Over the past three decades, global trade has grown and many new exporting countries, particularly in Asia, have been incorporated into the global economy. The Global Value Chain (GVC) literature emerged as an attempt to describe how multinational firms have integrated production activities in Asia into their global strategies and what the consequences might be for the newly-integrated economies. The GVC analysis is a useful tool to trace the shifting patterns of global production, link geographically dispersed activities and actors within a single industry, and determine the roles they play in developed and developing countries alike. This course provides competency sets (mind set, tool set, knowledge set, and skill set) used for analyzing and synthesizing a new value chain system in order to extend the current value chain and to promote participation and upgrading in global value chains.

1. Global Value Chain:
An Introductory Session
Togar M. Simatupang
Institut Teknologi Bandung
5 November 2020

2. Overview
1. What is GVC?
2. Course Description
3. Global Value Chain (GVC) Story
4. Learning Outcomes
5. Teaching Plan
6. Textbooks
7. Concluding Remarks
8. Case Analysis Template
2

3. What is GVC?
3

4. Source: "A force for development: New World Bank online course explores the potential of global value chains", Anabel Gonzales and Sheila Jagannathan
|AUGUST 14, 2020 https://blogs.worldbank.org/voices/force-development-new-world-bank-online-course-explores-potential-global-value-chains 4

5. Source: “How important are Global Value Chains for development?” https://blogs.worldbank.org/developmenttalk/how-important-are-
global-value-chains-development-read-new-wdr2020-draft-report-and
Interacion between firms typically involve durable relationships.
Economics fundamentals drive countries’ participation in GVCs. But Policies matter –
to enhance participation and broaden benefits
How do GVCs work?
5

6. Vertical competition along the “smile” of value creation
6

7. Characterization of Existing Chain Frameworks
Source: Adjusted following Bair (2005) in Faße, A., Grote, U. and Winter, E. (2009), "Value Chain Analysis Methodologies in the Context of Environment
and Trade Research", Discussion Paper No. 429, Leibniz Universität Hannover, Hannover.
7

8. Why Global Value Chains (GVCs) and why now?
• The World Bank’s last report on trade was more than thirty years ago
– WDR 1987 Industrialization and Foreign Trade.
• In the meantime:
• Trade’s share of GDP globally has doubled;
• Average income grew by 24 percent globally;
• Poverty declined from 35 percent to 10 percent;
• The income of the bottom 40 percent of the world population increased by
close to 50 percent.
Source: “How important are Global Value Chains for development?” https://blogs.worldbank.org/developmenttalk/how-important-are-global-value-
chains-development-read-new-wdr2020-draft-report-and
8

9. How important are GVCs for development?
• GVC trade in the past 30 years has accelerated economic growth and reduced
poverty greatly.
• It has enabled an unprecedented convergence: poor countries grew faster and
began to catch up with richer countries.
• Productivity and incomes rose in countries that became integral to global value
chains—China, Vietnam, Indonesia, and Bangladesh, among others. And the
steepest declines in poverty occurred in precisely those countries.
• One of the most exciting findings is that all empirical evidence – from cross-
country, to sector, to firm-level – supports a picture of GVCs greatly boosting
productivity and incomes.
• In contrast to “standard” trade carried out in anonymous markets, GVCs typically
involve long-term firm-to-firm relationships.
• This “relational” nature of GVCs makes them a particularly powerful engine for
growth, as they represent a natural vehicle for technology transfer.
Source: “How important are Global Value Chains for development?” https://blogs.worldbank.org/developmenttalk/how-important-are-global-value-
chains-development-read-new-wdr2020-draft-report-and 9

10. How important are GVCs for development?
• Firms have a shared interest in specializing in specific tasks, exchanging
technology and learning from each other.
• This is most easily done in the context of longer-term firm-to-firm relationships.
• There is strong evidence that the gains from GVC trade are being distributed
unequally within and across countries.
• This evidence has improved our understanding of why some workers, firms, and
communities have been hurt by globalization as well as where environmental
risks have arisen.
• It has helped us reflect on strategies that promote GVC participation as well as
policies that ensure a fair distribution of benefits across society and containment
of potential environmental costs amidst a future of rapid technological change
and policy uncertainty.
Source: “How important are Global Value Chains for development?” https://blogs.worldbank.org/developmenttalk/how-important-are-global-value-
chains-development-read-new-wdr2020-draft-report-and
10

11. So what next?
• GVCs can continue to boost growth, create better jobs, and reduce poverty,
provided developing countries implement deeper reforms and
industrialized countries pursue open, inclusive, and predictable policies.
• Importantly, if countries fail to invest in human capital, they may end up in
a middle-income trap and miss out on the next stage of development.
• The evidence also indicates that technological change is likely to be more a
boon than a curse for trade and GVCs.
• The benefits of GVC participation can be widely shared and sustainable if
all countries enhance social and environmental protection.
Source: “How important are Global Value Chains for development?” https://blogs.worldbank.org/developmenttalk/how-important-are-global-value-
chains-development-read-new-wdr2020-draft-report-and 11

12. Global Value Chain (GVC) Story
Past Reality
Value Chain
Present Reality
Value Chain
Future Reality
Value Chain
Value Chain Ecosystem:
• Key trends and complementors
• Macroeconomic Influences
• Market ecosystem
• Industry ecosystem
Mission-
Vision-Purpose-
Ideal Final
Results
for Global
Value Chain
Dimensions of Global Value Chains:
1. An input-output structure, which describes the process of transforming raw materials into final products;
2. The geographic scope, which explain how the industry is globally dispersed and in what countries the different GVC activities
are carried out;
3. A governance structure, which explains how the value chain is controlled by firms.
4. Upgrading, which describes the dynamic movement within the value chain by examining how producers shift between different
stages of the chain
5. An institutional context in which the industry value chain is embedded in local economic and social elements; and
6. Industry stakeholders, which describes how the different local actors of the value chain interact to achieve industry upgrading.
• What are the particular needs of firms in the global
value chain, and how do proposed policy initiatives
affect this critical segment?
• How can companies work together to ensure that
benefits of GVCs are created, shared, and sustained?
12

13. The three spheres of
sustainability
diversified, inclusive, and green growth
GVC Interventions:
The upgrading efforts and competitiveness of the
primal actors within global value chains (GVCs)
Source: “Upgrading in Global Value Chains: Addressing the Skills Challenge in Developing
Countries” by Karina Fernández-Stark, P. Bamber, Gary Gereffi (2012)
13
Value chain interventions are broadly labeled as value chains for development
and share common characteristics such as the focus on improving market
access conditions for and upgrading opportunities of developing country firms
and producers to promote market-based and often export-oriented
development.

14. Mango value chain
in the different
sites around the
Outamba Kilimi
National Park
Source: Arinloye, A.D.D., Degrande, A., Fassinou
Hotegni, V.N. et al. Value chain development for mango
(Mangifera indica) around Outamba Kilimi National
Park in Sierra Leone: constraints and opportunities for
smallholders. Agric & Food Secur 6, 14 (2017).
https://doi.org/10.1186/s40066-017-0092-x 14

15. Business Model Visualization
Source: Andrew James Walls (2019), “How to Visualize Your Business Model in 5 Easy Steps”
https://medium.com/swlh/a-new-methodology-for-business-model-mapping-6a122f140579
15

16. Source: “Multiple forms of capability”
http://www.organizationaldesigncompetence.com/p/education.html
“Global
Value Chain”
“The framework
of GVC”
“Cases and
Design”
“The GVC analysis,
theory of change”
16
How to Study?

17. Course Description
17

18. Course Description
• The evolution of global value chains in diverse sectors, such as commodities, apparel,
electronics, tourism and business service outsourcing has significant implications in
terms of global trade, production and employment and how developing country firms,
producers and workers integrate into the global economy.
• The GVC framework allows one to understand how global industries are organized by
examining the structure and dynamics of different actors involved in a given industry.
• In today’s globalized economy with very complex industry interactions, the GVC analysis
is a useful tool to trace the shifting patterns of global production, link geographically
dispersed activities and actors within a single industry, and determine the roles they play
in developed and developing countries alike.
• The GVC framework focuses on the sequences of value added within an industry, from
conception to production and end use.
• It examines the job descriptions, technologies, standards, regulations, products,
processes, and markets in specific industries and places, thus providing a holistic view of
global industries both from the top down and the bottom up.
18

19. Course Learning Outcomes
Apply and critically evaluate global value chains and contemporary logistics and
distribution systems
Analyze and synthesize a number of key themes in global value chain management
Explain how global value chains interrelate with society, economy, and the
environment
Design the expansion of an existing business or the creation a new venture using global
value chain knowledge and tools
19

20. Course Assessment Plan
Assessment Method
Type of Assessment Weight
Participation 20%
Individual Assignment 20%
Case Study based Assignments 25%
Group Project (Final Exam) 35%
Total 100%
Comments
• Participation is required in all discussions.
• Group project is summative.
20

21. The GVC framework
21
Producers
Exporters
National
Markets
Processors/Traders
Global
Markets
Input Suppliers
SCM: management
of inter-firm
relations/operations
GVC: global
value chain
development
Governance
Selecting and
priotizing the value
chain: Sub-sector,
product, or
commodity
Analyzing the
selected value
chain
Formulating an
upgrading strategy
for the selected
value chain
Implementing the
value chain
upgrading strategy
Monitoring and
Evaluation
Value Chain
Finance
Value Chain Structure Value Chain Development
Core Value Chain
Service
Provision

22. 22
SUPPORTING
FUNCTIONS
RULES
LawsStandards
Information
Informing &
communicating
Setting &
enforcing rules
DemandSupply CORE
The cause of
poor
performance
here .....
.... lies here
The market system

23. Teaching Plan: CBC514 Global Value Chain
Session Topic Reference
1.
5-11
The introductory session on Global Value Chain
1.1. Course Description
1.2. Course Learning Outcomes
1.3. Assessment Method
1.4. Teaching Plan
Gereffi and Lee (2012)
2. The Global Value Chain Fremework
2.1. Globalization and GVC
2.2. Concept of the Value Chain
2.3. The GVC Framework
2.4. Dimensions of Global Value Chains
2.5. Value Chain Typology
2.6. Examples of GVC
Gereffi and Fernandez-Stark (2016)
Jones et al. (2019)
Taglioni and Winkler (2016),
3.
12-11
Supply Chain Management Hernández and Pedersen (2017)
Ghemawat and Nueno (2006): ZARA:
Fast Fashion, HBS Case.
4. Value Chain Mapping Pérez and Oddone (2016)
23

24. Teaching Plan: CBC514 Global Value Chain
Session Topic Reference
5.
19-11
ECCO A/S Global Value Chain Management (Class Discussion) Nielsen et al. (2017): ECCO A/S - Global
Value Chain Management, Ivey Business
School Case
6. Global Value Chain Analysis
6.1. Dimensions of GVC Analysis
6.2. The Process of Value Chain Analysis
6.3. Recent Applications of Global Value Chain Analysis
Pérez and Oddone (2016)
Supti et al. (2019)
Macadamia nut farming in Malawi
Stimulating the Potato Value Chain in
Zambia
7.
26-11
Value Chain Governance Gereffi et al. (2005)
Chan and Reiner (2019)
8. GVC Interventions
8.1. Value chain interventions
8.2. Global Value Chain (GVC) Upgrading
8.2. Global Value Chains and Development Cooperation
8.3. Limitations of “Value Chains for Development”
Pérez and Oddone (2016)
9.
3-12
Upgrading Ponte et al. (2014)
10. Monitoring and Evaluation for Value Chain Development “Monitoring & evaluation for VCD”, ILO
Taye et al. (2019) 24

25. Teaching Plan: CBC514 Global Value Chain
Session Topic Reference
11.
10-12
Business models of participating in global supply chains and Finance
Value Chain
11.1. Business Model Visualization
11.2. GVC Business Plan
11.3. Finance Value Chain
Kaminski et al. (2020)
12. Integrating SMEs into Global Value Chain: Linking in to Global Value
Chains
Kilelu et al. (2017)
13.
17-12
Global Value Chains in the Agrifood Sector
13.1. Agribusiness and poverty
13.2. GVC analysis applied to agribusiness
13.3. Policy options for agribusiness and poverty reduction
Humphrey and Memedovic (2006)
Slob (2006)
Kalibwani et al. (2018)
14. The Digital Economy and Global Value Chains
Case: Industry 4.0 and GVC
Haryanti et al. (2018)
Foster et al. (2018)
15.
7-01-21
Group Presentation (Final Exam)
16. Group Presentation (Final Exam)
25

26. Textbooks
• Gereffi, G. (2018), Global Value Chains and Development: Redefining the Contours of 21st Century
Capitalism, Cambridge University Press, Cambridge.
• Haryanti, D.M., Kusumawardhani, M. and Anshar, K. (2018), Indonesia: Inclusive Business in Indonesia -
Improving Supply Chain Efficiency through Inclusive Business, Asian Development Bank.
• Pérez, R.P. and Oddone, N. (2016), Strengthening Value Chains: A Toolkit, Economic Commission for Latin
America and the Caribbean (ECLAC), Mexico.
• Taglioni, D. and Winkler, D. (2016), Making Global Value Chains Work for Development, International Bank
for Reconstruction and Development, Washington.
26

27. Concluding Remarks
• Over the past three decades, global trade has grown and many new exporting
countries, particularly in Asia, have been incorporated into the global economy.
• The Global Value Chain (GVC) literature emerged as an attempt to describe how
multinational firms have integrated production activities in Asia into their global
strategies and what the consequences might be for the newly-integrated
economies.
• The GVC analysis is a useful tool to trace the shifting patterns of global
production, link geographically dispersed activities and actors within a single
industry, and determine the roles they play in developed and developing
countries alike.
• This course provides competency sets (mind set, tool set, knowledge set, and skill
set) used for analyzing and synthesizing a new value chain system in order to
extend the current value chain and to promote participation and upgrading in
global value chains.
27

28. Useful Resources
• USAID: Value Chain Development
• https://www.marketlinks.org/using-value-chain-development-wiki
• The Value Chains knowledge portal (tools4valuechains.org)
• http://tools4valuechains.org/about
• The Duke University Global Value Chains Center
• https://gvcc.duke.edu/
• https://gvcc.duke.edu/cggcproject/food-agriculture/
• UNIDO: Global Value Chains
• https://www.unido.org/resources/publications/publications-type/working-papers/global-value-chains
• ILO: Global Supply Chains
• https://libguides.ilo.org/global-supply-chains-en
• DCED (the Donor Committee for Enterprise Development): Value Chain Development
• https://www.enterprise-development.org/implementing-psd/value-chain-development/
• ADB's Focus on Agriculture and Food Security
• https://www.adb.org/sectors/agriculture/main
28

29. Case Analysis Template
29

30. 30
Issue/Problem Statement:
Background and Importance:
Problem Analysis:
Goals/Dashboard Metrics:
Future State and Counter Measures:
Follow Up:
Sustain Results:
Implementation Plan:
Sponsor:
Participants:
Title
Date Revised:
Version #:
Start Date:
Revised Date
A3 Template

31. Title: What you are talking about.
Background
Current Situation
Goal
Analysis
Recommendations
Plan
Follow - up
Why are you talking about it?
Where do we stand?
Where we need to be?
What is the specific change you want
to accomplish now?
-What is the root cause(s) of the
problem?
-
What is your proposed
countermeasure(s)?
What activities will be required for
implementation and who will be
responsible for what and when?
How we will know if the actions have
the impact needed? What remaining
issues can be anticipated?
What’s the problem?
31

32. Title: What you are talking about
Background
Current Conditions
Target/Goal(s)
Analysis
Proposed Countermeasure(s)
Plan
Followup
Why you are talking about it.
- What is the business reason for choosing this issue?
Where things stand today.
- What’s the problem with that, with where we stand?
- What is the actual symptom that the business feels that
requires action?
Show visually – pareto charts, graphs, drawings, maps, etc.
The specific outcome required for the business.
- What is the specific change you want to accomplish now.?
- How will you measure success?
The root cause(s) of the problem.
- Why are we experiencing the symptom?
- What constraints prevent us from the goal?
Choose the simplest problem-solving tool for this issue:
- Five whys
- Fishbone
- QC Tools
- SPC, Six Sigma, Shainen, Kepner Traego, others…
Your proposal to reach the future state, the target condition.
- What alternatives could be considered?
- How will you choose among the options? What decision
criteria?
How your recommended countermeasures will impact the
root cause to change the current situation and achieve the
target.
A Gantt chart or facsimile that shows actions/outcomes,
timeline and responsibilities. May include details on the
specific means of implementation.
- Who will do what, when and how?
Indicators of performance, of progress.
- How will we know if the actions have the impact needed?
- What are the critical few, visual, most natural measures?
Remaining issues that can be anticipated.
- Any failure modes to watch out for? Any unintended
consequences?
Ensure ongoing P-D-C-A. Yokoten as needed.
Ownerinitials
32

33. 33
Title
Reason for choosing issue:
Brief
One or two bullets
Analysis
Visual
Charts
QC Tools
Fishbone
5 WhysCurrent Conditions
Summary
Visual
Map?
Pareto?
Problem Statement –
what’s the actual pain/symptom being felt? Just
the facts
Countermeasure Options
1) ??
2) ???
Goal/Target Condition
Brief
One or two bullets
Evaluation of Options
Criteria
2)
Name:
Coach:

34. Value Chain Development
34
Selection
Analysis
UpgradingImplementation
Monitoring and
Evaluation

35. 35
SUPPORTING
FUNCTIONS
RULES
LawsStandards
Information
Informing &
communicating
Setting &
enforcing rules
DemandSupply CORE
The cause of
poor
performance
here .....
.... lies here
The market system

36. 36
Source: https://www.non-engineer.com/post/case-study-competition-ppt-example

37. Thank You
37