TISA - Recommendations for a Sustainable Micro-franchise

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Siddharth Durgavanshi, Janos H. Katter,
José María San Juan, Nora Szeile, & Zoraida Velasco
The Fletcher School of Law and Diplomacy - Tufts University
B243: Market Approaches to Human Development:
Reaching the base of the economic pyramid through social enterprise
Prof. Kimberly Wilson
Medford, MA
May 2, 2014
TIENDAS DE LA SALUD
Recommendations for a sustainable micro-franchise
Prepared especially for:
Nancy Swanson and Anna de la Cruz, Linked Foundation

B243: Market Approaches to Human Development 2 May 2014
TIENDAS DE LA SALUD: Recommendations for a sustainable micro-franchise
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Table of Content
Page
Background & Introduction 1
Introduction 1
Brief SWOT 2
Optimizing Customer Experience 4
Optimizing Franchisee Experience 5
Financial and Operational Challenges 9
Social Metrics Challenges 14
Expansion Strategy 15
Conclusion 21
Annex 23

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Background
Tiendas de la Salud (TISA) is a micro-franchising project located in Guatemala and made
possible through a partnership between Farmacias de la Comunidad (Farmacias), the country’s
largest pharmacy chain, Mercy Corps, and Linked Foundation (the Foundation). Its purpose is to
provide rural communities with access to modern pharmaceutical products through health shops
that sell inexpensive medicines. This allows Farmacias to serve not only the social purpose of
providing access to health products, but to support economic development in rural areas while
expanding their supply chain and gaining profit. Currently, the project has opened over 70 stores
and has been able to reach over 120,000 people.
Farmacias provides store owners with generic medicines at 20% discount. The store
owners sell the product and other health and basic food items while receiving business and
health support from not only Farmacias but Mercy Corps staff as well. Additionally, after investing
in building the store, they have access to loans from Banrural that are designed to cover start-up
costs.
Introduction
Linked Foundation, as an investor in the TISA project, requires the business model to have
a diminishing subsidy level with a goal of achieving financial sustainability and allowing them to
exit from the project. With this in mind they have requested the assistance of students from
Professor Kim Wilson’s Market Approaches to Human Development: Reaching the base of the
economic pyramid through social enterprise class at the Fletcher School of Law and Diplomacy in
assessing the viability of a sustainable expansion strategy for the project. The goal of this case
study is to evaluate how well the TISA stores meet the program's mission of improving access to
essential medicines with three objectives: 1) understand when and how community members
use the TISA stores 2) assess the community-level effectives of the program 3) assess the
operations and management of the TISA stores. Ultimately the objective is to increase revenues
to make the project sustainable and less reliant on funding from the Foundation. The following
report is a SWOT (strengths, weaknesses, opportunities, and threats) analysis derived from the

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work of five teams from the class which focused on the following different aspect of the business
respectively: 1) inventory/supply chain; 2) financials; 3) social metrics; 4) customer experience;
and 5) franchisee experience.
Brief SWOT
TISA, as a social enterprise, has to excel in accomplishing its social mission while also
creating a business model that is profitable and scalable. With this double-bottom line in mind,
TISA has to measure both social and financial results while staying on track for expansion. In order
to reach its social mission, TISA has to build a well-articulated theory of change (Toc) that is
supported and measured by useful and informative social metrics. Further crucial steps before
scaling are optimizing franchisee and consumer experience including the development of
financial metrics.
Looking at five aspects of the business such as - 1) inventory/supply chain; 2) financials;
3) social metrics; 4) customer experience; and 5) franchisee experience - we conducted a SWOT
analysis to reveal the areas to improve or to capitalize on for future sustainable growth. This
method also helped to show the links between certain problems and how the five aspects are
interconnected and affect strategic expansion.
Franchisees are currently facing profitability and cash-flow issues; moreover, they have
to deal with inventory and supply chain difficulties. The franchise-model is not fully standardized
across stores; owners have very different trainings and backgrounds. These do not only affect the
franchisee’s motivation but it also reduces consumer satisfaction. These gaps in the model allow
other potential competitors to enter the market or further develop the TISA-model. Branding is
also a key part to strengthen both internally for franchisees and the external perception to build
loyalty and be distinguished from competitors.
There’s a current paradigm shift in development and business to address complex
challenges by building partnerships to leverage collective impact. Based on the available
information, we identified the lack of diversity in partnerships as one area to move forward and
invest in. For future potential partnerships, - that include also important stakeholders – TISA

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should turn its focus across sectors and pursue greater involvement with government bodies and
private companies.
The following sections follow up on each aspect abovementioned and provide an
assessment of the current situation along with recommendations for further strategic actions.
Optimizing Customer Experience
Community members in Guatemala go to different health facilities to meet different
health needs. They use basic government health clinics staffed by community health workers for
preventative services and sometimes for basic medicines. Each TISA community has one of these
facilities and they are open either weekly or monthly for preventative services. There are also
provision stores, which sell over the counter medicines and pharmacies, where community
members can pick up medicines prescribed to them at the hospital.
Where does TISA fit in?
In the general progression of health-seeking behavior of first trying home remedies, then
looking at over-the-counter (OTC) options, then attending a health facility and finally purchasing
prescriptions, TISA’s entry would be in providing OTC medications and filling prescriptions when
free medicines aren’t available.
There are challenges that TISA faces with regard to consumer patronization of TISA stores,
which are fulfilling customer needs, trust of TISA and TISA employees, and cost of health care.
Three primary customer needs were identified:
● Filling prescriptions (when free medicine is unavailable)
● Over the counter medicine (ibuprofen, cough syrup, etc.)
● Non-medicine food, hygiene and other items (sugar, candles, soap)
Surveys show that the most popular items sold were sugar, candle, soap, cough and cold
medicine, OTC pain medication (acetaminophen), OTC anti-inflammatory (ibuprofen). These
account for 52 percent share in overall sales. Most customers complain over the low availability

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of products at TISA stores. This is due to the fact that stores are constantly running out of items
that people need and in addition to people’s inconsistent purchasing power. This demonstrates
the interrelation between the franchisee and customer experience. The effects of this
relationship will be analyzed further under the following Optimizing the Franchisee Experience
section.
Optimizing Franchisee Experience
Each TISA franchise is owned and managed by a community resident. This study has
identified two major objective of each franchisee/TISA store owner. The first one is to set up and
manage a sustainable and profitable micro-business and the second one being able to provide
valuable medicines and service to the community.
A successful franchisee is pleased to have the opportunity to start a business. The
experience provides them with a higher level of trust from other community members and the
ability to develop leadership skills as a result of their participation in the program. They feel proud
to provide an essential service to their community and in many cases describe their role as more
than just a store owner—wanting to integrate all health knowledge into their practice (i.e.,
prescribing medication, explaining dosage). Most reported that one benefit was the opportunity
to reinforce their existing health knowledge and learn new things.
Analysis
Despite their willingness and some of the positive experiences, TISA franchisees face a
number of challenges that have resulted in unpredictable but generally low sales volumes, small
profit margins, and inconsistent provision of quality service to their community. These franchisee
challenges have simultaneously a direct influence on the customer experience as well. This study
has identified the following challenges as the most essential:
● Medicine stocks in the TISA shop do not meet the health needs of community members.
● Farmacias are out of stock of essential medicines when store owners need to restock.
● Store owners and/or employees have low levels of financial literacy and management
skills and insufficient medical knowledge

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● Community members have low, unstable incomes
Recommendations
The following are practical recommendations pertaining to training of franchisees and
human resource management - to know how to sell; operation and supply chain management -
what to sell; and financial support. Improved financial cash flow management is addressed briefly
in this section. Nevertheless, an in-depth analysis of this is provided under the Financial Analysis
section of this report.
“How to sell”
The role of the Field Technician was identified as a key function to assist the franchisee,
especially in relation to training and human resource management and operation and supply
chain management. Field technicians represent a critical resource for store owners that enable
them to manage their store more efficiently. Additionally, field technicians play two key roles:
they identify entrepreneurs within community clusters of 900 or more to take part in the health
franchise and they provide technical supports to store owners ensuring that they comply with
TISA standard requirements.
Under the newly envisioned TISA model, Farmacias Regional Managers supervise field
technicians. The technicians receive an average of two months of trainings prior to identifying
entrepreneurs to run the shops and are required to open up to 20 stores during a 9-month period.
However as of 2014, TISA has managed to setup only 70 stores. There is also evidence suggesting
that the quality of the support received by store owners through their field technicians varies
among regions. In order to address this issue, we offer the following recommendations:
● TISA should hire field technicians who possess strong business skills and experience to
support store owners. While store owners are generally educated and possess health
training, they lack the business skills like book keeping ensuring adequate tracking of
profits. Field technicians have the potential to fill this gap and identify other areas through
which they can provide support to the store owners like with marketing and advertising
to improve sales. Field technicians should be screened and tested to ensure they possess
the adequate business skills and acumen to advise store owners.

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● Strong incentives should be given to field technicians to provide technical support after
the entrepreneurs have set-up their shops. While it is important for field technicians to
be rewarded for signing up entrepreneurs to setup shops and expand the franchise, more
incentives should be given to the technicians to continue training and supporting after
the initial set-up of the store. Field technicians could for example, receive a bonus when
store owners under their supervisions are able to pass a business exam administered by
TISA to test their accounting and other business skills.
“What to sell”
A significant challenge for TISA franchisees is ensuring they have the right mix of products
in stock. Since TISA store owners buy their inventory from Farmacias locations, it is important
that the stores they visit have the needed products in stock when resupply trips are made.
Research conducted of TISA store owners showed stock-outs at Farmacias as one of the top three
reasons store owners have problems with declining sales.
It is understandably challenging for Farmacias stores to have sufficient product on-hand for
when TISA store owners make unscheduled resupply trips. To address this problem, a revised
supply chain management approach should be considered. Several possibilities exist, including:
● Developing an ordering system that would enable individual TISA store owners to
transmit orders before making the expensive trip to pick up products. This would enable
Farmacias to prepare orders in advance and confirm that all ordered goods are available
prior to travel. From a technical standpoint, this could be developed using a simple mobile
text or voice messaging system or similar low-cost mechanism that leverages technology
already in use. Similar mobile phone-based systems are successfully used around the
world to notify rural farmers when market prices are favorable, to help them maximize
revenue and make expensive trips to market only when profitable to do so.
● Helping individual store owners pool their orders to enable more frequent stock
replenishments. Again, texting or a similar simple technical system implemented by
Farmacias could help owners relatively close to one another, but far from the nearest
Farmacias location, to share the costs of more frequent travel for order pick-up. If

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retrieving orders for a larger number of owners, travel by more than one owner could still
be cost-effective
● Farmacias could contract with a local bus or other transit company to ship orders to rural
bus depots for pick-up by store owners. Order payment could be made via cellphone or
store accounts if available.
● Product deliveries could be made by area managers or field technicians when visiting the
stores in their areas.
Financial support
Independent research conducted by University of California San Francisco (UCSF) notes
that certain franchise owners have struggled with turning a profit and in turn, repaying loans.
Reasons cited include, a small customer base, hard economic times, and the inadequate
restocking of pharmaceutical supplies by Farmacias. Without the proper stock of goods, TISA
franchisees are forced into a downward cycle where their sales and revenues drop and are thus
unable to afford further purchases of other goods to sell.
In order to better serve Franchisees and prevent such cycles from occurring, Farmacias could
commit to provide greater financial support through the following options:
● Restructure terms of franchise contracts so that they are more favorable for franchisees.
If contractual requirements such as restocking of goods are not met by Farmacias, then
they could offer to provide financial support by negotiating loan extensions for borrowers
with local banks. Fair contractual agreements would make the franchisors responsible to
supply on time, relieving the franchisee from the stress of a stock-out of products.
● Provide smaller credit options on a more consistent basis to ensure that franchisees can
pre-order in the case that certain challenges arise. Furthermore, this extension of credit
will help streamline the purchase of products, by giving franchisees the ability to meet
customer’s needs on demand.
● Work with Banrural, TISA’s financial lender, to restructure financial agreements.
Currently, Banrural requires that all franchisees have a co-guarantor, which represents a
major impediment and disincentive for potential franchisees from joining the operation.

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Furthermore, while Mercy Corps’s pilot project offered loans at 1% interest, Banrural’s
current rate is 12%. Farmacias can also make the operation more attractive to potential
franchisees by agreeing with Banrural to lower their current interest rates. Additionally,
considering that Farmacias is providing a social service need that is not met by the
Guatemala government, they can also pursue a partnership with the government
requesting them to serve as a guarantor for the Banrural loans.
● Give franchisees the opportunity to sell back goods. The UCSF study notes that upon
inauguration, franchisees are unaware of customer demand, and end up with large
supplies of goods they will never sell. For such small operations, the financial loss is far
greater for the TISA shop-owner than for Farmacias, who can simply sell these goods in
stores where the demand is high.
Financial and Operational Challenges
A TISA store’s average monthly income is around USD $25, while their cash flow is
negative USD $7. Franchisees absorb the loss and re-invests in the project to keep it running.
Many stores are not sustainable and are at the risk of being insolvent. This difficult situation can
be attributed to the intertwined operational and financial difficulties of TISA stores. The
low/unsustainable cash flow is an outcome of different problems, from low purchasing power,
lack of advertisement and/or differentiation of TISA from competitors, and inventory problems
among others. Franchisees have adapted to this situation to keep the business running, but they
will not be able to afford it for extended periods of time.
On some occasions, franchisees reduce the low purchasing power barrier by providing the
medicines on credit; this depends on the ability of the TISA store owners to set aside extra cash
for the goods they are willing to sell on credit. Some of the factors causing the low/negative cash
flow levels are low gross margin, low ticket sales (low purchasing power in the towns) and low
store traffic. The TISA stores have to buy the goods with cash from Farmacias and this reduces
their working capital. This cash crunch also decreases the ability of the store owners to restock
properly.

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Consumer preferences will have to be factored in while planning the inventory to increase
the profitability. Additionally, while a typical customer finds it difficult to afford the medicines
they also prefer to go to the store when someone with basic health care training is available to
provide advice. The lack of available trained health attendants at the stores coupled with an
unreliable supply of stock deters customers from shopping. Consequently, these defeats the
social purpose TISA stores were created for. Going forward, TISA will have to work on their brand
as a pharmacy store. Currently they are perceived as another convenience store in the town and
not as a store with a social mission.
Farmacias, through their stake and exclusive partnership, has a considerable leverage
over the TISA project; this limits the ability of store owners to negotiate better terms. TISA
should explore re-negotiating buying goods on consignment and the possibility of a partnership
with another pharmaceutical firm for medicines.
TISA as a business proposition, though attractive, has not envisaged the opportunity cost
of store owners. The risk store owners are taking as entrepreneurs needs to yield revenues in
addition to the amount of minimum wages. Nowadays, the average net income in the region is
around USD $22. This figure must be considered to calculate the break-even point.
Recommendations:
These problems lead to unsustainability for the stores and the project in general. The main
problem can be encompassed in cash flow unsustainability. TISA stores’ current situation will not
change with one single strategy, a holistic business strategy has to be adopted to cover all the
weaknesses present. The proposed strategy covers marketing, price sensitivity analysis, strategic
alliances among others. Its main goal is to create synergies among the listed areas to improve the
individual performance of each store, as well as the overall performance, and to reach cash flow
sustainability. The strategy is divided into the five following sections:
a) Consignment scheme:

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Farmacias will help Tisa’s store owners by giving them part of the medicines they need in
consignment, allowing them to reduce their initial investment and working capital future needs.
Store owners will pay to Farmacias the next time they go to restock their store. The benefits of
this scheme are as follows:
● Shared risk between Farmacias and store owners.
● Increase the level of engagement with the project in both parties.
● Appropriate inventory levels to satisfy customers demand.
● Less financial burden to store owners, and a higher cash flow per month.
● Monitoring the sales of each store by Farmacias.
● Identify the fast moving and essential medicines per community.
b) Negotiate a better margin from Farmacias
Tisa stores’ gross margin is 20%, while Farmacias is around 56%. In addition, Farmacias
expected net profit -profit after taxes- is around 20%. The difference among margins is high, and
if we consider that the risk is mostly taken by the store owners, it seems an unfair situation.
Farmacias can lower their prices without harming their financial sustainability. There are two
potential outcomes from this price renegotiation:
1. Reduce price to increase store owners profit margin: by reducing the price store owners
can have a better margin from each product they sell.
2. Reduce wholesale price to reduce the retail price: As mentioned before, the low
purchasing power of the customers is a barrier to some stores. Medicines at a reduced
price will become more affordable for customers, increasing their willingness to buy.
The second option is better because it is in line with the project goals - providing medicines
at affordable prices to low income communities - and it will increase the flow of the people in
the stores. The question Farmacias needs to address is: Do they want the 56% of 10 or the 30%
of 100? Increasing the volume of sales will benefit the performance of the whole project.

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c) Strategic Alliances
The TISA store project created a new distribution channel aimed to reach unattended
communities in Guatemala. Forty eight percent of Tisa stores are non-medical products. This
creates opportunities for large companies like Nestle, P&G and Unilever, whom are looking to
expand their businesses in emerging countries. A strategic alliance with large multinational
companies can be made to diversify the products offered by the stores, to ensure the quality of
them and to increase the sales margin of the store owners. In addition, they can provide support
with the initial investment of the stores.
d) Credit Payment Scheme
The low purchasing power of the consumers is a barrier to increase the average sales per
customer and the number of sales per day. This could be solved by implementing a community
credit scheme that would enable purchase of medicines on credit. In the case they are in need of
a medicine, the cost may be already covered, and if it not, and they don’t have enough money to
cover it, the store owner can give them a small credit to afford it. The key is to create engagement
between the stores and their clients.
e) Training in Basic Health Services
Customers’ willingness to buy in TISA stores increases when the shopkeeper has some knowledge
of health services. Unfortunately, the store owner with this knowledge is commonly there only
for few hours at night. Investing in basic health services training for the store shopkeepers,
particularly for those who staff the shop most of the time, will increase the flow of customers.
f) Financial & operational dashboards.

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“If you can measure it, you can’t manage it.” To understand the performance of the stores it is
important to measure their operations and financial situation. The next metrics will help keep
track to the performance of the stores and from the project in general:
● Operational / Sales
● Average sales per client
● Clients per day
● Composition of the average ticket:
○ Medicines participation in each average ticket
○ Hygiene products participation in each average ticket
○ Other products participation in each average ticket
● Monthly Average Sale per Store
● Restocking travels per month
● Financial Metrics
● Profit Margin (medical products and non-medical)
● Compound Annual Growth Rate (CAGR) of Sales and Revenues
● Operational margin: EBITDA/Revenues
● Inventory turnover ratio
● Working Capital
This strategy needs to be complemented with a marketing campaign focus on highlighting
the benefits and goals of the stores. Community members need to be aware of the value added
provided by TISA, and how can they be benefit from it. For the average net income and cash flow
and expected net income numbers see Annex 1.
Social Metrics Challenges

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For TISA, we recommend using utility focused monitoring and evaluation methods that fit
the existing operations so when it comes to integrating monitoring and evaluation (M&E) to the
whole TISA system, it won't be an extra burden to resources and people. In order to collect social
metrics, TISA has to have a plan to verify the direction they are moving towards and have a
baseline to compare the change to.
To ensure a return for Linked’s philanthropic investments, M&E is crucial component to
the due diligence process. Yet this is only an investment worth making if there is some system
for analysis and learning. The best way to capitalize on M&E systems is to create an evaluative
culture in the organization that supports learning and provides feedback loops for iteration of
programs when needed. Adequate M&E systems contribute to knowledge management, higher
and better transparency, and accountability.
Hiring an M&E-specialized consultant to design a social metrics system to meet the
criteria above and to engage with TISA and Linked staff in the design and learning process should
be the first step. For that engagement, we recommend making the ToC explicit; creating metrics
that align to the changes the program seeks to make; and investing in an M&E system.
Make the Theory of Change explicit
Well-articulated ToC is crucial to promote social change. ToC depicts the change pathway
and reflects the organization’s mission. The more explicit it gets, including the list of assumptions
one has to make; the better social metrics can be built to measure change. This process does not
only serve the purpose of monitoring and evaluation but fosters discussions regarding the
mission, vision and the related strategic decisions. The latter discussion and decisions derived
from it will help to contribute to develop a standardized brand for TISA too.
Create metrics that align to the changes your program seeks to make
Social metric systems should primarily be informative and useful to the end-user so that
it informs the decision-making process and tracks changes. Each objective should have a basket
of indicators to triangulate the changes by both qualitative and quantitative data. Besides
considering what data should be collected, TISA also needs to thinking thoroughly about who will

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be the data collectors and their supervisors, who will evaluate the data, and finally, who will make
the final decisions based on the evaluations.
Invest in a Monitoring & Evaluation system through the following
● Develop a process for data collection, analysis and learning
● Anticipate spending financial and organizational capital on this
● Align system with existing operational structure and expansion plans preferably “light
touch” using tablets and/or field officers (see technology recommendations under
Expansion Strategy).
● Deliver monitoring data to the right person to inform decision-making
● Engage at all levels throughout the organization to create an evaluative organizational
culture for learning with the ultimate purpose of betterment
● Align social and financial metrics
Expansion Strategy
While the initial expansion strategy sought to open 2440 stores (look at business plan) in 18
months of time, since its inception, Farmacias has opened over 70 TISA stores at a rate of 3 stores
per month. This has allowed them to serve over 120,000 people with access to pharmaceutical
products they would otherwise have to travel great lengths to purchase. While TISA’s rapid
growth has allowed this social enterprise to reach a larger audience, there are specific aspects of
the value chain that need to be carefully evaluated and improved before considering any further
expansion. This section will particularly address: Recruitment, Training & Funding; Product
Procurement; Marketing & Sales; and Monitoring & Evaluation.
Figure 1 - TISA’s Value Chain

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Source: Presentation on March 7, 2014. By Blaen Abraham, Chuck Dokmo, Allison Hutchings
Claudia Schwartz, Nora Szeile, Zoraida Velasco
Analysis
A number of the assumptions underlying the enterprise are challenged. These are related to
the value chain and include:
● Accessibility: The lack of awareness of TISA stores in some areas coupled with physical
access from health centers make accessibility difficult due to distance and/or costly
transportation.
● Availability: Most TISA store owners find themselves working multiple jobs to make ends
meet. This decreases the amount of time they have available to tend to the TISA store.
This coupled with the fact that they do not always have professional medical or business
training affects their credibility towards the consumer. Additionally, stock outs at
Farmacias outlets also have an impact on this. The lack of direct connections to the

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network of health centers affects their product offerings and availability for training and
professional development.
● Affordability: There is evidence that customers have difficulty paying for products,
especially during lean periods. Store owners report experiencing low sales volumes and
small profit margins which makes turning a profit/paying back Banrural loans difficult.
● Acceptability: Customers have expressed a preference for seeking medicines and advice
from trained health professionals, however, often store owners and/or staff members do
not have health credentials. There is also concern that customers seek products via other
outlets including free products at government health centers. Furthermore, there is often
a highest demand for non-pharma products which has led store owners to complain about
not being able to stock certain items that they think would be beneficial to customers like
antibiotics and contraceptives.
Recommendations
Premature scaling risks long-term financial sustainability and brand reputation. Before an
expansion strategy can be pursued, the operational model needs to be optimized, as described
in the previous sections of this report, to increase profitability for franchisees, improve the
consumer experience and reduce cash flow issues. A systematic approach needs to be developed
to address the value chain’s weaknesses and to implement a controlled expansion that maintains
brand integrity. Considering the fact that Guatemala had 103.5 percent mobile phone
penetration in 2013, final recommendations for TISA revolve around the incremental use of
technology, and are as follows:
a) Recruitment, Training, & Funding
Store owners, staff and field technicians are all key to the success of a TISA store. Health
resources need to be made available to the store owners and their staff. This could be done by
providing them access to a health database (similar to the one displayed in figure 2) through a
tablet or similar device. Investment in a Tablet or Smartphone based application for TISA owners
could give them access not only to health information but to other training components on topics
like marketing and accounting to better run their business. Additionally, apps on the tablet or
mobile device would help with mobile health delivery and provide the opportunity for customers

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to receive expert advice from remotely located doctors. This technology could also serve as a
platform to connect with other public health centers and share patient information as noted
previously.
Figure 2 - Example of a health database
As outlined in the Optimizing the TISA Experience section, there is a need to better screen
field technicians to guarantee they have the necessary business skills. Incentives need to be
established to encourage them to continue providing quality support to TISA stores. Moreover,
technicians could also serve as financial advisors and encourage the creation of micro-savings
groups for health in the communities they serve.
b) Product Procurement
Product procurement can be improved if a better tracking system is implemented in relation to
sales and inventory. A data-driven inventory management system operated through the same
tablet used by store owners to obtain health information would help consolidate and compare
purchasing trends as well as log information about inquiries related to specific ailments and
product needs from consumers. Furthermore, as mentioned previously, clustering new stores
would allow, store owners to travel together when needing to restock. Plus, if the stores are close

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enough to each other they can buy or trade inventory from one another instead of traveling to
the Farmacias warehouse for just a couple of items. Additionally, Farmacias could provide loans
or other financing options for store owners to purchase products and they should allow store
owners to diversify their non-pharma product offerings. The framework displayed in figure 3 is a
sample of how the inventory can be customized.
Figure 3 - Customizing inventory
Source: Presentation on March 7, 2014. By Blaen Abraham, Chuck Dokmo, Allison Hutchings
Claudia Schwartz, Nora Szeile, Zoraida Velasco
c) Marketing & Sales
Aside from providing training to store owners through a mobile application, there are
several other initiatives that could be pursued to improve marketing and sales for TISA stores. A
marketing strategy needs to be designed to strengthen the TISA brand and distinguish from
competitors. This can be accomplished by developing strategic partnerships with institutions and
businesses frequented by the members of the community where a TISA stores are currently

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located or will be opening. These partnerships would allow for an ad campaign highlighting why
TISA stores are different than its competitors and what the benefits and goals of the program
are. These benefits could include things like diversified payment options for customers, the
micro-savings groups, and the use of technology like M-PESA to allow mobile payments. For
details on M-PESA and possible strategic partnerships see Annex 2.
Another component of the marketing and sales plan would strive to solidify and extend
the distribution network and increase sales. This may be done by launching a pilot program of a
rural travelling sales team. Field technicians already have extended networks in the areas and are
respected by the communities they serve. If given the right incentives, field technicians can be
encouraged to become mobile TISA stores and visit the more rural areas to extend the services
and products offered by the stores. The use of technological analytic tools such as Social Network
Analysis and Geographic Information Systems (GIS) and can help determine the extent of the
field technician’s networks and the most underserved areas in terms of access to health in
Guatemala, respectively. See Annex 4 for a sample of the capabilities a GIS in-depth analysis can
provide.

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Conclusion
TISA, as a social enterprise, has to excel in accomplishing its social mission while also
creating a business model that is profitable and scalable. In order to reach its social mission, TISA
has to build a well-articulated ToC that is supported and measured by useful and informative
social metrics. Further crucial steps to be taken before scaling up are optimization of the
franchisee experience and enhancement of consumer satisfaction.
Both franchisees and the target customers are the key to stabilization of the current
operations. Currently there are teething troubles with both the franchisee owners and
customers. In order to consolidate the gains of recent past and prepare the organization for
future expansion, TISA will have to address the weaknesses within the stores’ network, as well
as its value proposition to the low income consumers to address if the consumers are really being
benefitted. Current operations of the stores can be stabilized and made effective with enhanced
capacity building of the TISA store owners. Creating an integrated and synergistic inventory
system and complementing the current supply chain can improve both the franchisee and the
customer experience.
As the areas under TISA operations are underserved by medical professionals, TISA store
owners invariably double up as para-physicians and managers. If the store owners are trained on
basic communicable and recurrent diseases, the target population would benefit.
Franchisees are currently facing profitability and cash-flow issues; moreover, they have
to deal with inventory and supply chain difficulties. Technological intervention can help in the
inventory management, although it will be expensive and can be considered for investment. A
manual yet robust bookkeeping system would probably be required before implementing an
automated management information system.
TISA’s partnership with Farmacias is another area where some low hanging fruits exist. As
a sole partner, Farmacias has a natural leverage and bargaining power over TISA and that may in
the future result in rent seeking behavior from Farmacias, if it is not already happening. The
foundation of this partnership must be based on a mutually beneficial relationship that is
equitable for the smaller partner (TISA). It will not be just a matter of choice to renegotiate but a

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matter of long term commercial sustainability for TISA to try to diversify its supplier base away
from Farmacias and also to renegotiate on supply payment terms such as purchase on
consignments.
The overall recommendation is to optimize the business model and create functional
social and financial metrics to measure whether the goals in both financial and social dimensions
are being accomplished. Once TISA has the solid foundations and a perfected franchising model,
it will be in a better position to expand and grow sustainably while investing in improved
technologies, continuous training, partnerships for collective impact and iterating the TISA model
in the social and business context.

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ANNEX 1
Financial Analysis
1a. Average Net Income and Cash Flow of TISA Stores
Figures in USD
1b. Farmacias de la Comunidad Expected Net Income

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Annex 2
Inspirations & Potential Partners
INSPIRATIONS
About M-Pesa
M-Pesa is a mobile-phone micro-financing service for Safaricom and Vodacom. Currently, as the
most developed mobile payment system in the world, M-Pesa allows users with a national ID
card or passport to deposit, withdraw, and transfer money in a fast, secure and convenient way
by using the SMS (text messaging) feature of a mobile device.
Social Benefits
The service enables its users to:
 Deposit and withdraw money
 Transfer money to other users and non-users
 Pay bills
 Purchase airtime
 Transfer money between the service and a bank account (in some markets)
Scaling M-PESA
M-Pesa was first launched by the Kenyan mobile network operator Safaricom, in March 2007. It
quickly captured a significant market share for cash transfers, and grew astoundingly quickly.
Today M-Pesa can be found in the following countries:
 Kenya
 Tanzania
 Afghanistan
 South Africa
 India
M-PESA has inspired other mobile money platforms to spring up in other areas of the world.
For more information:
www.mit.edu/~tavneet/M-PESA.pdf
http://en.wikipedia.org/wiki/M-Pesa
http://www.safaricom.co.ke/personal/m-pesa/m-pesa-services-tariffs/relax-you-have-got-m-
pesa
www.mpesa.in

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About M-KOPA
M-KOPA was established in Kenya in 2011 and provides affordable solar power to over 50,000
Kenyan households that are not otherwise connected to the electric grid.
The Product
M-KOPA sells an LED lamp and radio/phone charging station powered by a solar panel that is
fixed to the owner’s roof. Customers can pay for their purchase of the solar panel, lamp and
charging station with installments sent via SMS on M-Pesa’s mobile money network. M-KOPA
products are currently sold through more than 750 retail shops throughout Kenya.
The Social Benefit
M-KOPA views solar-powered lighting as a cost-effective substitute to kerosene lamps and
anticipates customers saving an entire year’s income within three years of owning the product.
Additionally, M-KOPA’s home system eliminates the accidental fires and indoor air pollution
caused by kerosene lamps and improves productivity and educational outcomes through
reliable and long-lasting electricity.
http://www.m-kopa.com/
http://acumen.org/investment/m-kopa/
About Bridge International Academies
Founded in 2007, Bridge International Academies aims to provide high-quality primary
education for poor families by scaling a for-profit “academy-in-a-box” franchise. Bridge ensures
standardization by issuing all teachers an e-tablet pre-loaded with lesson plans and activities.
Social and financial metrics are regularly sent to Bridge’s headquarters and provide a near-real
time monitoring and feedback for adjusting the programming and franchise model as it scales.
In 6 years, they have grown to 134 academies and more than 53,000 pupils in Kenya. This year,
they plan to expand outside of Kenya.
http://www.bridgeinternationalacademies.com/

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POTENTIAL PARTNERS
About Quetsol
Quetsol is a social enterprise in Guatemala whose mission and business model is similar to the
M-KOPA model in Kenya.
http://www.quetsol.com/
About Movilway
Founded in 2010 and based in Spain, Movilway is a leading pre-paid mobile top-up company in
Latin America. Like M-PESA in Kenya, Movilway provides a mobile electronic payment platform
for the unbanked in Latin America. They also recently developed their own customized tablet
with inventory management and point of sale (POS) applications—particularly aimed at helping
rural entrepreneurs succeed. Movilway recently moved into Guatemala and expects to reach
2,500 outlets within the country. They are now present in 8 Latin American countries and
spend $15M annually in the region.
http://www.movilway.com
http://m.prnewswire.com/news-releases/movilway-arrives-in-guatemala-to-compete-in-
mobile-recharge-market-129532408.html
http://techcrunch.com/2012/03/04/movilway-expands-services-in-latin-america/

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Annex 3
Social Metrics
Source: Presentation on March 7, 2014. By Katie Dutko, Kate McMahon, Phoebe Sloane, Jennie Vader, Sarah Willis
TISA’s Theory of Change
Source: Presentation on March 7, 2014. By Katie Dutko, Kate McMahon, Phoebe Sloane, Jennie Vader, Sarah Willis
Our Understanding of TISA’s Goal
Availability Access Utilization
Improved
Medicine
Security
Community
Empower-
ment
GOAL:
Improved
Medicine
Security
Objec ve 4:
Empower
Community
Objec ve 1:
Availability
Objec ve 3:
U liza on
Objec ve 2:
Access
Opportunity
Structure
Economic Self-
Reliance
Social
Rela onships
Theory of
Change
Constant
High Quality
Timely
Correct Meds
Knowledge
Affordable
Proximity
Strategic
Loca on

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Annex 4
To view the image below in better resolution please visit: www.tufts.box.com/TISAgis

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