Sri Lanka's rubber industry: succeeding in the global by Ridwan Ali, Yusuf Choudhry, Douglas W. Lister

By Ridwan Ali, Yusuf Choudhry, Douglas W. Lister

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Additional info for Sri Lanka's rubber industry: succeeding in the global market, Parts 63-370

Sample text

Recessions and expansions in the developed countries and per capita income growth in many of the developing countries both affect the growth of rubber demand. The industry grew very slowly in the 1970s, due to numerous shocks to the world economy. It increased rapidly during the second half of the 1980s. 8 million tons in 1987. There was a big upsurge of demand in 1988-1989 that created a supply shortage and prompted a sharp increase in world price for rubber. Price was stabilized to some extent by using buffer reserves under the International Natural Rubber Agreement (INRA).

While the government has the above important role in creating factors that enhance the industry's competitive advantage, individual firms in the industry have to assist the government in shaping policy and must put their support behind constructive government programs. They should stay clear of quick fixes, such as subsidies and market protection, that in the long run would undermine their competitive ability. They must also look for strategic alliances with firms in other countries to fill any resource gap that may be hindering development.

Today, three or four large multinational companies dominate the world tire industry and these companies have forged direct supply links with the major rubber-producing countries who can assure them quality and consistency of supply. Concurrent changes in the technological environment have accelerated the pace of change, as new technologies requiring high grade natural rubber increased the necessity of establishing direct and continuous supply channels with selected producers. Standard grade rubber today, is bought by industries producing less sophisticated goods that can do with mixed grades of rubber accumulated from different countries.

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