CHAPTER 2

REVIEW OF RELATED LITERATURE

Cruz (2010), patterned after the One Village, One Product (OVOP)

movement at Oita Prefecture in Japan. OTOP-Philippines aims to generate jobs

by improving the competitiveness of local industries by focusing on the product or

service in which the particular town or municipality has the resources, capability

and the skills that needed to produce the product or deliver the service efficiently.

The program is meant to catalyze the development in the regional and rural

areas. It has effectively enhanced the entrepreneurial consciousness of people in

the countryside and has paved the way towards the more productive utilization of

the indigenous resources as a raw material. Many countries, particularly in Asia,

have already OTOP as SME promotion strategy.

According to Executive Order No. 176 (2004), The OTOP-Philippines must

be viewed within the broader context of micro, small and medium enterprises

(MSME) development policy in the country. While there has been number of

legislations and government initiatives in the past that promotes the creation of

rural cooperatives and enterprises.

Reyes-Maqasuit (2008), The National Export development strategy

likewise stipulates the promotion of Small and Medium Enterprises (SME) as an

important component of stimulating economic growth and rural development.

Within the framework, the formation and creation of industrial zones is also a

mechanism to disperse industrialization to other parts of the country to stimulate

economic growth, while clustering is hoped to spur the growth of small and

medium enterprises across the country in partnership with other government

agencies, the private sector and the local government.

Philippine Export Development Plan (2005-2007), furthermore, they called

for sustaining the clustering approach to industry development with special

emphasis on regions and provinces with export-oriented cities/municipalities

covered by One Town One Product (OTOP).

Cruz (2010), Industry clustering is now the [Philippines] key strategy

towards an inclusive economic growth that is both efficient and sustainable. The

Medium-Term Philippine Development Plan (2004-2010), outlined the strategies

of the product development through OTOP and credit provision through SULONG

(SME Unified Lending Opportunities for National Growth) to support three million

entrepreneurs and generate six to 10 million jobs.

De Leon (2011), According to DTI Strategy Gregory Domingo The

implementation of OTOP has been extended by the present administration. Since

the said programs proves to be an effective strategy in stimulating economic

development in the countryside. Ho (2011), the program will be pursued and

scaled-up as an integral component of the regional clustering program and will

be imbedded in the tourism promotion program.

The accomplishment report Cruz (2010) reveals the program exceeds its

performance targets, but employment. From 2005 up to third quarter of 2010, the

program implemented various activities and interventions that generate positive

results.

Betcherman et.al (2009) suggest that policy-makers should be realistic

about what Active Labor Market Program (ALMP) can do and that investments in

this area should be made carefully and modestly. It is a good practice to start

with modest program. Sriwong (2008) stated that training of local procedures

lacked of skills in mass production but the strength of community business has

no detrimental effects to the environment.

Kongsomtub (2006) pointed out that when the local producers started to

duplicate each other ideas and produce similar products, it created the crunch of

raw material. Eventually, it unnecessary raised the cost of raw material and price

of OTOP products. Mekhum et.al (2007) and Jomphot (2008) found that the most

important training that local products need is simple but useful accounting

method and the knowledge of improvement of production process.

Pravatsor (2008) studied product development and found that local

products have a potential in product development and eagerness to transfer their

knowledge to next generations. Kongsompee (2007) stated that government

needs to find place for OTOP products to display and the promotion of OTOP

products for exporting should be focused on high potential and high quality

OTOP products only.

Tantabundit (2008) concurred with Isarakutan (2006) that the external

factors of success are product development, marketing strategies and customer

satisfaction. Prapatsorn (2008) found that new channel of market often came
from exporting the product soon after they got some kind of awards.

Dusadeephipat (2004) stated that there should be a joint process of

thinking and working. In addition, may issues were raised in the OTOP

producers convention during August 18, 2008 such as insufficient of proper tools

and equipment, lack of innovation, unable to fulfill high demand and product

damage during transportation.

In writing about the effects of the Internet and coffee table books such as

Barbash and Ragan (2004) on production, styles and sales Chibnik concludes

that although publicity has increased that crafts legitimacy especially in the eyes

of the Mexican governments popular writing on wood carvings has not increased

sales much, though styles have been somewhat affected by popular writing on

the craft, as some producers and buyers pick pieces, catalog-style, from public

pictures.