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Posts Tagged ‘artisanal goods’
Q&A with Tram Nguyen-Stevenin, author of MAI Vietnamese Handicrafts case study in Vietnam

Tram Nguyen-Stevenin was born and raised in Vietnam. She graduated from ESSEC MBA with a focus in Marketing & Sales, and has 13 years of international management experience acquired in both the association sector and private sector. She effectively managed Sales & Marketing for the largest European and American multinationals operating in Telecommunications and e-commerce & Online Financial Services. For over 2 years, she has been the Executive Director of a Business Organization (European Chamber of Commerce) in the developing and exciting country of Vietnam. She accepted this appointment which is somehow different in her corporate career path as a key opportunity to promote and facilitate trade and investment activities between the EU, her welcome mainland, and Vietnam, her born country. After her term at EuroCham, she is now back to the business world as the Marketing & PR Director at K+, the first media joint-venture ever in Vietnam between the Canal Plus group (Vivendi) and the national broadcaster Vietnamese Television VTV.

Mai Vietnamese Handicrafts (MVH), a member of the Worldwide Fair Trade Organization, trades handicrafts produced by a network of artisans (in majority women) in small remote villages.

To download the MAI Vietnamese Handicrafts case study from the GIM database, please click here.

What is MAI Vietnamese’s basic value proposition and what makes its financial model sustainable?

At the origin an income generating and educational project, MVH was established with the objective to generate direct income and promote self-reliance for the poor and the disadvantaged minorities through fair trade. Mai Vietnamese Handicrafts acts as a primary trading agent and reaches out to neglected women in underdeveloped areas and employs them as producers.

In order to make the financial model sustainable, MVH is also actively involved in long term product development, marketing activities and design to offer quality, environmentally friendly and trendy products.

What would you say was critical about the actor ecosystem that enabled this business to be successful?

Organized in the beginning as an association, MVH could benefit from the valuable support of the Ten Thousand Villages and Mennonite Central Committee (MCC). MCC sponsored the participation of MVH at a handicraft fair in Hanoi and a study tour afterwards in Thailand. MCC also sent a marketing consultant to assist the association in trading efforts.

What have been the benefits for the company in partnering with the World Fair Trade Organization?

As a member, MVH fully benefits from the guidance and business tools of the World Fair Trade Organization.

Organized following the Fair Trade standards (transparency on financial results and use of profit, annual general meeting,..), the company was for instance provided with a WFTO software to calculate from the selling price the final net income for the producer, after deduction of the cost of raw material and labor.

Besides,  the company gets access to a platform of information and relevant partners and customers.

What have been the main challenges of decentralizing the business model?

1. The coordination of a decentralized network has a cost in terms of time and logistics as these small groups work from their homes, located in remote areas. On the other hand, mutual benefit is observed in between the 2 parties in terms productivity, loyalty and scale as artisans get more professional and skilled.

“We are aware of the higher evident cost and complexity involved in running a decentralized model compared to a centralized model of production” the founders say. “However this decentralized approach is the very fundamental of our business model, as we aim to reach out to ethnic minorities and isolated villages with traditional savoir-faire in handicrafts.”

2. The quality control and deadline challenges. On a standard basis, the orders are ready for shipping within 3 months: MVH contractually ensures the production is delivered to their warehouse by the producers in 75 days, so that the company can proceed with the quality check and the packaging within 15 days. The most common quality issue lies in the finishing work of the goods.

However, the payment scheme adopted by MHV is designed to favor the producers and encourage respect of quality and deadline: unlike the common practice to pay producers only upon reception of the merchandise by end-clients, MVH settle a prepayment from 30 to 50% at the order, and pays the remainder under 48 hours at reception of the merchandise in their warehouse, right after the immediate quality check. This feature reduces considerably the payment term (as opposed to a standard 30 to 60 day waiting period). As producers are ensured to get paid immediately upon quality check, they can work with a constructive mindset and focus on high quality standards and on time delivery. To end with, Mai also distributes rewards to the groups for on-time delivery and good quality.

What has been your personal experience going through the GIM training and case research process?

Going through the GIM training and case research process has been such an enriching and self-fulfilling experience for me.

On a professional level, I could learn how to lead and structure a research, how to analyze and link these operational businesses to a broader development perspective.

On a personal level, I had the opportunity to meet and exchange with great and insightful people (GIM team, fellow researchers, business owners and case related stakeholders). The interactions and lively discussions I had within the case research process were most rewarding and interesting.

 
Q&A with Samer Abdelnour – author of case study: Blacksmiths (Sudan)

Samer Abdelnour is a PhD candidate in Management at the London School of Economics where he explores the intersection of enterprise and development in postwar and conflict contexts. His ongoing research explores the interactions among NGOs during humanitarian response, and the role of community-based and collective enterprise in postwar development. He currently manages applied research projects across Sudan (Darfur, Southern Sudan, Blue Nile). He is also a founding member of the Foundation for Sustainable Enterprise and Development, and an affiliate of the Centre for Refugees, York University.

To download the Blacksmiths case study from the GIM database, please click here.

What is the basic value proposition of the Blacksmiths cooperative case and what makes its financial model sustainable?

The blacksmiths offer agricultural implements customized to the particular farming needs and conditions in various regions of Darfur, as well as traditional handicrafts and tools embodying cultural and historical customs. The animal plough, itself an adaptation brought to Darfur, has demonstrated potential for widespread dissemination and impact in terms of agricultural productivity and farmer livelihoods. Along with the plough comes new forms of knowledge, and an alternative to development approaches – such as mechanized farming projects – which are proven to be destructive for the environment and livelihoods in Darfur.

I like to think of the financial model as a work-in-progress. The financial model, as it is today, has evolved simultaneously with the needs of the Blacksmiths, and the conceptualization of the Blacksmiths as a community-based enterprise. Significant components of the financial model, including the floating of metal as a form of credit, stockpiling implements for accommodating contract sales, official business registration, and the opening of bank accounts, have allowed the blacksmiths to overcome challenges associated with production, demand, and growth. Moving forward, I expect that the financial model will continue to evolve as some Blacksmiths push to refine their manufacturing techniques and specialize in new tools and ventures.

Is the financial model sustainable? Not entirely. The Blacksmiths rely on their NGO partner Practical Action – who helped establish the metal credit system and registration – for ongoing material support during times of change and as a result of ongoing challenges. In addition, they still have incredibly rough methods of accounting, which may be an impediment to growth in the future. While dependency is built into the existing financial model just as it is the overall partnership, what the Blacksmiths have been able to achieve in partnership with Practical Action is quite remarkable considering the socio-cultural, economic, political and environmental challenges they face in Darfur.

Why did the Blacksmiths choose to organize into a cooperative? What are the benefits and challenges of such a model?

Throughout Sudan’s modern history, cooperatives have played an important role in its economic development. While cooperative enterprises are shown to be more resilient than individual-entrepreneur models in most contexts, in Sudan many initiatives promoted by successive governments were unsustainable due a top-down approach to implementation and management. Among many communities in the Sudan, there exists a strong cultural tendency, known as nafeer, to cooperate through work. In addition to these, there are other motives to support the decision of the Blacksmiths to organize into a cooperative. The Blacksmiths are among the most marginalized groups in Darfur, with historically few social linkages to other groups. Because of this, they became accustomed to relying on one another as a form of social and economic solidarity. This is demonstrated by the way in which conflict-displaced Blacksmiths were accommodated in the homes and workshops of others. They also congregate in markets for strength in production and retail. A cooperative model builds on these foundations and allowed the Blacksmiths to gain efficiencies in terms of their interactions with Practical Action and other organizations. By forming a cooperative, the Blacksmiths were able to benefit from training and apprenticeships, development of a metal credit scheme, comfortably specialize into different products, and group together for the purposes of producing for the changing aid market. It also concentrated the challenges of management and administration, allowing most members the ability to focus on the core aspects of production. Currently, the challenges and costs of coordination are set to increase as the Blacksmiths attempt to manage their increased socioeconomic successes and the desire for some members to diversify into other investments and businesses.

What impact does procurement from the UN Food and Agriculture Organization (FAO) generate for the Blacksmiths community? Do you think procurement from international organizations in general can contribute to more inclusive markets?

The immediate and apparent impact of the UN FAO contracts for the Blacksmiths is quite positive. However, it is important to keep in mind the impact of the scale of the contracts, which were so large that the Blacksmiths were extremely nervous about their ability to deliver. Even their banker was in disbelief as to the amount of the payment. The size of the contracts and related visibility of supplying the FAO surely served to raise their professional and economic status. In addition, producing agricultural implements for Darfur gave the Blacksmiths an opportunity to apply their knowledge to the contract to ensure implement appropriateness for various soil and farming conditions; had this not occurred numerous implements would have been produced and delivered to regions requiring alternative tools. Finally, Practical Action’s ability to encourage the FAO to procure from Darfur, and not from elsewhere, contributes to the local economy and helps to ensure maximum impact in the value chain, from production through to use of tools and implements.

Still, to conceive development as a long-term process of social change, we must also consider the potential drawbacks of the contract. For one, the mass distribution of agricultural implements across Darfur occurred outside local market mechanisms typical of the way aid is disseminated. Tools distributed freely, normally produced for sale through traders and markets, can cannibalize future demand for implements. Farmers or households with excess tools and implements sell these to market vendors. In fact, the Blacksmiths are very concerned about their own tools finding their way back into local markets and selling for less than the cost of production. As a result, the Blacksmiths may compete against their own products being sold through the same markets at a lower price point. Still, competing against your own tools versus tools made in China or elsewhere may be the lesser of two evils. These factors point to the importance of monitoring and evaluation over a number of years beyond the contract and dissemination of implements, and also a deeper consideration of the impact of aid on local market actors.

What role does the NGO Practical Action play in this model?

Practical Action is an integral part of the business model. The relationship between Practical Action and the Blacksmiths began as an NGO-beneficiary model, and has evolved into a partnership where each plays specific roles. These roles have shifted over time, through periods of incubation, development, and growth. Over their twenty-year partnership, Practical Action has provided training, access to knowledge and resources, representation in the complex development bureaucracy, and planning. This relationship is unique in many respects, but has evolved in part due to Practical Action’s focus and expertise in appropriate technology and the natural alignment with the work of the Blacksmiths, and also their unbroken, long-running commitment to the Blacksmiths and an intimate knowledge of the socio-cultural, economic and environmental complexity of Darfur region.

Is it really possible for inclusive business models to develop and grow in conflict-affected regions like Darfur?

It is important to keep in mind that in stable, industrialized contexts it can take many years for an enterprise to reach a position of sustained stability; in poverty and conflict contexts long-term business development approaches – rather than short-term intervention – will greatly increase chances of success for inclusive business models. That said, as attractive as it might sound I do not see this case only in terms of ‘conflict’ or ‘post-conflict’. Certainly the Blacksmiths and the users of their implements and tools have faced, and will likely continue to face, great turbulence in all aspects of their lives and environment. The development and growth of the Blacksmiths model, as an inclusive business model, is based on a number of important factors relating to their own skills and work, and well as their relationship with and approach of Practical Action.

Saras Sarasvathy’s concept of effectuation – in some ways the reversal of conventional/western thinking on entrepreneurship – provides a framework for exploring entrepreneurial logic and decision-making which is valuable for explore the case of the Blacksmiths. Rather than building and executing a business plan to an existing market, effectual logic first asks of the entrepreneur(s) three questions as a starting point for any enterprise: Who am I? What do I know? Who do I know? Through strategic partnerships and expanding into different market segments, the entrepreneur(s) continually create the market and their market position. Both the Blacksmiths and Practical Action have a strong grasp of these elements, and brought with them appropriate knowledge, skills, capabilities, resources and relationships into their partnership. Importantly, Practical Action has helped the Blacksmiths to conceptualize themselves in new ways through the evolution and growth of their business. As this occurs, Practical Action and the Blacksmiths are able to shift their own role in the relationship and therefore explore the boundaries of and expansion beyond their prior success. This not only allows for growth and development, but also builds strategic flexibility into the business model. Strategic flexibility and the continual reevaluation of their roles allows for their continued success, development and growth even in the dynamic and turbulent Darfuri context.

What has been your personal experience going through the GIM training and case research process?

First and foremost, I am excited to be part of the GIM initiative. I saw the development of this case study as an opportunity for me to share the experiences of the Blacksmiths and my ongoing research with them to practitioners, policymakers and academics. While I was unable to attend the initial training session, the GIM team ensured that I received consistent support throughout the entire research and writing process. The GIM case study protocol, conceptual materials, and thorough review process made for an excellent learning opportunity. The process has been an absolute learning pleasure. I wholeheartedly recommend the process for any researcher interested in exploring analytic case studies as a potential research methodology or output for their research.