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  • Presenter states: We begin with a success story of an individual who has benefited significantly from a BDS market development initiative. (It is best to select a success story from a program in the region where the presentation is being given.)
  • Here is another success story. This one illustrates how the radio program promoted the use of other business development services.
  • Presenter states: We begin with a success story of an individual who has benefited significantly from a BDS market development initiative. (It is best to select a success story from a program in the region where the presentation is being given.)
  • Presenter states: Once it became clear that BDS suppliers could earn revenue from services if they were highly relevant to SEs, the field began to think about how to achieve sustainability.
  • Note: This graphic requires a box to left of BDS facilitator labeled Donor and with an arrow going to BDS Facilitator
  • Presenter states: for example, the veterinary services were developed due to lack of services in the area; The voucher program is designed to convince businesses to try training services, and convince trainer to serve SEs.
  • Presenter States: For example, none of these suppliers received direct grants from the facilitators – only technical assistance to take advantage of existing market opportunities.
  • Presenter States: SEs should be free to select any supplier, rather than induced to go to particular suppliers because they offer free services. The programs focus primarily on building supplier capacity and SE awareness of the services – they do not work directly with SEs.
  • Presenter States: For example, the voucher program briefly screens suppliers only to ensure that they are indeed trainers. They are attempting to develop many sources of supply for SE customers.
  • Presenter states: Again, no grants to suppliers. In order for suppliers to focus energy on serving SEs well, they need to view the SEs as the customer, and the program as a business opportunity –not charity.
  • Presenter States: For example, ApproTEC has introduced three types of water pumps to the market as they have understood different market segments and as improvement in technology have taken place.
  • Presenter States: It is very difficult to sell services in a market where SEs are used to receiving free services, whether they are happy with them or not. This approach requires a collective cultural shift among donors, government agencies, NGOs, SEs and members of the public who support SE development.
  • Presenter States: This is the biggest challenge. For example, ApproTEC is still involved in some quality control and promotion activities. However, an exit strategy is a clear element of developing a functioning market.
  • 871_1_DayPresentation.ppt

    1. 1. BDS Market Development A Training Presented by the SEEP Network and the International Labour Organization’s SEED Program
    2. 2. BDS Market Development <ul><li>COURSE GOAL </li></ul><ul><li>To help enterprise development specialists understand commercially-oriented business development services (BDS) initiatives and to improve the outreach, cost-effectiveness, sustainability, and impact of their BDS offerings to micro, small, and medium-sized enterprises (SEs). </li></ul>
    3. 3. BDS Market Development <ul><li>AGENDA </li></ul><ul><li>Overview </li></ul><ul><li>5 Guiding Principles </li></ul><ul><li>Practitioner Presentation </li></ul><ul><li>Risks & Rewards </li></ul><ul><li>Closing & Evaluation </li></ul>
    4. 4. BDS Market Development <ul><li>LEARNING APPROACH </li></ul><ul><li>Trainers... </li></ul><ul><li>Facilitate learning; </li></ul><ul><li>Draw on participant experience; </li></ul><ul><li>Use a variety of learning methods—role plays, case studies, lectures, games; </li></ul><ul><li>Supply reading material; and </li></ul><ul><li>Provide practical lessons. </li></ul>
    5. 5. BDS Market Development <ul><li>OBJECTIVES </li></ul><ul><li>Define / describe general principles of Market Development Approach to BDS; </li></ul><ul><li>List broad categories of BDS w/ examples; </li></ul><ul><li>Describe key financial sustainability strategies; </li></ul><ul><li>List BDS organizations / appropriate roles; </li></ul><ul><li>Describe BDS market development principles / strategies; and </li></ul><ul><li>Describe main risks / rewards of BDS market development strategies. </li></ul>
    6. 6. BDS Market Development <ul><li>THE MARKET DEVELOPMENT APPROACH </li></ul><ul><li>Basic Principles: </li></ul><ul><li>Impact-centered programs; </li></ul><ul><li>Specific, focused, tailored services; </li></ul><ul><li>Demand-driven services; </li></ul><ul><li>Sustainable Service delivery; and </li></ul><ul><li>Development of competitive, vibrant BDS markets. </li></ul>
    7. 7. BDS Market Development Principle 1: Impact-Centered Programs The focus of BDS programming is to create a POSITIVE IMPACT . The delivery of business services and the development of service markets are means toward that goal.
    8. 8. Impact-Centered Programs What kind of impact does your program seek to achieve?
    9. 9. Sustainability Outreach Cost-Effectiveness Impact-Centered Programs IMPACT
    10. 10. Impact-Centered Programs Who does the program serve?
    11. 11. Impact-Centered Programs SEs... Micro, small and medium- sized firms, and small-scale farmers
    12. 12. Success Story Microenterprise: Ms. Jemima Gyamfi, Caterer and wholesale egg distributor Country: Ghana Organization: ILO FIT and Kapital Radio BDS: SE Radio Programme
    13. 13. Success Story <ul><li>Ms. Jemima Gyamfi , Caterer and Egg Seller, Ghana </li></ul><ul><li>Learned improved book-keeping practices. </li></ul><ul><li>“ Now no matter how small the amount, I record it. I indicate the date, describe the transaction and indicate the cost. This is helping me to protect my chop money.” </li></ul><ul><li>(Her food money.) </li></ul>
    14. 14. Success Story Microenterprise: Mrs. Mary Adubofour, Retailer, Poultry Equipment Country: Ghana Organization: ILO FIT and Kapital Radio BDS: SE Radio Programme
    15. 15. Success Story <ul><li>Mrs. Mary Adubofour. Retailer Poultry Equipment </li></ul><ul><li>Learned about the importance of BDS and increased her participation in BDS. </li></ul><ul><li>“ At first I wasn’t used to participating or attending workshops or meetings, but this program has encouraged me. I attend any workshop or meeting that has any bearing on my business.” </li></ul>
    16. 16. BDS Market Development <ul><li>Principle 2: Specific, Focused, Tailored Services </li></ul><ul><li>Business Development Services must: </li></ul><ul><li>Address specific SE wants and needs; </li></ul><ul><li>Focus on high-priority issues; and </li></ul><ul><li>Be tailored to add high value to SEs. </li></ul>
    17. 17. Specific, Focused, Tailored Services <ul><li>What are </li></ul><ul><li>Business Development Services? </li></ul>
    18. 18. Business Development Services They Are More Than... Technical Assistance Finance Training
    19. 19. Business Development Services They Are Also... Market Access Technology Inputs & Infrastructure Product Development SE White Paper: Proposals to Improve SE Policy in South Africa Advocacy
    20. 20. Specific, Tailored, Focused Services <ul><li>INSOTEC: Ecuador </li></ul><ul><li>Sector : Jeans manufacturing </li></ul><ul><li>Strategy: Help MEs improve quality </li></ul><ul><li>Services: Buttonholing, embroidery, input and equipment supply. </li></ul><ul><li>Outreach: 4,450 in 2000 </li></ul><ul><li>Sustainability : Break-even in 2000 </li></ul>
    21. 21. <ul><li>Principle 3: Demand-Driven Services </li></ul><ul><li>Respond to SE wants and needs; </li></ul><ul><li>Are paid for by SE or commercial actors with vested interest; </li></ul><ul><li>Put immediate financial pressure on supplier to provide relevant services. </li></ul>BDS Market Development
    22. 22. Demand-Driven Services <ul><li>SEs pay fees for services </li></ul><ul><li>or </li></ul><ul><li>SEs acquire services such as advice from buyers or suppliers as part of a business deal. </li></ul>
    23. 23. Charging Fees <ul><li>Veterinary Services in Nepal </li></ul><ul><li>CECI/MARD trains entrepreneurs to supply veterinary services to farmers; </li></ul><ul><li>Veterinarians sell services to farmers; </li></ul><ul><li>40 village veterinarians selling; </li></ul><ul><li>Vets earn profits of 40 - 50%. </li></ul>
    24. 24. Services Through Business Deals <ul><ul><ul><li>PROARTE, a Nicaraguan handicraft company initiated by MEDA </li></ul></ul></ul><ul><li>Markets traditional handicrafts; </li></ul><ul><li>Buys from about 100 rural artisans; </li></ul><ul><li>Supplies inputs, product designs, & training; </li></ul><ul><li>Earns 15% profits in 1997. </li></ul>
    25. 25. <ul><li>Mutually Beneficial Services… </li></ul><ul><li>FIT Business Connect Magazine </li></ul><ul><li>Publishes free business-to-business magazine – circulation 10,000 – in Zimbabwe; </li></ul><ul><li>Financed by advertising revenue from small and large firms with... </li></ul><ul><li>Large firms buying big ads, paying more; </li></ul><ul><li>Small firms buying small ads, paying less; and </li></ul><ul><li>Micro firms benefiting for free. </li></ul>Other Financing Strategies
    26. 26. BDS Market Development Principle 4: Sustainable Services BDS should be made available to SEs over the long run through financially sustainable delivery mechanisms, institutions, and markets – In sum, through the PRIVATE SECTOR .
    27. 27. Sustainable Services <ul><li>Sustainability depends on: </li></ul><ul><li>Private sector financing (demand-driven services); </li></ul><ul><li>Cost-structure in-line with SE and market ability to pay; and </li></ul><ul><li>Independent, financially viable institutions and delivery mechanisms. </li></ul>
    28. 28. Criteria for Viable BDS Suppliers <ul><li>Capacity to deliver services; </li></ul><ul><li>Close to SEs in culture, operating environment, geography; </li></ul><ul><li>Low cost structure; </li></ul><ul><li>Commercial focus, business culture, accounting and management systems; </li></ul><ul><li>Organizational independence, especially from donor funds; </li></ul><ul><li>Organizational stability; and </li></ul><ul><li>Focus on services, SEs, or BDS. </li></ul>
    29. 29. <ul><li>Institutional sustainability more likely when subsidized and commercial activities are separated . </li></ul><ul><li>Supplier or provider delivers (commercial) services directly to SEs; or </li></ul><ul><li>Facilitator supports the (commercial) supply of BDS by other (sustainable) institutions. </li></ul>Sustainable Services
    30. 30. <ul><li>Principle 5: Develop Vibrant, Competitive, BDS Markets </li></ul><ul><li>Success is: </li></ul><ul><li>A vibrant, competitive BDS market in which a range of SEs are accessing </li></ul><ul><li>a wide selection of BDS supplied by </li></ul><ul><li>numerous commercial suppliers that </li></ul><ul><li>SEs choose to patronize. </li></ul>BDS Market Development
    31. 31. BDS Market Development Donor Service Provider MSME Subsidized Program Model
    32. 32. <ul><li>Subsidized Program Model </li></ul><ul><li>Donors support 1 or a few providers </li></ul><ul><li>NGOs provide free or highly subsidized services </li></ul><ul><li>Small number of SEs gain access to services designed by Donor/NGO </li></ul><ul><li>Program lasts as long as funding is available. </li></ul>BDS Market Development
    33. 33. BDS Market Development Model Donor
    34. 34. BDS Market Development <ul><li>Donor or facilitator supports numerous suppliers with TA rather than grants; </li></ul><ul><li>Suppliers are commercially oriented and competing to serve SEs; </li></ul><ul><li>Suppliers provide services SEs want; </li></ul><ul><li>Suppliers service numerous SEs; </li></ul><ul><li>Suppliers earn profits and provide services over the long term. </li></ul>
    35. 35. <ul><li>BDS Market Development is new, Many questions remain… </li></ul>BDS Market Development
    36. 36. 3. Who does? Research and development …Product development … Delivery of services …Information coordination … Skills enhancement … Regulation… Advocacy   State Private sector (for-profit) Not-for-profit sector Business membership organisations Business networks   4. Who pays? 2. Key supply-side players 1. Market functions
    37. 37. <ul><li>Start with understanding the </li></ul><ul><li>EXISTING </li></ul><ul><li>PRIVATE SECTOR </li></ul><ul><li>MARKET </li></ul><ul><li>for services . </li></ul>BDS Market Development
    38. 38. BDS Market Consists of… Supply Demand Transactions BDS Market Development
    39. 39. BDS Market Geography Target SEs BDS Type BDS Markets are Bounded by …
    40. 40. <ul><li>BDS MARKET ASSESMENT </li></ul><ul><li>Why assess markets? </li></ul><ul><li>What do we do with this information? </li></ul><ul><li>Understand current supply and demand; </li></ul><ul><li>Pinpoint specific constraints / opportunities SEs face in accessing desired services; and </li></ul><ul><li>Investigate sustainable service delivery strategies. </li></ul>BDS Market Development
    41. 41. Select Appropriate Interventions <ul><li>MATCH </li></ul><ul><li>Constraints to Interventions </li></ul>Weak Supply Weak Demand Few Transactions Product Development, Capacity Building Promotions, financing, discounts Linkage & information services
    42. 42. Vouchers Networks Biz . Links Product Dev. Information Venture Cap . TA Training Seven BDS Market Development Strategies
    43. 43. <ul><li>Voucher Programs </li></ul><ul><li>Training Services in Paraguay </li></ul><ul><li>  </li></ul><ul><li>  Between 1995 and 1999: </li></ul><ul><li>Provided 30,000 vouchers to </li></ul><ul><li>13,700 microenterprises purchasers </li></ul><ul><li>Over 40 private sector suppliers. </li></ul>50% off! BDS Market Development
    44. 44. <ul><li>Information Services </li></ul><ul><li>FIT ILO SE Radio Program </li></ul><ul><li>Since 1999 : </li></ul><ul><li>Reaching over 300,000 SEs; </li></ul><ul><li>Changing policies, helping SEs improve business practices and reach new markets; </li></ul><ul><li>Broadcasting commercially viable programs; </li></ul><ul><li>Costing under $100,000 (total program). </li></ul>BDS Market Development
    45. 45. <ul><li>SE Cluster and Network Development UNIDO </li></ul><ul><li>Helps groups of firms access services in Honduras, Nicaragua, Mexico, Jamaica, and India. </li></ul><ul><li>Knitwear producers in India approached ITC training to adapt course to their needs – 500 firms reached. </li></ul><ul><li>Membership fees sustain the groups. </li></ul>BDS Market Development
    46. 46. <ul><ul><ul><li>Business Linkages </li></ul></ul></ul><ul><ul><ul><li>Manicaland Business Linkage Project </li></ul></ul></ul><ul><li>Facilitates sub-contracting from large to small firms </li></ul><ul><li>1996-2000: 110 linkages, 1,000 jobs </li></ul><ul><li>Large firms mentor small firms. </li></ul>BDS Market Development
    47. 47. <ul><ul><ul><li>Technical Assistance to Suppliers </li></ul></ul></ul><ul><ul><ul><li> ACDI/VOCA Training and Technical Assistance to Polish Business Support Organizations (BSOs) </li></ul></ul></ul><ul><li>Project strengthened supply and demand for Business management training and consulting services; </li></ul><ul><li>Project trained 38 BSOs, 131 consultants, 223 SEs in </li></ul><ul><li>Trainers and consultants served more than 30,000 clients on a commercial basis. </li></ul>BDS Market Development
    48. 48. <ul><li>Product Development and Commercialization </li></ul><ul><li>IDE – Irrigation Technology: Treadle Pumps </li></ul><ul><li>IDE designs pumps & trains manufacturers and distributors; </li></ul><ul><li>Bangladesh in 2000: 65 manufacturers, 700 dealers, 5,000 installers sold more than 1 million pumps. </li></ul>BDS Market Development
    49. 49. <ul><li>Social Venture Capital: </li></ul><ul><li>MEDA & PROARTE in Nicaragua </li></ul><ul><li>MEDA & individuals invested venture capital in PROARTE, </li></ul><ul><li>PROARTE marketed traditional Nicaraguan crafts for 100 producers in 1997. </li></ul><ul><li>MEDA plans to disinvest over time. </li></ul>BDS Market Development
    50. 50. <ul><li>From this experience, and applying basic market thinking, a set of guiding principles has emerged. </li></ul><ul><li>Although not all examples represent all principles, </li></ul><ul><li>these are the principles to strive for! </li></ul>BDS Market Development
    51. 51. GUIDING PRINCIPLES <ul><li>Focus: </li></ul><ul><li>Target interventions to address BDS market constraints. </li></ul>
    52. 52. GUIDING PRINCIPLES <ul><li>Tread Lightly: </li></ul><ul><li>Minimize interventions to avoid BDS market distortions. </li></ul>
    53. 53. GUIDING PRINCIPLES Supply Demand Transactions Intervene here ! NOT here ! Intervene here ! Provide market assessment, training, TA – not direct services.
    54. 54. GUIDING PRINCIPLES <ul><li>Promote Competition. </li></ul><ul><li>Develop a range of suppliers and service products in the same market – offer SEs choice. </li></ul>
    55. 55. GUIDING PRINCIPLES <ul><li>Develop business relationships with suppliers, </li></ul><ul><li>mutually beneficial contracts, not grants for direct services to SEs. </li></ul>
    56. 56. GUIDING PRINCIPLES Remain Flexible to Rapid Change, in SE markets and in BDS markets.
    57. 57. GUIDING PRINCIPLES Coordinate with other BDS Stakeholders. Suppliers offering subsidized services undermine efforts to develop BDS markets .
    58. 58. GUIDING PRINCIPLES Develop a clear exit strategy. Plan to leave behind a vibrant, competitive, BDS market.
    59. 59. <ul><li>Do the programs presented use the guiding principles? </li></ul>BDS Market Development
    60. 60. BDS Market Development <ul><li>PRACTITIONER PRESENTATION </li></ul>
    61. 61. <ul><li>Risks & Rewards of BDS Market Development </li></ul>BDS Market Development
    62. 62. <ul><li>Risks & Rewards of BDS Market Development </li></ul>BDS Market Development
    63. 63. BDS Market Development <ul><li>OBJECTIVES </li></ul><ul><li>Define / describe general principles of Market Development Approach to BDS; </li></ul><ul><li>List broad categories of BDS w/ examples; </li></ul><ul><li>Describe key financial sustainability strategies; </li></ul><ul><li>List BDS organizations / appropriate roles; </li></ul><ul><li>Describe BDS market development principles / strategies; and </li></ul><ul><li>Describe main risks / rewards of BDS market development strategies. </li></ul>
    64. 64. BDS Market Development <ul><li>THE MARKET DEVELOPMENT APPROACH </li></ul><ul><li>Basic Principles: </li></ul><ul><li>Impact-centered programs; </li></ul><ul><li>Specific, focused, tailored services; </li></ul><ul><li>Demand-driven services; </li></ul><ul><li>Sustainable service delivery; and </li></ul><ul><li>Development of competitive, vibrant BDS markets. </li></ul>
    65. 65. <ul><li>Resources </li></ul><ul><li>www.seepnetwork.org/bdsguide.html </li></ul><ul><li>http://www.ilo.org/public/english/employment/ent/sed/bds/seminar/index.htm </li></ul><ul><li>http://www.ilo.org/public/english/employment/ent/sed/bds/donor/index.htm </li></ul>BDS Market Development
    66. 66. BDS Market Development A Training Presented by: The SEEP Network and The International Labour Organization’s SEED Program

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