Global Floriculture Industry Value Chain

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  • Topic: Supply chain, Supply chain management, Value chain
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  • Published : August 27, 2011
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Master programme in Economic Growth, Innovation and Spatial Dynamics

GLOBAL FLORICULTURE INDUSTRY VALUE CHAIN. POSITION OF THE UKRAINIAN FIRMS IN THE FLORICULTURE BUSINESS.

Olha Martsynovska aeg10oma@student.lu.se
Abstract: Floriculture industry is very dynamic in its varieties and trade volumes demonstrating 6 to 9 % of annual growth. It gets also more and more diverse in terms of global actors. Now there are about 120 countries actively involved in the floriculture industry as global manufactures with the Netherlands as an epicentre of world flower production and distribution. In that respect, analysis of the floriculture industry in terms of global value chain changes is an interesting and relevant issue to address as it has gone through some global conversion and is still shifting in the direction of cost and production optimization. First aim of the research is to conduct an analysis of the main processes that shape the global value chain structure and functioning using an empirical illustration of the floriculture industry. The study provides insights on the industry’s key actors and processes from the point of production to the final consumption destination. However, further scope of the research is narrowed down to the analysis of the Dutch floriculture sector, as the main hub in the global floriculture industry value chain, and the investigation of the potted and garden plants chain, as it demonstrates considerable differences from the one of cut flowers. Another aim of the research is to proceed from the macro analysis of the global industry actors and global value chain to a micro level perspective in the empirical analysis that was done to analyse Ukraine as a consumption hub in the industry value chain. Key words: Floriculture industry, global supply/value chain, transaction costs, institutions, Netherlands, Ukraine

EKHR21 Master thesis (15 credits ECTS) June 2011 Supervisor: Lars Coenen Examiner: Håkan Lobell

AWCKNOLEDGEMENTS Without the cooperation of Ukrainian importing firms and industry organization and foreign exporters involved in the research (specified in the Appendix C) the following study would have been impossible. I am particularly grateful to Ruud van Emmerik and Rupert A. Spaargaren for providing unforgettable practical insights and helpful information on the Dutch floriculture industry functioning that made my stay in Holland the most interesting part of this research. I want to express gratitude to professor Jo Wijnands (Wageningen University, Holland) for the interest in my research and providing general industry information and statistics as well as feedback on theoretical framework of the research. I also want to thank my supervisor Lars Coenen for encouraging me to write about the subject I feel personal interest to and being very supportive during the whole period of my research work.

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TABLE OF CONTENTS

1. Introduction ……………………………………………………………………………………... 4

2. Previous Research & Theoretical framework …………………………………………................ 6 2.1. Global value/supply chain theory …………………………………………….……..9 2.2. Institutional and transaction cost theory ……………………………………………13 2.3. Strategic management theory …………………………………………………….... 16 3. Research methodology ………………………………………………………………………… 17 4. Global floriculture industry value chain ……………………………………………………….. 19 4.1. Global floriculture industry value chain in facts and figures……………………...... 19 4.2. Netherlands – the main hub in the industry chain…………………………………… 24 4.3. Summary of the key findings on the global floriculture industry value chain………. 32 5. Positions and perspectives of the Ukrainian stakeholders in the floriculture business ………… 34 5.1. Ukraine – promising market? ………………………………………………………. 34 5.2. Ukrainian floriculture business: insights by the actors across the chain …………..... 36 5.2.1. Supply channels…………………………………………………………….... 36 5.2.2. Structure of the Ukrainian floriculture sector………………………………... 40 5.2.3....
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