Situating Social Enterprises In The Business World

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Rene Gaurin, President of Philippine Social Enterprise Network (PhilSEN) gives a background to how social enterprises can apply corporate practices.

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Situating Social Enterprises In The Business World

  1. 1. Situating Social Enterprises in the Business World “ Social Enterprises: Key to Strong Local Economies” June 22-23, 2009 Astoria Plaza, 15 J Escriva Drive, Ortigas Business District, Pasig City
  2. 2. Social Enterprise in the Business World <ul><li>Experiences from NGOs engaged in Social Enterprises </li></ul><ul><li>Learning, Insights and Innovations from the NGO experience </li></ul><ul><li>Opportunities and the Comparative Advantage of the NGOs and the Community Enterprises </li></ul>
  3. 3. Social Enterprises in the Business World <ul><li>20% remain but do not grow or experience decline … quoted from Prof Andy Ferreria, former DEAN AIM ME </li></ul><ul><li>If left on their own Only 6-10% Micro Small Entrepreneurs grow to small and medium, </li></ul><ul><li>USAID study on Microfinance </li></ul><ul><li>Performance of MF borrowers in NRBSL </li></ul>
  4. 4. And Yet… Social Enterprises call for doing beyond Profits <ul><li>The 3 bottomlines for Social Enterprises </li></ul><ul><ul><li>Doing Well  Profitability </li></ul></ul><ul><ul><li>Doing Good  Income for the poor household/ preference for the marginalized </li></ul></ul><ul><ul><li>Doing Right  Contributing and Supporting advocacies on Environment, Social Equality, Sector Development </li></ul></ul><ul><li>Can this be done??? </li></ul>
  5. 5. Social Enterprises Experiences CERD, KMPFI-Balay Mindanaw, UMFI
  6. 6. Center for Empowerment and Resource Development Inc., CERD <ul><li>CERD - existing for 30 years now (VMG) </li></ul><ul><li>Improving “quality of life” of fishing communities through: </li></ul><ul><li>* Technology enhancement and income </li></ul><ul><li>diversification </li></ul><ul><li>* Engaging in local governance </li></ul><ul><li>* Protection and management of the </li></ul><ul><li>coastal resources </li></ul><ul><li>* Empowering women and men fishers </li></ul>
  7. 7. Who We Are p. 2 CERD Project Areas Mondragon, N. Samar Gender –Responsive FIRMED Program Calbayog & Almagro, Samar (Samar Sea) Gender-Responsive FIRMED Program Hinatuan, Surigao Sur Gender-Responsive FIRMED Program Socio-Economic Program Biri N. Samar Gender –Responsive FIRMED Program Socio-Economic Program SE program for emphasis
  8. 8. Prawn Hatchery Center for Empowerment and Resource Development Inc., (CERD) <ul><li>Major supplier of Prawn Fry in Mindanao </li></ul><ul><li>Grow-Out project provides Income to HH Growers PhP7,500/Month </li></ul><ul><li>Practices and Advocates environment friendly technology </li></ul><ul><ul><li>Lesser fry density/sqm </li></ul></ul><ul><ul><li>Returns Spawner to the sea after 1 or two cycles </li></ul></ul><ul><ul><li>Shows commercial players viability of environment friendly technology </li></ul></ul>Annual Production Amount Sold CERD Hatchery 9 M pieces P0.22 Household Hatchery 1.5 M pieces P0.16 to 0.18 Semi-commercial 3 M pieces P0.16 to 0.18
  9. 9. KATILINGBANONG PAMAHANDI SA MINDANAW FOUNDATION INC. The Social Enterprise Institution of Balay Mindanaw Group <ul><li>Helping Build Community Sustainable Enterprises </li></ul><ul><li>Helping Build Opportunities for Wealth Creation for Local Entrepreneurs </li></ul><ul><li>Helping Build Vibrant Local Economies </li></ul><ul><li>Helping Build Foundation of Sustainable Peace…. </li></ul>
  10. 10. <ul><li>KPMFI - Manok Mindanaw </li></ul><ul><li>Backyard Poultry Production Project </li></ul><ul><li>Context: </li></ul><ul><li>Provide additional Household income </li></ul><ul><li>Maximizing productive local resource (land, labor, water and indigenous materials) </li></ul><ul><li>Revolutionalizing the poultry industry through backyard poultry project </li></ul>
  11. 11. Supplier 1960s- 1970s Backyard Poultry Raisers Backyard Poultry Raisers Backyard Poultry Raisers Backyard Poultry Raisers Market Middlemen Canvasser Consumer Supplier Supplier In the beginning….. The Evolution of Poultry Industry in the Philippines
  12. 12. The Evolution of Poultry Industry in the Philippines : Commercial Contract Growing 1980s - present Large Contract Growers Supplier 2 Integrator Large Contract Growers Large Contract Growers Large Contract Growers <ul><li>Inputs </li></ul><ul><li>DOC </li></ul><ul><li>Feeds </li></ul><ul><li>Vaccines, Medicines </li></ul>Output 30-35 day chicken Supplier 3 Supplier 1 Processing Marketing Dealers Litson Manok Feed Mill Payment Payment
  13. 13. The Revolutionizing Poultry Industry through BPPP At 2005 - present Backyard Broiler Growers Supplier 2 Integrator Backyard Broiler Growers Backyard Broiler Growers Backyard Broiler Growers <ul><li>Inputs </li></ul><ul><li>DOC, Feeds, Vaccines Medicines </li></ul>Output 30-35 day chicken Supplier 3 Supplier 1 Processing Marketing Dealers Litson Manok Feed Mill KPMFI FACILITATOR, ORGANIZER AND CONSOLIDATOR Payment
  14. 14. Backyard Broiler Balay Mindanao <ul><li>Current Capacity = 10,600 heads / day (Php 16.5M monthly turnover) Institutional tie up with Sr. Pedro Lechon Manok </li></ul><ul><li>Better HH level performance vs. Industry </li></ul><ul><ul><li>Lower mortality </li></ul></ul><ul><ul><li>Higher feed conversion ratio </li></ul></ul><ul><li>HH Income = Additional PhP 2,000- 6,000 per cycle (the work consume minimal time from the HH) </li></ul><ul><li>Environment friendly  chicken waste, Preference for small producers, working with major industry players for partnership and use of model vs large commercial growers ( 10,000 heads) </li></ul>
  15. 15. Bridging the Big M A R K E T Divide UMFI’s Core Business CBEs Supermarkets
  16. 16. Engaging Mainstream Markets with CBE Products CBEs UMFI Champion Products Supermarkets,Groceries,Retail Shops, Industrial, Institutional END CONSUMERS CBEs CBEs Consolidation = Scale to cover volume Requirement of Mainstream Markets Product Development Common Brand = Shared Quality Standards, Shared Costs
  17. 17. UMFI’s Current Operations <ul><li>Established partnerships with 110 communities nationwide </li></ul><ul><li>Distribute 8 CBE products to 300 retail outlets nationwide (SM Supermarkets, Robinson’s, 7-11, Ministops) </li></ul><ul><li>PhP 132 Million worth of CBE products traded </li></ul><ul><li>89% increase in Farmers gross income (rice) </li></ul><ul><li>100% increase in Farm gate prices for muscovado </li></ul><ul><li>Supports and promotes organic products in the mainstream markets </li></ul>
  18. 21. Product Innovations
  19. 23. Learning/ Insights <ul><li>Select the right chain </li></ul><ul><ul><li>Margins are good, business is growing, community has an edge </li></ul></ul><ul><ul><li>Balance between economic vs mandate priorities </li></ul></ul><ul><ul><li>Understand the roles and functions in the chain and start with the strategic yet doable roles and functions </li></ul></ul><ul><li>Be a good chain actor first </li></ul><ul><ul><li>Learn about the industry, Benchmark against the Industry Standards  be a viable and reliable player </li></ul></ul><ul><ul><li>Enough with “inato” isolationist strategy  link up, get industry experts, bring in industry people, work with the private sector </li></ul></ul><ul><ul><li>Move along the chain as capacities increase vs total “take over” integration </li></ul></ul><ul><li>Innovate the process and the product </li></ul><ul><ul><li>Incubate then commercialize </li></ul></ul>
  20. 24. Learning/ Insights <ul><li>Use “Development’s Comparative Advantages to come up with your competitive advantages” </li></ul><ul><ul><li>Access to technology turn for commercial value </li></ul></ul><ul><ul><ul><li>Innate capacity to work on innovations </li></ul></ul></ul><ul><ul><ul><li>Development Funds for pilots </li></ul></ul></ul><ul><ul><ul><li>“ backdoor” to technical assistance (schools, foreign partners, designers) </li></ul></ul></ul><ul><ul><li>Network of partners for the supply base important to attain scale </li></ul></ul><ul><ul><li>Social Capital to access key resources , Managing the free “consultants” </li></ul></ul><ul><ul><li>Access to “affordable” finances </li></ul></ul>
  21. 26. Enterprise Development  Value Chain Management Research and Development Input Sourcing Production Distribution Sales and Marketing Customer Service / Market Feedback Market Community Industry Technology Raw Materials Production Inputs Quality Control Standards Costs/Pricing Skills/Systems/Structure Open Channels Logistic Support Sell and Collect Channel Maintenance Feedback  Addressing the bottlenecks along the chain to attain Cost Leadership Deliver/Mdse Advertise/ Promote  Core business, Link up and Outsource = Business is partnership Follow through  Managing the activities along the chain to ensure Product Differentiation  Meeting the Quality Definition of the Target Market
  22. 27. Thank You

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