TEAM MEMBERS: VISHAL GUPTA JENNY HU KEVIN KUNG...
Transcript of TEAM MEMBERS: VISHAL GUPTA JENNY HU KEVIN KUNG...
Vision
The Entrepreneurial Solution for Defeating the Diseases of Poverty
Reinvent village healthcare and micro retailing in the developing world,
Through networks of franchised micro entrepreneurs,
Who bring high quality products to poor consumers at significantly lower cost.
Vision Context Business Model Tradeoff Leadership
Initiatives
Context
• Nearly 20,000 people die every day in developing countries for want of basic medicines that cost less than a cup of coffee.
• This list of diseases account for nearly 70% of childhood illness and death in Africa.
Vision Context Business Model Tradeoff Leadership
Initiatives
Avon Model Inspiration Design
Vision Context Business Model Tradeoff Leadership
Initiatives
Partner Branches (24)
LG DirectBranches (4)
CHPs (480) CHPs (140)
Rural/Peri-Urban Markets$0.50-$2.00/day
Business in a Bag
Products
Avon Model Inspiration Design
Lean Supply Chain, Tight Information Loops, Cash Flow
Vision Context Business Model Tradeoff Leadership
Initiatives
LG DirectBranches (4)
CHPs (480) CHPs (140)
Rural/Peri-Urban Markets$0.50-$2.00/day
Business in a Bag
Products
Branches (24)
Value Proposition Model
Branches (24)
CHPs (480)
LG DirectBranches (4)
CHPs (140)
Rural/Peri-Urban Markets
Manufacturer(e.g. P&G)
National Distributor
Regional Distributor
Local Distributor
Rural Seller
Vision Context Business Model Tradeoff Leadership
Initiatives
Value Proposition Model
Vision Context Business Model Tradeoff Leadership
Initiatives
CHPs (480)
LG DirectBranches (4)
CHPs (140)
Rural/Peri-Urban Markets
Manufacturer
-Buying power
-Optimizes density of agents
-LG prices average 30% lower than market
-Products delivered directly to consumer
-Managing frequency of stock -outs, counterfeits
Branches (24)
Cash Flow Model
LG DirectBranches
CHPs ($75/mo.)
CHPs ($125/mo.)
Rural/Peri-Urban Markets
Donor Capital($1.6 m in 2009)
Inventory Restock
Sales
Micro-financing
Vision Context Business Model Tradeoff Leadership
Initiatives
Branches (24)
Cash Flow Model
LG DirectBranches
CHPs ($75)
CHPs ($125)
Rural/Peri-Urban Markets
Donor Capital
-CHPs retain 20% of sales
-Average monthly income $75/$125
-Targeting sustainability within five years
Simple Cash Flow Loop
Vision Context Business Model Tradeoff Leadership
Initiatives
Branches (24)
Information Loop
Quantitative monitoring of information is part of the model
Vision Context Business Model Tradeoff Leadership
Initiatives
LG DirectBranches
CHPs CHPs
Rural/Peri-Urban
Markets
-Initial training covers market data collection
-1 week review training/year
-Monthly coaching sessions
Branches (24)
Adaptability+ tailor to local needs+ capturing niche markets+ sense of franchise ownership+ resilient to price fluctuations+ learning/improving/experimenting
Uniformityproduct quality control +
branding +bulk purchasing power +
simplified/measurable standards +
Example Tradeoff: Adaptability vs. Uniformity
Vision Context Business Model Tradeoffs Leadership
Initiatives
Independence+ operations management+ identity+ quality control
Partnershipusing on existing infrastructure (“lean”) +
reduced overhead costs +distributed risk +
potential to scale up +
Example Tradeoff: Independence vs. Partnership
Vision Context Business Model Tradeoffs Leadership
Initiatives
Empowering women
Delivering health care
+
+
Expansion
Training ProcurementMonitoring
RA
RT RD
RA + RT + RD = Given resources (constrained)
Example Tradeoff: Prioritizing Goals
Vision Context Business Model Tradeoffs Leadership
Initiatives
Actionable Suggestions
Monitoring/Regulation. As LG expands, the ability to monitor CHPs may become more costly. Develop aligned incentives to ensure that CHPs cooperate with LG rules and standards.
Tracking Impact. Develop quantitative metrics for measuring LG’s Avon-like operations model and efficiency, in addition to its health outcomes.
Refining Core Competencies. As LG expands into other countries and work with other partners, it needs to decide on what operations can be outsourced, and what core competencies it would like to “own”.
Vision Context Business Model Tradeoffs Leadership Initiatives
References
Center for Health Market Innovations. Living Goods. 14 Jul. 2010. Accessed 8 Dec. 2010. <healthmarketinnovations.org/program/living-goods?display=default>.
Global Health Group, University of California, San Francisco. Clinical Social Franchising Compendium. San Francisco: UCSF, May 2010.
GiveWell. Charities worthy of special recognition. 10 May 2010. Accessed 8 Dec. 2010. <www.givewell.org/international/charities/special-recognition>.
IBS Center for Management Research. Living Goods - developing a sustainable business model to provide healthcare services in Uganda. 2009. Accessed 8 Dec. 2010. <www.icmrindia.org/casestudies/catalogue/Business%20Ethics/BECG104.htm>.
Khalil, O. An Avon approach to healthier and wealthier communities. CauseCapitalism. 4 Jun. 2010. <causecapitalism.com/an-avon-approach-to-healthier-and-wealthier-communities>.
Lemelson Foundation. The ‘Avon’ of rural health. Accessed 8 Dec. 2010. <www.lemelson.org/programs-grants/developing-country-program/technology-dissemination-grants/health/living-goods>.
Living Goods. Accessed 8 Dec. 2010. <www.livinggoods.org>. Living Goods. A sustainable system for defeating the diseases of poverty. 2008. Living Goods. March 2009 update and milestones. 2009. Living Goods. Scaling a sustainable system for defeating the diseases of poverty. 2010. Living Goods. Simple habits for health living. 2010. Mulago Foundation. Living Goods: taking health door to door. Accessed 8 Dec. 2010.
<www.mulagofoundation.org/portfolio/living-goods>. Omidyar Network. Living Goods receives $915K from Omidyar Network to improve health care, support
livelihoods in Africa. 2 Dec. 2010. <www.omidyar.com/about_us/news/2010/12/02/>.
Appendix: Avon Video
Avon Business Model – Andrea Jung SWIM video: 2:34 (towards end) start mitsloan.mit.edu
Appendix: Avon Video Notes
Avon videos Video: 00:20 to 1:21- Vast bond with women- earnings opportunity and social purpose to women- Independent earnings opportunity- largest economic engine in the world is the emerging market
of women 3:21 to 3:40- Earnings to support families, access health care and education
and improves personal security- Extend earnings to society to build hope and spurring social
progress- http://www.youtube.com/watch?v=sLojyNBXtiA&feature=p
layer_embedded#!
Appendix: Living Goods & Avon: Business Model & Social Responsibility Shared Goals
A proven business-in-a-box system heavily supported with training, marketing and coaching
Low start up costs of just $100-$250 supported with simple low-cost financing, and
Flexible hours and lifestyle: Sellers can work on their own schedule and in their own communities.
“Independent earnings opportunity for women”
“Social purpose for women” “Largest economic engine in
the world is the emerging market of women”
“Women’s earnings are used to support families, access health care and education and improves personal security
“Women’s earnings are used to build and spur social progress”