Catalytic Lead Firms Usaid CI

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Understanding Catalytic Firms

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Catalytic Lead Firms Usaid CI

  1. 1. catalytic lead <ul><li>Characteristics of catalytic firms are having the resources, vision, incentives, and commitment to address industry-wide constraints and drive upgrading investments </li></ul><ul><li>They can be a VC participant or service provider </li></ul><ul><li>They recognize the crucial role that small firms play </li></ul><ul><li>Lead firm has the power to set the terms and conditions of transactions, set product and service specifications, have access to key end-markets, and market information </li></ul><ul><li>Lead firm may/may not be catalyst firm </li></ul><ul><li>We are interested in working with lead firms when they are also catalyst firms </li></ul>informal formal Income Generating Activities <ul><li>Self employed </li></ul><ul><li>No Reinvestment </li></ul><ul><li>No fixed assets </li></ul><ul><li>Traditional technology </li></ul><ul><li>Seasonal employment </li></ul><ul><li>Mixed with household </li></ul><ul><li>No written records </li></ul>Microenterprises <ul><li>1-9 employees </li></ul><ul><li>Limited reinvestment </li></ul><ul><li>Limited fixed assets </li></ul><ul><li>Outdated technology </li></ul><ul><li>Part time employment </li></ul><ul><li>Limited written records </li></ul>Small Enterprises <ul><li>10-49 employees </li></ul><ul><li>Reinvestment </li></ul><ul><li>Fixed assets </li></ul><ul><li>Modern technology </li></ul><ul><li>Full time employment </li></ul><ul><li>Written records </li></ul>Medium Enterprises <ul><li>50-250 employees </li></ul>Large Enterprises <ul><li>250 and up employees </li></ul>
  2. 2. <ul><li>MATURE & COMPETITIVE </li></ul><ul><li>Facilitate industry leadership through industry leader(s) </li></ul><ul><li>Identify win-win strategies from collective action </li></ul><ul><li>Support the formalization of industry, and/or trade groups and associations </li></ul>CLEAR INDUSTRY LEADER NO INDUSTRY LEADER(S) MARKET STRUCTURE MARKET CONDUCT ATOMISTIC COLLECTIVE ACTION <ul><li>LESS MATURE </li></ul><ul><li>Include broader section of stakeholders </li></ul><ul><li>Move from short term to longer term results activities </li></ul><ul><li>Shift facilitation from activities to vision focused </li></ul><ul><li>EMERGING </li></ul><ul><li>Use VCA to identify interventions with the greatest leverage </li></ul><ul><li>Bring together subgroups of stakeholders key to the success of the leveraged intervention </li></ul><ul><li>Facilitate activities with short term win-win results </li></ul><ul><li>Build on positive experience to increase incentives to collaborate </li></ul><ul><li>VALUE CHAIN WITH LEADER </li></ul><ul><li>Facilitate lead firm investment in industry upgrading </li></ul><ul><li>Consider marginal gains from working principally with leader </li></ul><ul><li>Support industry leader in increasing competitiveness of MSE-lead firm linkages. </li></ul>Competitiveness
  3. 3. ISSUES IN WORKING WITH LEAD FIRMS <ul><li>Confidentiality </li></ul><ul><li>Ownership of learning </li></ul><ul><li>Establishing/honoring commitments </li></ul><ul><li>Ensuring MSEs benefit (causal model, monitoring, performance contracts) </li></ul><ul><li>Replication beyond lead firm </li></ul><ul><li>Understanding incentives </li></ul><ul><li>Market distortions </li></ul>
  4. 4. WORKING WITH LEAD FIRMS: ONE OR MULTIPLE? <ul><li>One Firm </li></ul><ul><li>When only one lead firm is willing to be a catalyst </li></ul><ul><li>When assisting one “winner” will successfully integrate smallholders </li></ul><ul><li>When intervention will likely result in other lead firms replicating the model </li></ul><ul><li>Multiple Firms </li></ul><ul><li>Whenever you can </li></ul><ul><li>When one lead firm fails to offer adequate advantages </li></ul><ul><li>When one lead firm fails to honor commitments </li></ul><ul><li>When progress toward your competitiveness strategy cannot be achieved working with a single lead firm </li></ul>

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