1. “Comparison between OVOP/OTOP on a Business Model Ontology Canvas”
Kitin Sripuachareon1 and Dr. Kitti Setavoraphan2
Abstract
Business development and business model have been involved in many different
types of business, especially in the emerging and developing markets are competing in
the marketplace for more success. To small businesses, the biggest threat mostly comes
from big businesses that have better infrastructure and finance. The key to be able to
stand up against them is having a good business plan and model. Then, this study aims to
compare and illustrate the functions of two own-creative with same conceptual
principles’ OVOP & OTOP models. By drawing up frameworks and comparing the two
different models. The outcome introduces a twofold result: firstly, propose a better
understanding of both business models. Secondly, allow the comparison of two different
performance business models in order to improve the performances, representations,
designs, and analysis of both business models. By generating a better operational
infrastructure for OTOP program.
Keywords: Business model, Conceptual principles, OTOP & OVOP model, Framework
1. Introduction
Business development and business model have been incorporated into many
different types of business. Today both terms play important roles in the way we conduct
business. That is especially true in developing world where markets are still emerging and
business organization are fiercely competing in the current economy. Recently, Small and
Medium Enterprises (SMEs) take a very important role in the economy. Knowledge sharing
becomes a vital part of our professional and personal lives. Plus in the last two decades
technology has become inseparable from business and social life. However, it has not
been fully integrated into the field of all careers. The integration of technology in living
and working is still challenging and developing in many circumstances.
The conceptualization of OTOP’s Business model is based upon logic of earning
money, focusing on the business problems in Thailand. Based on t he poverty situation is
the majority problem in Thailand. Part of handling poverty reduction is operated by the
rural development project in Thailand called “One Tambon One Product” or OTOP.
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2. Unfortunately, after performing for many years, OTOP never really showed its
achievement in term of real development. In the opposite of the original one “One-
Village-One-Product” or OVOP project which has been successfully performed. Regarding
the government policy, OTOP project is a self-help development concept that was
created to promote the development of the local community and empower the
community strength. OTOP has encouraged rural communities to depend on their local
material and local resources. OTOP is considered a way to create prosperity for the
community in the upgrading of rural livelihood through producing or managing local
resources to become more value-added products. OTOP is based on the Japanese One-
Village-One-Product (OVOP) concept which began in Oita and was initiated by local
people at Oyama village in the Oita prefecture of Japan in 1961. It was promoted by
former Oita Governor Morihiko Hiramatsu since 1979 by Oita OVOP International Exchange
Promotion Committee in 2006. OVOP is an endogenous development model and a
community based model. It is based on three conceptual principles:
1) Local to global: To encourage rural entrepreneurs to produce at least one
globally accepted product using available rural natural resources, local craftsmanship and
develop all products by adding values to them. The product based on global standards.
2) Self-reliance and Creativity: To promote self-reliance from government
subsidies, they are not provided directly to OVOP group, but in term of technical
assistance and R&D support for product development, assist marketing and distribution.
Also help reduce the transaction costs that local entrepreneurs have to carry if they are
to execute product development and penetrate market themselves.
3) Human resource development: To have leadership training development,
building up community in order to sustain the community, help the local people become
stronger with challenge and creative enthusiasm.
The OVOP and OTOP concepts are very much in line with that proposed in
economic development literature. Friedman (1987) and Mackenzie (1992) state that one
of the primary measures to boost economic development and hence economic well-
being in rural areas is by enhancing rural entrepreneurship. Wortman (1990) defines rural
entrepreneurship as “the creation of a new organization that introduces a new product,
serves or creates a new market, or utilizes a new technology in a rural environment”.
However, the craft-based manufacturing sector was identified as a source of
competitive advantage that was not being properly valued and did not transform into
either price premium or customer loyalty because the topic of Trustworthy brand.
(Takano, 2007) Unfortunately, so far in international development practice it appears that
the OVOP movement is being promoted as a quick fix for community development by
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3. focusing on product development and marketing whilst virtually ignoring community
capacity issues. (UN-HABITAT, 2006) Whether OTOP program will survive in the long term
depends on continued government support of product development initiatives by people
in local communities. However, OTOP is primarily interested in high-end products for
export and it has not shown any interest in promoting products that are connected to the
domestic market or domestic consumption patterns.
This study proposes an OVOP basic conceptual model and compares the OVOP
and OTOP models to understand the similarities and differences between these two
models. The models were developed based upon the same conceptual principles,
relevant literatures relating to OVOP and OTOP program, gear train system, and business
model ontology canvas in the concepts and details.
2. Characteristics and Achievements of the OVOP movement
The original OVOP movement was launched in 1979 in Oita prefecture by
Governor Dr. Morihiko Hiramatsu. He encouraged residents in villages and towns to select
a possible product or industry distinctive to their village or town and foster it to be a
nationally, or even globally marketable one. Previously, local people had worked as
woodcutters or seasonal migrant laborers to make ends meet. The challenging attempt of
Oyama Town, whose motto was “let’s plant plums and chestnuts to go to Hawaii!”
proved to be successful. As their income increased thank to the new products. After the
movement that started in Oita prefecture has spread to other rural Japanese areas that
have been left out of the nation’s economic development and suffer from out-migration
and an aging population.1. The OVOP concept shares its focus on quality with other
Japanese concepts like Kaizen or the 5S-process. Yujiro Okura, one of the most prominent
analysts of the Oita OVOP movement, points out that the success of OVOP was due to
the continuous support given by local governments (Okura, 2007).
2.1 The Japanese OVOP and OTOP structure
The most important component of the Japanese OVOP structure is the initiative
and practical innovation of local residents. Daily activities, nature and local entertainment
can be turned into valuable products or services to be marketed. Activities such as “big
voice” or shouting contests in Yufuin town and pond cleaning in Ajimu town attract
1
Even in developing countries like China and Thailand, rapid urbanization and aging are becoming
major constraints in rural areas. This is one of the reasons we should take a fresh look at the One
Village One Product movement as a universal rural development policy.
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4. people from outside Oita. Sometimes, ideas from outside are implemented as local
events or activities that fully or partially make use of local resources, both material and
human. Public offices, mainly local governments, but sometimes even national public
entities, serve as facilitators of OVOP activities by helping with technical innovation,
production, and marketing for developments (JICA Research Institute, 2010).
To illustrate the procedures and the supporters of OVOP and OTOP movement in
two countries by the frameworks (see figure 1 and 2). These indicate to OVOP procedures
& supporters framework based on JICA Research Institute (2010) and Fujioka (2006), who
conducted a comparative study of OVOP and Thai OTOP implementation, concluded that
the former operates from the bottom up while the latter is run from the top down.
Supporterss
Program OVOP Program Goal
Goal
promotion OTOP Sub
councils committees
Project
Project Goal
Goal
Local Local
Outputs Outputs
Governments Sub-
committee
Inputs Inputs
‘Figure 1. OVOP-Procedures & Supporters’ ‘Figure 2. OTOP-Procedures & Supporters’
Fujioka (2006) examined the Thai OTOP and found out that it is different from the
Japanese prototype in the sense that the Thai OTOP is a top-down scheme led by the
central government while the Japanese OVOP is bottom-up led by the strong community
and local government supporters (see Figure 1 and 2). There are two development
methods ‘spontaneous’ and ‘extraneous’ method by using the extraneous method
means developing countries (or growing areas) tried to pursue its modernization by
outside resources introduction and commercial invitation, such as energy development,
automobile and electric appliance industries as to spontaneous method, it means to
develop the district economy through maximizing the latent resources and capital in the
area, such as economic activities between Primary Industry and Second Industry the
farmers process the harvest for products of higher value-added. “OVOP” movement has
the same definition with ‘Spontaneous Method’. (Kimoto Shoji, 2008)
3. Theoretical Framework
This part provides diagrams, frameworks and models; how the two businesses with
same conceptual principles are alike, different and related to each other in order to
achieve the main objectives of this study. It presents reviewed theories and information
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5. from published books, theses, journals, and other reports. The diagrams emphasize in
especially the efficiency of OVOP and OTOP models. The study includes the original OVOP
conceptual principles, both business models and frameworks, comparison of both
frameworks. In additional, the other diagrams and frameworks have been created and
designed to merge all their business components as same as the transferring of OVOP &
OTOP’s principles, and strategy into a blueprint of the business revitalization plan.
3.1 OVOP and OTOP Basic Conceptual Principles Diagrams
OVOP and OTOP model originally presented in this paper are based on the same
OVOP’s conceptual principles and basic components. However, when environment,
purposes and business structure has changed, the type of OVOP became in a difference
way like OTOP.
Figures below here are illustrated by using the concepts of ‘Mechanical Gears or
Gear ratio’ it is easily to explain how OVOP’s principles and components are related. In
figure 3 below, it has been drawn up to show the first original OVOP principles, then
combining with the gear system concept, it became the original OVOP conceptual
principle diagram in figure 4 (see below) and OTOP’s diagram in figure 5 (see below).
‘Figure 3. First Original OVOP principles’
From Figure 3, the original OVOP basic conceptual principles diagram begins from
‘self-reliance & creativity’ to ‘human resource development’ and to ‘local to global’.
Then, using three ‘spur gears’ apply to show the labels for the interlocking conceptual
principles and the ‘arrow shapes’ show how they relate and affect one another.
Self-
Human Local
reliance & Resource to
creativity Develop Global
‘Figure 4 .The original OVOP basic conceptual principle diagram’
After merging OVOP’s principles with spur gear concept they become the original
OVOP conceptual principle diagram above in figure 4. There are three sectors or gears:
starting from a ‘self-reliance & creativity’ biggest gear (see the black arrow) to a’ Human
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6. resource development’ the middle gear use less power and more less in a ‘local to
global’ while the smallest gear turns at the same speed. The reason is the more self
reliance and creativity run the more of human resources development or villagers
become powerful as well as challenges.
Then the smallest gear ‘local to global’ component is turning faster to keep up,
meaning that a community easily to offer the globally standardized products because
they have their own supports from the community.
Having more self-reliance and creativity help economics grow faster, means that
any business problem would solve with the more capabilities and flexibilities. Also it is
better for the innovative products with costs less. In the meantime, it saves operating
costs. As well, the wasted costs. Then OVOP has achieved the purpose ‘Local to global’
Local to
Self - Human
reliance global
Creative
resource
develop
ment
‘Figure 5 .The OTOP basic conceptual principle diagram’
From figure 5, OTOP project starts from turning a ‘self-reliance & creativity’ small spur
gear same the black arrow’s direction, to turn other bigger gears with the same speed it
needs more power than turning the equal-sized gears. Next turning ‘human resource
development gear’ (Idler gear) is done by fostering villagers with more know ledges and
creative spirits to operate this gear. Then, the bigger local to global gear, it is too big
component for OTOP’s project that start from a small source of ‘self-reliance & creativity’
which is not enough own capabilities power to turn the bigger gears. Thus, the projects or
villages need more supports from government in order to adding more facilities, subsidies
and other supports. On the other hand, if the community or village required more outside
supporters, the self-reliance has less to run itself.
3.2 The Nine components of OVOP framework
The nine components of OVOP project based on community , urban area, local
materials, local labors, environments, villagers, cultures and traditions, society, behavior,
governments, and many more components. By using nine jigsaws and three triangle layers
explain the nine components of OVOP framework. After selecting the right nine
components then classify them into three layers, which are:
1) Essential layer is required a set of a local material resource (LMR), local labor
resource (LLR) and local skills & capabilities (S&C).
2) Structure layer is required a set of a community based model (CM), an
endogenous structure (ES) and a strong community (SC).
6

7. 3) Maintenance layer is require a set of an awareness of OVOP (AO), initiative and
practical innovation (I&PI) and trustworthy and value added (T&V).
The nine jigsaws of OVOP component below are related and supported to each
other, as well as classified the three layers component. (see figure 6)
‘Figure 6. The Nine Components of OVOP framework within three layers’
From figure 6 (see above), after combining the nine jigsaws and became OVOP
framework, those classifications of three layers are organized the nine components in
order to facilitate the systems. See also figure 7; an alternative choice or a replacement
plan helps fixing and solving any challenges.
‘Table 1. A description of the nine OVOP components’
Layer Component Resource Usefulness Importance
Local material Rural areas (all or part of it), Supporting Marketing-
resources Work in process or Goods in local opportunity,
(LMR) process from other economies Reducing Cost
resources. Structures
Local labor Local residents / Villagers More job Revitalization,
Structur Essential Layer
resource (LLR) opportunities Less moving out
Local skills & Traditions, Cultures, Life Valuable and Product quality,
capability style (sociology), impressive Singularity,
(S&C) Knowledge, Practices products Employability
Community Community development Understanding Stabilization,
e Layer
based model plans, Community’s the real Easy and well
(CM) problems problems realization
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8. Endogenous OVOP’s infrastructure, Local Ability to plan Flexibility and
structure (ES) government (Self-governing & control Agility
towns)
Strong Their cooperative, Local Independence Manageability,
community governments, Mayors and & more Dominance
(SC) Councils flexibility
Awareness of Maintenance status, Motto Sustainable Internal
OVOP (AO) and Business plan by JICA business, controls,
Limitations Controllable
business
Initiative & Economic revitalization, Motivation and New creativities,
Practical Local government and Economic Innovative ideas,
Maintenance Layer
innovation Community, Social life incentives Singularity
(I&PI)
Trustworthy & Proudness, Meticulous Royalties and Longevities and
Value added procedures , Honesty, Valuable Sustainability
(T&V) Motivation, Business products
systems, Customer services
According to the details on the above will be able to demonstrate a shortlist of
the Resources that indicates ‘Where do they come from’, the Usefulness indicates ‘What
are their benefits’ and the Importance indicates ‘Why they are needed’ (in the table 1).
The table 1 above indicates the sources of nine components, the essentials and
benefits of the nine components. These results will be useful information and beneficial
processes to perform any similar OVOP projects at a later time.
3.3 The nine components of OVOP and OTOP basic conceptual models
The purpose of creating a model is help to understand, describe and forecast by
exploring a simplified representation of a particular entity. Business model is representing
how a company earns money from buying and selling goods and services (Osterwalder,
2004). According to figure 7 and 8, after combining figure 4 with figure 6 (from the above)
into an OVOP model (figure 7) and figure 5 with figure 6 into an OTOP model (figure 8).
The small ovals indicate OVOP/OTOP components, the three spur gears indicate
original OVOP conceptual principles, the black-arrow indicates a starting gear/concept, the
big oval indicates OVOP/OTOP structures, and the curved arrows indicate the rolling
direction of the OVOP’s conceptual principles under the spur gears concept.
8

9. Figure 7 below shows the development process of OVOP business model. Starting
from the nine ‘OVOP’s components’ into ‘OVOP structure’ by transferring all component
into OVOP structure. It is operated by three gears ‘OVOP conceptual model’.
The structure begins to perform with a self-reliance and creativity concept. It helps
motivating a human resource development concept to operate a local to global concept.
The concept of local to global is originated from traditional knowledge and local skills to
meet with the global standard concept.
ES
CM SC
S&C AO
‘OVOP Structure’
LLR Self- I&PI
Human Local
reliance & Resource to
creativity Develop Global
LMR T&V
`vvV
‘Figure 7. OVOP Nine Components with Basic Conceptual Model (based on Metaphysics-Ontology)’
ES
CM SC
S&C AO
‘OTOP Structure’
Local to
LLR Self-
reliance
Human global I&PI
Creative Resource
Develop
ment
T&V
LMR
PI
‘Figure 8. OTOP Nine Components with Basic Conceptual Model (based on Metaphysics-Ontology)’
The figure 8 is an OTOP basic conceptual model, it’s similar with OVOP, begins
with nine OTOP’s components go into ‘OTOP structure’ by transferring all components
into OTOP structure. It is operated by three gears ‘basic OVOP conceptual model’.
The model has first performing based on a tiny self-reliance & creativity concept to
run a human resource development concept, then human resource development
concept operated the model by turning a local to global concept, the concept mostly
supports by local and central governments including a few traditional skills, knowledge
and global standards. Lastly, the main differences between the two business models are:
‘OVOP’ is good because the outcome grow up very fast, able to catch up market’s
needs in due time with the high quality products, but OVOP model is not very good yet
because it really can not process the big orders or transactions. The reason is the whole
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10. processes needed a specific time frame for the meticulous products. But this case may
has already been fixed by using a franchise strategy.
‘OTOP’ is good because its goal local to global, expected lot of orders, running
the small gear of ‘self-reliance and creativity’ would probably affect the quality of
product. The government tries more support in generating and supporting. So, the
community is not being able to improve their products.
3.4 Comparison OVOP and OTOP framework by Main Characteristics
In this category is comparing of two business frameworks based on theirs
characteristics and functions, to have more understanding in factors and problems, the
analysis and improvement of both business models. The study is aims to identifying the
similarities and differences of both frameworks in order to find out about their
transformations throughout the process. However, it is necessary to have a true
understanding of both frameworks for knowing their differences and overlaps in their
organizations (see table 3).
‘Table3. Comparison nine building blocks of OVOPOTOP frameworks by Benefits.’
Pillars OVOP’s style OTOP’ Shared Main Benefits
Characteristics of OVOP
model
Differentiation, Popular-trendy Traditional Knowing what
Value Proposition
Proudness, Meticulous products/services , knowledge, Local to offer to
products, Innovative Too many brands in skills& capabilities, customer.
offers ,Trustworthy brand same category, Product quality
name Competitive pricing control
Strong community, Central government Local government Knowing how
Key Partners
Villagers, Local banks agencies, Outsider agency, SMEs to manage the
and cooperatives, supports, Nation Bank systems.
Regional training Schools
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11. The initiative and A self-help Local government Knowing what
practical innovation. A development supports, should replace
community based model, program, Exogenous Residential or adjust the
Endogenous structure, structure, Central participants, system for
Key Activities
Cooperative, Strong government control, Logistics more flexibility.
community organizing, SMEs, Supporters, R&D
Own R&D, Word of by supporters
mouth
Awareness of OVOP, A Customer(market) ’s Local material Knowing what
community revitalization needs/interested, and labor should
purpose, Self-reliance Government &Others resources, Local business look
Key Resources
and creativity, directed supports, wisdom, Skills & for or have and
Trustworthy & Value New entrepreneurs& knowledge, why.
added customers Culture,
Distributions ways
Website& own surveys, Government & Website, Events, Knowing
Business advisors, Supporter’s Surveys (feed what/how to
Relationships
Training Program & researches and back) do with your
Customer
Dispatch lecturers, Word surveys, Websites customer
of mouth relationship
management
Local customer, Regular Middlemen Tourists, Exports, Knowing who
customer, Exports, (Wholesalers, Retailers SMEs, Online should
Customer
Segments
Franchise customer. agents), customers business has
relationship
with.
Antenna shops, Local OTOP shops, Direct Trade fairs, Knowing how
festivals (matsuri), Micho selling, Middleman Exhibitions, Micho to get in touch
Channels of
Distribution
no eki, Franchises (reseller) no eki (roadside w/ customer,
stations) reducing
logistics costs.
Research &Development Middleman costs, Local material & Knowing more
Stream Structur
cost labor costs, ways to save
Revenue Cost
logistic costs costs
e
Regular customers, Visitors, traders, Affairs, Online, Knowing more
Royalty customers, Middlemen Traders, SMEs business
Franchises channel
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12. The above table 3 compares characteristics between OVOP and OTOP frameworks
and the main benefits of OVOP model that had been missing during the process of
transferring to become OTOP. Both models based on Metaphysics-Ontology which are
related to environments, society, traditions, cultures and much more. Then the design of
their models rely on their information some are same some not, it depends on their
business purposes. In spite of, they have the same conceptual principles; the out come
will be difference. The most important structure of frameworks is the differentiation
between two frameworks. The differences are; orderly, methodology and the purpose of
creating a framework. On the other hand, the challenges of OTOP need to resolve in a
right place and way. Otherwise, it will be wasted more time and cost. The research of this
paper is provided OVOP & OTOP’s information as well as the classification between the
two. It will also be useful and very beneficial of this project in the near future.
4. Discussion
Both businesses models have similarly purpose, they aim to improve their
economies, but they have many different purposes which are the characteristics like Self-
Reliance, Business purpose, Knowledge management, and Management structure.
Self-Reliance is the most important characteristic in OVOP model because
originally OVOP’s concept aims to support local community that they are able to take
care themselves by own self-sufficiency with reliable and sustainable occupations. While
OTOP project did not realized that they did reduced community’s self reliance with more
direct subsidies. Not only does the unclear position of improper component capability in
today’s market, it also impairs progress on the development of OTOP program and its
capability. However, OTOP project has to be truly understanding with the real problem
before they would be able to get things fix properly.
Business purpose is the topic that stimulates the business plan. OVOP purpose is
maintaining the community living specially in the rural area to be longevity and
revitalization for the village life, but for the OTOP purpose is making money and having
career did not think about become strong community which is an important part of OVOP
conceptual model. Based on the components in the business model, product, customer,
infrastructure, management and finance several business models can be created.
Actually, every business model can be perceived as a unique one, depending on
the significance and difference of the variables. The success depends on the inequality in
the equilibrium between cost and revenue drivers. As for any different sector components
of OTOP business model are also demonstrate in the business models of OVOP project.
Actually, new business model is emerging from one sector find their way and application
in other sectors. A relatively new type of business model is the open innovation business
12

13. model. The basic principle of an open innovation business model is the partnering with
others for better technology, products and services. It is also that business model is
typical for all knowledge where innovation, singularity and business creation are very
critical for securing a competitive edge.
5. Conclusion
In this paper is about OVOP and OTOP business structures, the comparison
between two differences models with same conceptual principle and how it is affected to
the business and economic. Both business models are operating based on same
conceptual principle but different purposes. And both businesses continue maintenances,
innovate products and service offering by doing as best as they can within their
capabilities and responsibilities in developing the suitable way. Even though OTOP is
improving in efficiency and capability, it will still need a better model with more flexibility
and adjustable solution.
There for, a business model is a conceptual tool that contains a set of elements
and their relationships and allows expressing a company's logic of earning money. It is a
description of the value a company offers to one or several segments of customers and
the architecture of the firm and its network of partners for creating, marketing and
delivering this value and relationship capital, in order to generate profitable and
sustainable revenue streams. The business model ontology is a set of elements and their
relationships that aim at describing the money earning logic of a firm. As outlined above
the ontology contains nine business model building blocks, so-called business model
elements.
Further research would include the way to adjust the difference between all kind
of OVOP models, especially in OTOP model. The purpose of future research will be able
to enable the capability and adjusts the configurations to develop the model and
structure. By every business model elements can be decomposed into a set of defined
sub elements and recreate into a new one.
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