ELEMENTS FOR DESIGN OF ADVANCED DEVELOPMENT PROGRAMMES BEING LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets THINKING EIL KNOWING : LARGE REGIONAL FIRMS IN THE CARIBBEAN DRIVERS OF GROWTH AND OPPORTUNITIES FOR EXPANSION INTO NEW Prof. Miguel Carrillo, Ph D. MARKETS DOING 1 : LARGE REGIONAL FIRMS IN THE CARIBBEAN ELEMENTS FOR of DESIGN ADVANCED DEVELOPMENT PROGRAMMES Drivers GrowthOF and Opportunities for Expansion into new markets • Objective of the Study: Understand and Document Growth BEING Strategies, Trajectories and Patterns in Large Regional Caribbean Firms. • Large: Typically >> 500 employees • Countries: – – – – – – EIL DR THINKING Guyana Jamaica Suriname Barbados DOING Trinidad and Tobago KNOWING 2 : LARGE REGIONAL FIRMS IN THE CARIBBEAN ELEMENTS FOR of DESIGN ADVANCED DEVELOPMENT PROGRAMMES Drivers GrowthOF and Opportunities for Expansion into new markets • Project Funded by Compete Caribbean. BEING • Progress: – 37 in depth interviews with CEOs, Chairman and Top Executives of Largest Corporations in the Caribbean THINKING KNOWING – 6 Surveys of Base of the Pyramid Market Profile – Identification of about 9 Growth Trajectories – Mapping of LRF – Cases and Mini Cases DOING EIL 3 Business Mapping of Large Regional Firms in the Caribbean Content Analysis of Selected Variables for 2012 900 800 700 600 500 400 300 200 100 0 Goddard Grace Guardian Ansa Mcal Enterprises Kennedy Holdings New Growth Innovation Short Term Same Local Competition/Compete Profitability Profits Control Risk/Risks Efficiency Costs/Cost 36 5 0 10 13 9 5 6 9 31 100 0 116 45 58 6 6 9 8 6 7 14 26 326 5 119 19 14 1 11 1 7 0 1 1 7 26 2 62 26 36 1 35 13 7 2 3 16 33 218 2 150 Kersten 34 0 1 7 9 0 9 0 0 24 36 0 40 First Republic Caribbean Bank Bank 29 61 0 5 6 20 6 29 7 5 0 0 2 2 5 3 26 6 45 170 21 420 0 25 20 45 Sagicor 23 2 7 17 10 3 7 0 10 27 293 0 54 Massy Holdings Ltd 86 97 0 23 7 10 5 18 110 41 81 3 64 Content Analysis of Selected Variables 2012 300 250 200 150 100 50 0 Opport Internat unities/ Compet Allianc Joint Collabo Insight/ Long Sustain Global Explore Projects Start ional Opport itive e Venture ration Insights term ability unity Massy Holdings Ltd 34 1 0 5 34 1 1 12 0 12 4 17 4 Sagicor 46 56 7 0 5 5 0 1 34 1 7 2 2 First Caribbean Bank 30 80 5 0 9 46 0 1 47 5 4 1 1 Republic Bank 21 10 22 2 0 4 7 0 0 5 1 9 1 Kersten 34 1 18 3 0 4 0 5 5 1 3 1 25 Guardian Holdings 4 26 7 1 6 12 8 2 0 53 1 5 2 Ansa Mcal 1 0 1 0 0 1 5 0 0 2 0 3 1 Grace Kennedy 41 45 14 0 5 1 6 0 0 16 3 1 5 Goddard Enterprises 2 23 5 0 3 0 5 2 1 17 0 2 1 Top large Non Financial Firms Employment Size Company Head quarters Neal and Massey Trinidad and Tobago Ansa McAl Trinidad and Tobago Digicel Jamaica Goddard Limited Barbados Grace Kennedy Jamaica Cerveceria Nacional Dominicana, S.A Dominican Republic Jamaica Producers Jamaica Agostini Trinidad and Tobago TCL Group of Companies Trinidad and Tobago Kersten Suriname The Generating Company Haina Dominican Republic Bank Holdings (Beverages company) Ltd Barbados Light and power holdings Barbados Jamaica Broilers Group Jamaica Angostura Holdings Limited Trinidad and Tobago Employment Size Year 2013 8988 6000 5500 5023 2633 2500 1534 1025 1000 999 600 589 451 273 250 Top large Financial Firms Employment Size Company Head quarters Employment Size Year 2013 Grupo Popular Dominican Republic 6500 CIBC First Caribbean International Bank Barbados 3424 Republic Bank Trinidad and Tobago 4091 Memoria Banco BHD Dominican Republic 4000 Guardian Holdings Ltd Trinidad and Tobago 2529 Sagicor Trinidad and Tobago 1500 First Citizen Bank Trinidad and Tobago 900 Revenue Positioning of Top Non Financial and Financial Firms Revenue Positioning of Top Non-Financial Firms in the Caribbean 2010 to 2013 Revenue Positioning of Top Financial Firms in the Caribbean 2010 to 2013 Assets Positioning of Top Non Financial and Financial Firms Assets Positioning of Top Non Financial Firms in the Caribbean 2010 to 2013 Assets Positioning of Top Financial Firms in the Caribbean 2010 to 2013 Goddard Ansa Mcal Neal & Massy Grace Kenedy Market Valuation 185 Million 1.829 Billion 1.02 Billion 182 Million P/E 17.5 13.9 10.9 5.7 # Companies 53 39 73 36 Sales USD 487 Million 1.6 Billion 1.466 Billion 850 Million Territories 22 8 11 12 Employees 5,023 6,000 10,000 1,800 Net Profits USD 21 Million 174 Million 131 Million 20 Million Asset BasenUSD 335 Million 2 Billion 1.4 Billion 350 Million Share Price 3.08 11.75 10.8 0.50 Basic Benchmarking some LRF : LARGE REGIONAL FIRMS IN THE CARIBBEAN ELEMENTS FOR of DESIGN ADVANCED DEVELOPMENT PROGRAMMES Drivers GrowthOF and Opportunities for Expansion into new markets • Geographic Growth Trajectories: BEING – Trajectory 1: Country Centric – Trajectory 2: Caribbean Centric – Trajectory 3: Caribbean as platform for Global THINKING KNOWING Growth EIL DOING 16 : LARGE REGIONAL FIRMS IN THE CARIBBEAN ELEMENTS FOR DESIGN OF ADVANCED DEVELOPMENT PROGRAMMES Drivers of Growth and Opportunities for Expansion into new markets Location of HQ. BEING • Caribbean HQ serving the Caribbean Region: Ansa Mcal Sagicor, Guardian EILthe Caribbean Region: PALIG, • Non Caribbean HQ serving THINKING KNOWING UNICOMER, Goddard Catering Group • Caribben HQ serving non-Caribbean Regions: SM Jaleel, Grace Keenedy. Goddard. DOING 17 : LARGE REGIONAL FIRMS IN THE CARIBBEAN ELEMENTS FOR of DESIGN ADVANCED DEVELOPMENT PROGRAMMES Drivers GrowthOF and Opportunities for Expansion into new markets • Growth Patterns relative to Markets: BEING – Pattern 1: Market Dominance. Have a bigger slide. – Pattern 2: Market Development. Have a bigger pie – Pattern 3: Market Dominance as the platform for THINKING Market Development. Have aKNOWING bigger slide of a bigger pie. EIL DOING 18 : LARGE REGIONAL FIRMS IN THE CARIBBEAN ELEMENTS FOR of DESIGN ADVANCED DEVELOPMENT PROGRAMMES Drivers GrowthOF and Opportunities for Expansion into new markets • Growth Generic Strategies: BEING – Strategy 1: Integration of new value chain steps – Strategy 2: Value deployment through new channels THINKING KNOWING – Strategy 3: Old Growth EIL DOING 19 Core Business Adjacent Space Entirely New Space Horizon 1 Horizon 2 Horizon 3 Growth Playbook of LRF in the Caribbean Old Growth New Growth Growth Matrix • Operations in New Locations • Conquering new customer segments • New Products/Services • New business model • M&A/ JV’s in new value chain step • M&A/ JV’s of unrelated new businesses • M&A/JV’s within new channels • Market Penetration • Replication • Operational Effectiveness • M&A in same sector/value chain step • M&A in related Markets • JV with traditional players Organic Growth Inorganic Growth NEW OLD 15% 5% 65% 15% ORGANIC INORGANIC How will your company grow in the next 3 years? N=11 LDF NEW OLD 30% 10% 40% 20% ORGANIC INORGANIC How will your company grow in the next 5 years? N=11 LDF Goddard Enterprises (IJV) Angostura (Alliance) Kersten’s Housing (IJV) Ansa’s Water Treatment Solutions (Alliance) Beverage Company Access Colmados in DR (Alliance) Micro Insurance for BOP (GF) Almonde Popular Engineering (GF) Massy Auto Insurance Massy Ecosystem (GF) What growth vehicles are preferred? • Acquisitions • Distribution Alliances • Greenfield • Least Used: International JV 27 Key Findings of the Study • First Mover Advantage Vs. Unique Mover Advantage • Lack of Volume/Critical Mass not enough to attract enough competition • Most growth is based on the attaining operational excellent in already mature markets/businesses • LRF are too regional centric. Global benchmarks are rarely used. 28 Key Findings of the Study • Fear of Cannibalization (Innovations might not create new markets but cannibalize existing ones) • Success breeds conservatism (fear of failure) • Localization of assets, resources, and capabilities constrain expanding behavior • Technology is not a mainstream ingredient in growth trajectories 29