveness is determined by a combination of processes which, if managed properly, will improve the profit and growth of artisanal businesses:

  • Human resources management: This is a key factor in craft businesses due to their productive processes and given the importance of qualification and experience of the workers with respect to the quality of their products. The small average size of craft firms makes human resources even more important with respect to business competitiveness.
  • ICT Application: It has become one of the main factors of business competitiveness that determines improvements through different ways. Its application to production processes generates innovation, which favors gains in productivity. It also makes organization and commercial innovation possible and facilitates the internationalization of the business.
  • Innovation: In many aspects quality is a step very much tied to, or even prior to, innovation. A company’s concern on quality reflects its desire for continuous improvement in serving its customers. A way to achieve this is by obtaining product and service quality certifications in domestic and international markets, which will boost loyalty among new and existing consumers.
  • Internationalization: The most frequent marketing channel of artisanal businesses is through direct sales to specific customers. The other marketing channels have limited presence, especially those that reach foreign markets. An alternative is to sell in specialized portals and through websites.
  • Financing: The financial status of a business marks its possibilities for growth and conditions its strategic planning. The financial structure, and in particular the amount of external financing and its distribution in the short and long term, is a result of multiple factors including the company’s strategic policy and the economic situation of the market where the activity is carried out.
  • Business and Institutional Cooperation: In the case of artisanal businesses it acquires special relevance due to their small average size, since it is a way of overcoming some of the disadvantages associated with microenterprises. The advantages of third-party collaboration (companies or other organizations) include easier, cheaper and faster access to information, technology and new markets; the obtaining of additional human and financial resources; and the possibility of sharing risks, both in developing new products and services and in accessing foreign markets.
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