05 Nov 2016
Private sector development, innovation and knowledge-based economy, Other Regions

CP ALL and the Case of Value Web Creation

How should convenience store operators like Thailand’s CP-ALL construct its value chains? What does economic theory teach us about an under – modelled area of management theory (namely value chains)?

 

In this paper, Bryane Michael, Christopher Hartwell and Vladimir Korovkin use a seemingly unrelated economic model analysing Vietnam to tell something about the conglomerates running convenience stores licenses like CP-ALL. They find that convenience stores may not want to raise capital from Thai banks and the Bangkok stock market when labour productivity exceeds capital’s. They also find that inefficiencies inherent in Thai markets may significantly reduce the optimal size of a convenience store operator like CP ALL. These operators may also (counter-intuitively) need to give up a significant share of their profits to “value service providers” when the cost of capital falls. As such, counter to the usual World Bank nostrums, improvements in Bangkok’s stock market and banks may actually hurt firms like CP ALL.