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The cashmere industry is an important sector in Mongolia, and it has the potential to contribute to the growth of the economy and poverty alleviation. It provides income and employment for over a third of the population, and raw cashmere and cashmere products are the Mongolia’s third largest official export products after copper and gold.
Mongolia is the world’s second largest producer of raw cashmere, producing over 20 percent of world supply next to the neighboring country China. Nevertheless, 55.9% of the raw cashmere is used for manufacturing finished and semi-finished products, the capacity utilization rate remains low at all stages of processing, and processing firms are losing their competitiveness.
Firstly, through the review of related literature, this study finds out the key issues of cashmere industry in Mongolia. Then, based on Michael Porter’s Diamond Model with AHP method, this study develops a hierarchical framework including a goal, criteria, sub-criteria, and alternatives affecting the competitiveness of cashmere industry.
Secondly, this study intended to develop questionnaires for experts including CEOs and managers from cashmere industry, government organizations, and research institutions. The main purpose is to find out the relations among the factors, and give them their weights of importance, and it points out its further competitive advantages of Cashmere Industry. As a result, 25 responses were received at the end of the survey.
The collected data from the survey was analyzed through the AHP approach. We have calculated a composite weight to each factor and put the factors in order based on the weight that each factor has got. Our study suggests that the cashmere industry in Mongolia should further upgrade its working efficiency in order to create a more sustainable advantage. In addition, our results further confirm that a government can play a significant role in creating competitive advantages.
Finally, on the basis of the above results, we proposed several policy recommendations for relevant organizations in order to help cashmere industry upgrade their competitiveness by increasing the capacity of producing more value added products.

TABLE OF CONTENTS

ACKNOWLEDGEMENTS…………………………………………………………….I
ABSTRACT………………………………………………………………………………II
TABLE OF CONTENTS………………………………………………………………...III
LIST OF TABLES………………………………………………………………………..V
LIST OF FIGURES…………………………………………………………..…………VII
CHAPTER ONE. INTRODUCTION…………………………………………………..1
1.1 Research Background and Motivation………………………………………………1
1.2 Research Problems and Objectives……………………………………………………3
1.3 Research Procedure……………………………………………………………………5
1.4 The Structure of the Study…………………………………………………………….6
CHAPTER TWO. LITERATURE REVIEW……………………………………..…7
2.1 What is Cashmere?…………………………………………………………...7
2.2 Theory of Competitive Advantages…………………………………………………9
2.3 Porter’s Diamond Model……………………………………………………….12
2.4 Analytic Hierarchy Process……………………………………………………..16
CHAPTER THREE. CASHMERE INDUSTRY……………………………………20
3.1 Cashmere Industry in Mongolia…………………………………………………20
3.2 Capacity and Structure of Mongolian Cashmere Industry………………………..24
3.3 The Role of Cashmere Industry in Mongolian Economy………………………….27
3.4 Government Policy on Cashmere Industry…………………………………………..30
3.5 World Cashmere Industry……………………………………………………………32
CHAPTER FOUR. RESEARCH DESIGN AND METHODOLOGY……………..36
4.1 The Conceptual Model…………………………………………………………..36
4.2 Definition and Explanation of Research Constructs………………………………..37
4.3 Questionnaire Design ……………………………………………………….43
4.4 Sampling Plan and Data Collection…………………………………………45
4.5 Data Analysis and Procedure…………………………………………………..46
CHAPTER FIVE. DATA ANALYSIS AND RESULT………………………………50
5.1 Characteristics of Respondents………………………………………………..…50
5.2 The Pair-wise Comparison Matrix…………………………………………………52
5.3 Consistency Test…………………………………………………………………….53
5.4 Comparison of Different Groups……………………………………………………58
CHAPTER SIX. CONCLUSIONS AND SUGGESTIONS………………………….64
6.1 Research Conclusion……………………………………………………………..64
6.2 Recommendations and Implications……………………………………………..67
6.3 Research Limitations……………………………………………………………..68
6.4 Suggestions for Further Research………………………………………………….69
REFERENCES…………………………………………………………………………..70
APPENDIX I…………………………………………………………………………….75
APPENDIX II…………………………………………………………………………81

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