Business Development Services (BDS)
The acronym BDS stands for market development for non-financial business development services. Small and medium enterprises are in great need of such services if they want to progress and improve their competitiveness. With the BDS approach, principles of market economy and commercial transaction between a supplier and a customer are introduced to the domain of services delivery and consumption which has up to now been dominated by subsidized support structures built up by donor organisations. This set-up often involved a range of cumbersome intermediary organisations and was not sustainable in the long run. The results that were produced have been judged too expensive and too ineffective for the development of the SME sector. It is hoped that commercial BDS, based on the direct interaction between a commercial service provider and an SME customer will achieve better results with regard to effectivity, outreach and sustainability.
Market development interventions
There are four ways of achieving market development for BDS:
Creating favourable framework conditions and the mechanisms to enforce them. Role clarification among the most important protagonists (private service providers, SME promotion agencies, ministries, donors, etc.) and achieving consensus that government and public agencies will largely withdraw from direct services delivery of business development services and will leave this field to commercial or other private institutions that act at least in an entrepreneurial way.
Strengthening the supply side for BDS: based on a market analysis (including existing suppliers, products and prices, existing and potential demand from target groups) a concept for market development is designed, and competition between suppliers is promoted, i.e. they are supported in product development in a non-discriminating way (e.g. through competitions, tendering of funds). Promotion of suppliers is in any case temporarily limited (exit strategy) and performance-oriented.
Developing the demand side for BDS: various support instruments such as vouchers enable the customer to get a service at reduced cost and, at the same time, do neither restrict his freedom of choice nor the supplier's cost calculation. Additional instruments of demand side development may also include small entrepreneurs' self-help structures: chambers and associations may support their members through group consultation and regular communication to "reframe their needs into demand" and to help them decide which services exactly they wish to purchase for their business progress.
Developing the "market place": generating "market places" includes all those activities that bring suppliers and customers together, either physically (e.g. fairs) or virtually, and that reduce transaction costs (information). This includes cooperation stock exchanges, internet sites, and also public relations in order to improve the image of the SME sector, to promote the use of BDS etc. Since information and communication stimulate market development considerably, these kinds of activities are becoming increasingly important. In the case of ict-based services, new products are even being created.
The GTZ BDS approach emphasizes - differently than the Anglo-Saxon one practiced by the multilateral donors - an active and compensating role of the state, the importance of public institutions and supporting instruments, public-private cooperations (support agencies) as well as chambers and associations as relevant protagonists within the BDS system. Thus, the shaping of sector-political framework conditions and qualitative effects of interventions (occupation effect, target group-specific access to services) are explicitly taken into account. The same applies to the participation of local protagonists in support strategy design, to specific mechanisms for consensus-building (such as round tables) as well as donor coordination aiming at broad-based ownership for the BDS approach.
More of Business Development Services: Group Consultation
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