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CASE 3: GERES Cambodia IcoProDac/ New Lao Stove Program
Sandra Romero Ruiz May 27th, 2014 -‐ Phnom Penh
• Development of quesAonnaires (Value Chain Analysis) ✓
• Individual interviews (program managers, business units of the value chain) ✓
• Visits to the field ✓ • Focus group discussions ✓ • Desk review ✓
• Preliminary findings presentaAon ✓
How we adapted the Methodology
Where?
GERES Cambodia main office in Phnom Penh & stove producAon sites in Kampong Chhnang province When?
Throughout the month of April 2014 What kind of interviewees?
Program managers Stove producers and distributers
INTERVIEWS & FIELD VISITS
What is IcoProDac? The Improved Cookstove Producer and Distributor AssociaGon in Cambodia (IcoProDac) is a business associaAon established in 2004 by GERES Cambodia. It was developed through GERES Cambodia’s New Lao Stove (NLS) Program.
INTRODUCTION & HISTORY
1. OrganizaAonal CharacterisAcs 2. Business Strategies Employed
a) EssenAal elements of the NLS Value Chain
b) NLS Value Chain modaliAes
3. Financial Model
4. Market access and trends
5. DistribuAon Channel Strategy
STUDY FINDINGS
ORGANIZATIONAL CHARACTERISTICS
• Type of organizaGon: Business AssociaAon, registered in 2004 by GERES
• 270 members
• Subsidiary of GERES (100%)
• Specialized in Improved Cookstove sector
• Social purpose (social return to the members – who are for profit)
OWNERSHIP OF THE MEMBERS – Business Units
At the output/ac,vity level:
• Few of them report 100% revenue from ICS, some side acAviAes, poeery, tradiAonal stoves, farming etc.
• Micro – small enterprises (non registered businesses, home-‐based in high percentage)
• Limited Financial capital registered
• Limited access to finance
ORGANIZATIONAL CHARACTERISTICS
COORDINATION AND GOVERNANCE
ORGANIZATIONAL CHARACTERISTICS
DISTRIBUTORS
EXECUTIVE BOARD ICOPRODAC
PRODUCERS PRODUCERS WHOLESALER PRODUCERS DISTRIBUTORS
• Formal AssociaGon – network (270 associates)
ORGANIZATIONAL CHARACTERISTICS
Appendix XXXX Organigram ICoProDAC
Chief of Executive Committee
Deputy Chief of Executive Committee
Secretary Treasurer Members
Steering Committee
ORGANIZATIONAL CHARACTERISTICS
• Specialized in Improved Cookstove Sector • Business AssociaGon
IcoProDac
WHERE THEY WORK
• Centralized producAon in Kampong Chhnang Province
• 41% of the HHs naAon wide • Distributed all over the
country – main urban areas
ESSENTIAL ELEMENTS OF NLS VALUE CHAIN
BUSINESS STRATEGIES EMPLOYED
Production Distribution & Commercialization Inputs End User
PRODUCTION FLOW
FINANCIAL FLOW
INFORMATION FLOW
GOVERNANCE MEASURES
NLS VALUE CHAIN MODALITIES
Suppliers
Micro/small Producers
Wholesalers
Distributors
Retailers
End Users
Suppliers
Micro/small Producers
Distributors
Retailers
End Users
BUSINESS STRATEGIES EMPLOYED
Suppliers
Micro/small Producers
End Users
NLS VALUE CHAIN MODALITIES (Cont…)
Suppliers
Micro/small Producers
Retailers
End Users
BUSINESS STRATEGIES EMPLOYED
FINANCIAL MODEL
ACCESS TO FINANCIAL CAPITAL
• Carbon Finance – VCS Fund (May 2003 – June 2013 under GERES) • ODA – EU & AFD (under GERES) • Stove pricing strategy – Fixed at producAon IcoProDac – Price for
the end user Market price • Limited access to Working capital:
• Economic pillar under GERES – build in house mechanism -‐ (producers and distributors) Microcredit max. 1,000 USD (savings/credit)
• Local MFIs & commercial loans • End user finance – No system in place, some informal ways along
the value chain business units
GERES • Quality control and Assurance systems (VCS) • Monitoring and EvaluaAon systems (VCS) • Training for ProducAon units (VCS & ODA) • Equipment and tools (VCS & ODA) • MarkeAng and awareness raising campaigns (ODA)
Business UNITS – SMEs • Profit from sales: Re-‐invested in the VC (payment of salaries,
supplies and equipment, upgrade in transport) • Credit:
• Economic Pillar • Commercial credits & Local MFIs
FINANCIAL MODEL
INVESTMENTS
FINANCIAL MODEL
RETURN ON INVESTMENTS • Margins are made along the Value Chain (higher sales margins at
distribuAon and wholesaler level) • Turnover revenues mainly spent for social and family needs
(more than business scaling) • Lot of room for improvement at the distribuAon level
“tradi,onal system” • “Lost of investment at the ProducAon Level -‐ Very high Drop-‐out
(>40%)” • “IcoProDac & members -‐ biggest market player in Cambodia” –
they absorb >40% of the naAonal market
• Same distribuAon channel – selling points as the tradiAonal cookstove
• Low level of partnerships with private sector, NGOs, CBOs, etc.
• IcoProDac does not parAcipate in naAonal mechanisms • Low level of investment in adverAsing – only related to donor
demand (EU) • Some cooking demonstraAons, billboards, word-‐of-‐mouth,
TV/radio ads, etc.
MARKET ACCESS & TRENDS
MARKET ACCESS & TRENDS
Stove type Number of Households (HHs) – rounded up to the nearest thousand
% of the Total Cambodian HHs
NLS 763,000 25% NKS 397,000 13% NLS + NKS 114,000 4% Total 1,274,000 41%
MARKET SHARE
• “No incenAves for the distribuAon network”. “Same system as tradiAonal cookstove (piggy backing)”
• “TradiAonal distribuAon network – low cost, low efficiency – when there is an upgrade at the distribuAon unit the operaAonal cost increases
• Decentralized channel
• No aper-‐sales support strategy (no maintenance, no repairs, no warranty, etc…)
CHANNEL STRATEGY
SWOT ANALYSIS
STRENGHTS WEAKNESSES
OPPORTUNITIES THREATS
NLS GERES
EMERGING ISSUES
GENDER Not present in design of the program, but it is a reality of the Business Model
INTERVENTION LOGIC
• Centralized understanding of purpose (GERES management level)
• Lacking clear informaAon on model of intervenAon
• Theory of change of IcoProDac is different from members’ one
• “Deeper private sector understanding and market perspecAve needed”
RECOMMENDATIONS
RECOMMENDATIONS
“Review areas of investment & intervenAon (more efficiency in producAon, increase number of producers, widen geographical areas, distribuAon mechanism, etc…)”
“Bring addiAonal financial support to the Value Chain”
RECOMMENDATIONS
• “Invest in organizaAonal development providing IcoProDac’s governing body with more insAtuAonal support”
• “Strengthen markeAng and awareness (explore outsourcing services…)”
• “Improve networking at local, naAonal, regional levels”
• “Private sector and business analysis & perspecAve needed”
RECOMMENDATIONS
• “ Access to financial capital (improve access to working capital for Business Units, strategic partnerships with MFIs) ”
• “ Improve technology and experAse t ransfer f rom GERES -‐ more experienced staff ”
• “ Access to financial services for end
users (partnerships with MFIs and savings and credits groups) ”
May 27th, 2014 -‐ Phnom Penh
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