Sustainable Business and Value Chains Management in the Developing World Africa50.dk conference 24 September 2010 1. Introduction 2. Business is Business Fair Qualities 3. Free choice themes 4. Business development models 5. Questions and comments 6. Final remarks Søren M. Borch Engineer M.Sc., and Business economist Ph.D. Business innovation consultant Advisor in eco-business, Danida, 2006-2009 www.condiv.dk ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 1
Example: Sundried fruit Alimentos Campestres (“Country side foods”) Suppliers Producer Clients Preparation Supermarkets Individual farmers’ and groups’ production Markets México, USA, Europe Drying with Solar Energy Packing and design of display products Transport ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 2
Example: Tourism � Marketing and improvement of community tourism in San Juan la Laguna, Sololá, Atitlán, Guatemala. Suppliers Producer Clients Service delivery Tour operators Cultural & Natural Circuit nat’l and internat’l Natural environment and Social community International tourists Local individual guides Fundación Solar, Commercial NGO ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 3
Successes of actors related to Premaca Premaca = Regional Environment Programme in Central America, Danida Premaca-4 = Component 4 on Eco-business, 2006-2012 Award / Prize in Honduras (FUNDER) Mora Lenca - black berries - clean production - CSR Award / Prize in Guatemala (AGEXPORT) Chirrepec - Fair Trade tea Mabeli - Spa products Danida - Institutional - Export support ... and 1000’s of new or improved jobs in sustainable businesses ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 4
Centre Sanghaï in Benin Africa or Central America, eco- business successes look alike. Director Godfrey Nzamujo, educated as electronic engineer in the USA, since 1980’s back in Benin. •400 workers produce fish food, fish, pigs, methane etc •enthusiasm, entrepreneurship, local material, local market Source: Arte Reportage "Ferme modèle au Bénin" http://www.arte.tv/fr/Videos-sur-ARTE-TV/2151166,CmC=3252748.html ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 5
Management for sustainability Management is the work of managers. Good management is the “sine qua non” for sustainability. I shall look at today’s conference theme from the management profession’s point of view. ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 6
>> BUSINESS IS BUSINESS >> ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 7
Porter’s Generic Value Chain (internal) Good functioning is better Basic functions in a company: Independent of country than bad functioning Firm infrastructure Secondary / support activities General management, finance, accounting, legal, quality control, government affairs Human Resource Management Recruiting, training, development, compensation Technology development Technology, know-how, machines, procedures, development of products and processes Procurement Buying raw materials, office equipment, machines, buildings Margin Profit Inbound Operations Outbound Service Marketing logistics logistics & sales Receiving, Machining, Order processing, Installation, Communicat. storing, assembly, test, warehousing, reparation, advertising, distribution, packaging, print distribution spare parts sales force, vehicle PR scheduling. Primary activities ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 8
Single business link P = Producer C = Client P C Product Business link A business link implies a commercial relation with transaction of products or services from a seller (producer) to a buyer (client). It is the most simple version of a chain. ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 9
Simple business chain P = Producer C C = Client Product P C ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 10
Detailed productive chain C C C C C S P = Producer V P P C C = Client V T B V = Supplier T P T = Transporter E = Packing P P C B = Bank P N = Norms E Certificator S = Business V N Service C Providers A productive chain is Link a business network of links, C all with relevant relations, Productive directly or indirectly, S C C chain to some central activities Product C ConDiv S N Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 11
Simple value chain C C C C C S P = Producer V P P C C = Client V T B V = Supplier T P T = Transporter E = Packing P P C B = Bank P N = Normalization E Standards S = Business V N Service A value chain is C Providers a part of a productive chain Link in which the actors C have an alliance and Productive corresponding governance S C C chain system with the goal Product C of producing and marketing products or services of added value ConDiv S N Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 12
Complex value chain C C C C C S P = Producer V P P C C = Client V T B V = Supplier T P T = Transporter E = Packing P P C B = Bank P N = Normalization E Standards S = Business V N Service C Providers Link C Productive S C C chain Product C ConDiv S N Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 13
Marketing mix, 4P-model P roduct P lace P roduct P lace - Features - Logistics - Features - Logistics - Quality - Channels - Quality - Channels - Packaging - Packaging - Locations - Locations - Size - Size - Inventory - Inventory - etc - etc - etc - etc Target Market P rice P romotion P rice P romotion - List price - Advertising - List price - Advertising - Discounts - Personal selling - Discounts - Personal selling - Payment - Sale promotion - Payment - Sale promotion - Credit - PR - Credit - PR - etc - etc - etc - etc The model is useful in all countries. - “Quality” is the right combination seen through the customer’s eyes Ref: Philip Kotler, ”Marketing management” ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 14
Competitive power Local competitors Competitor have the same Start with the International problems low hanging fruit Competitor International International National Buyer Supplier Local National National Competitor Supplier Buyer Local Power Local C vis-a-vis P Buyer Supplier Bargaining power Bargaining power Producer S vis-a-vis P B vis-a-vis P ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 15
Competition from Asia Wage and flexibility: •Indonesia cheaper and faster than Central America Same cost: •China 4 containers •Africa 1 container ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 16
Culture: Denmark vs Guatemala Gert Hofstede’sTM Cultural Dimensions Denmark and Guatemala are almost totally the opposite. A big challenge for development aid and B2B. Attitude of managers. Notes PDI: Power Distance Index IDV: Individualism MAS: Masculinity UAI: Uncertainty Avoidance Index Source: www.geert-hofstede.com/hofstede_dimensions.php ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 17
Cultural groups in Guatemala … it is not just a clean cut Denmark–Guatemala difference. It is multidimensional: ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 18
The “top manager” in the front President Àlvaro Colom of Guatemala sings the national hymn alone. Nobody else attended the meeting on time at 9:00 AM!! At the opening of the "Forum for alliance between the public and the private sector for development of competitive power". Source: Prensa Libre ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 19
The managers are key drivers •improve operations •use strategic partners •train employees •be change agent •honour end user •use strategic customers •business culture •get beaten, and get on ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 20
>>SUSTAINABILITY QUALITIES >> ConDiv Eco-business Africa50.dk, Sustainable business [Africa50-2010-09-24-presentation.ppt] Søren Borch Next Page 21
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