CONFIDENTIAL
The way forward for GT
Summary of review
December 5, 2006
Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
1
Possible product and customer/partner segments
INITIAL HYPOTHESIS
Increased
cost and
quality
Attractive
Unattractive
5
Hi-tech,
niche
version
Product
definition
• For special
situations, e.g.,
mine sweeping
Flexible ready
made model
with multiple
features
• Too
• Too
sophisticated
and expensive
2
Basic model
with selected
options
sophisticated
and
expensive?
3
• Too expensive • Possible
solution with
low cost
manufacturing
•
situations, e.g
remote control
Tailor made
solution
Assessed in
further detail
• Difficult to meet
•
customer needs
with one model
Scale needed
4
• For aid/
•
x
• For special
emergency use
For specific
projects
• Affordable
solution for
mid-tier
1
Self-assembly
kit with critical
parts
• Large segment, • Local manu•
but low income
Good “value for
money”
•
facturing
Use of local
companies
as agents/
franchisees
Local
High-end players
manufacturers/
developing
Individual users in
countries
developing
(companies, local
countries
authorities)
• For aid-projects • Want ready• For
made
development
• An alternative
programs
International aid Industrial, western
users, e.g.,
organization e.g.,
construction,
forestry
Red Cross, UN
work, military
Customer / Partner
Source: Interviews
for DIYsegment?
Increased
buying
power
2
Possible product and customer/partner segments
INITIAL HYPOTHESIS
Increased
cost and
quality
Attractive
Hi-tech,
niche
version
Product
definition
Unattractive
5. “The
ultimate
transporter”
x
Assessed in
further detail
Flexible ready
made model
with multiple
features
Basic model
with selected
options
2. “The low- 3. “The aid-to4. “The
cost
aid
multipurpose
professional transporter” transporter”
transporter”
1. “The transporter-in-a-box”
Self-assembly
kit with critical
parts
Local
High-end players
manufacturers/
developing
Individual users in
countries
developing
(companies, local
countries
authorities)
International aid Industrial, western
users, e.g.,
organization e.g.,
construction,
forestry
Red Cross, UN
work, military
Customer / Partner
Source: Interviews
Increased
buying
power
3
Most attractive product/customer mix-combinations
Most attractive
2. “The low-cost
1. “The transporterprofessionalized 3. “The aid-to-aid
4. “The multipurpose 5. “The ultimate
in-a-box”
transporter”
transporter”
transporter”
transporter”
Customer • Local 3rd world
• Local companies • International aid
• Construction
• Construction
rd
manufacturers
• Local 3 world
organizations,
• Forestry industry
• Forestry industry
“franchisees”
manufacturers
e.g., UN, Red
• Military
• Local farmers/
building from ready Cross (can also act
project developers
made chassis
as door openers for
in developing
•
Local
authorities
in
number 1 and/or 2)
countries
developing
• Aid agencies with
countries
local projects
Core
• Kit with patented
• Simple, robust, low • A vehicle with
• Flexible and robust • Flexible and robust
technology
joints
cost tractor. Either
valuable re-use
vehicle
vehicle
• Assembly manual
sold as basic
properties
• Customer tailored
for illiterate
version or as
solution
(ref. IKEA)
chassis
Example of
add-on
accessories
and
services
• Water pump
• Electricity
generator
• Grinder
• Biofuel engine
• Other agricultural
• Water pump
• Electricity
generator
• Grinder
• Biofuel engine
• Other agricultural
equipment
Production
system
• Kit made at “one”
•
central plant in
low-cost country
Local assembly
• Water pump
• Electricity
generator
• Water pump
• Electricity
generator
•
“one” central plant
Local assembly
(ref. production
system for buses)
generator
Remote control
Mine sweeper
Forestry tools
Spare parts
• Grinder
• Biofuel engine
• Forestry tools
• Spare parts
•
•
•
•
• Produced at one
• Produced at one
• Produced at one
equipment
• Chassis made at
• Water pump
• Electricity
•
global plant
Also potentially
entry point for #1
and #2
global plant
global plant,
potentially with
local modifications
add-ons
4
Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
5
1. “The transporter-in-a-box”
Product
Value to
customer
Ability to pay vs.
production cost
• Minimum kit with critical parts enabling local manufactures and farmers to build their
own vehicle from scratch, using locally available parts where possible (used cars etc.)
• Easy assembly manual for illiterate (ref. IKEA) describing functions and how to
assemble the tractor
• Possibility to sell optional add-on kits, e.g., water pump, electricity generator, grinder
•
•
•
•
•
Advanced vehicle built from cheap parts
High flexibility in choosing parts and final solutions; Easy to repair
For franchisees: A basis for building a local business
For society: Lower cost of rural development
For countries in rapid development (e.g., Mozambique), allow development prior
to development of road infrastructure, “The mobile phone of road infrastructure”
• Partly a very low income segment, requiring all costs to be kept at a minimum
• However, a mid-segment also exist (e.g. plantation owners etc.)
• Kit with parts to be produced as cheaply as possible, ideally at high scale in low-cost
country (India?)
Potential
partners
Source: Interviews
• Global agricultural equipment / automotive manufacturer seeking exposure to
developing markets, e.g., Tata Motors
• A network of local franchisees
• Local players in developing countries, e.g., partnership enabled through NORAD’s
MatchMaking Program
6
Key challenges: “The transporter-in-a-box”
Scale
• Currently relatively high share of subsistent
farmers with limited transportation needs in
African developing countries
• Potentially large market in the future, with
higher share of cash crop farmers
Competition
• Old trucks, owned and operated by individuals
at low cost
• Low reliability and quality, but sufficient for most
needs
Possible go-to-market approach
• Sale of self-assembly kits through international
aid organizations to gain market access
• Local authorities and companies targeted when
product is know in the market
Or….
• Local manufacturers and individual users in a
franchise system
Source: Interviews
Key challenges
• Understand current transportation
needs of rural population
• End users ability to pay given very
low average income (~1 USD/day)
• Convince international aid
organizations of product quality and
concept to gain partnership
Or…….
• Sign-up local franchisees
Recommended focus:
In parallell focus on aid organizations
and potential franchisees in top 5 countries – Countries
with weak infrastructure, but in commercialization
stage (e.g Mozambique)
7
Average income in African developing countries typically
~1 USD/day
Private consumption per head; USD/year
600
Kenya
500
400
Nigeria
Angola
300
200
100
0
2002
Source: EIU
2003
2004
2005
2006
8
2. “The low-cost professionalized transporter”
Product
Value to
customer
Ability to pay vs.
production cost
Potential
partners
Source: Interviews
• Simple, robust yet cheap vehicle targeted at local companies and authorities, without
will to build the product from scratch
• Optional add-ons tailored to customers needs, e.g., water pump, electricity
generator, grinder, biofuel engine
• Either sold as ready made or as chassis for local completion (lower cost, value to
local partner, possible tailoring)
•
•
•
•
•
Advanced yet cheap vehicle
Easy maintenance
High flexibility in choosing add-ons and final solution
Possibility for local assembly
For chassis buyer: A basis for building a local business
• Requires will from local companies / government to invest in this type of equipment
• Global agricultural equipment / automotive manufacturer seeking exposure to
developing markets, e.g., Tata Motors
• Local players in developing countries, e.g., partnership enabled through NORAD’s
MatchMaking Program
• Export/import agencies
• Local manufacturers and individual users in a franchise system(?)
9
Example: Optimum conditions for biofuel production in developing
countries – “The low-cost professionalized transporter” can solve
transportation issues and accelerate growth
Optimum
temperature
for sugar cane
cultivation from
25 to 35C
Example Brazil alone – Potential to
quadruple global bioethanol production
Source: Centro de Estudos Avançados em Economia Aplicada, H. Ruete, IEA meeting 2005
10
Example: Potential for significant bioethanol production in Mozambique at
competitive cost, lack of infrastructure limiting development
Mozambique
Malaysia
Bioethanol volumes
Billion gal
Potential in
Mozambique
EU mandate
35.0
Production volume
Billion gal
Mozambique
Rapeseed
oil EU
Palm oil
Global biodiesel*
1.1
Malaysia
Domestic fuel consumption – 2005**
Billion gal
~0.8-1.0
Malaysia palm oil*
3.3
Europe
Domestic fuel consumption – 2005
Billion gallon
Mozambique 0.1
Feedstock cost for
biodiesel production
USD/ton
Production cost 2005
USD/gal
1.89
1.60
Production cost
of gasoline at
60 USD/bbl
* Assuming same specific density, given existing mandates in 2010
** Includes gasoline and diesel
Source: FAOSTAT; NREL; SRI; Oil world
Malaysia
5.7
660
390
4.4
11
Key challenges: “The low-cost professionalized transporter”
Scale
• Chassis-approach allows for success even with
moderate scale
Competition
• “New” trucks, tractors and agricultural
equipment from well-known brands – Possibility
to compete on price, but need to convince user
of product qualities
• Third hand trucks/combi-vans
Possible go-to-market approach
• Partner with low cost manufacturer and
distributor to enable market access and low
cost production
• Sell chassis to local players thereby creating
local pull and a broader distribution network
Source: Interviews
Key challenges
• Understand needs of local authorities
and companies
• Identify and successfully enter
partnership with low cost manufacturer
and distributors with access to
customers
12
3. “The aid-to-aid transporter”
Product
Value to
customer
Ability to pay vs.
production cost
Potential
partners
Source: Interviews
• Robust and flexible vehicle targeted at international aid organizations, with valuable
re-use properties if left behind to local inhabitants
• Selected add-ons installed on original vehicle, to maintain flexibility of use, e.g.,
water pump, electricity generator
• Optional advanced add-ons for specific purposes, e.g., biofuel engine, grinder
•
•
•
•
Robust and flexible vehicle with good terrain qualities
Easy maintenance, flexibility to use local parts for repairs
Makes sense to “Leave behind”
High flexibility in choosing add-ons and final solution
• High will to pay for right solution, however potential customers need to be convinced
of product qualities
• Potentially a door opener for later sale of “The transporter-in-a-box” and “The lowcost-village tractor”
• International aid organizations
• Global agricultural equipment/automotive manufacturer seeking exposure to
developing markets, e.g., John Deere (already has a Gator model)
13
Key challenges: “The aid-to-aid transporter”
Scale
• Potential large scale, if international aid
organizations are convinced of product and
concept
Competition
• High cost brands, e.g., Toyota Land Cruisers
• Second hand military vehicles
• Focus on well known solutions and – in
emergency situations – availability of vehicle
within short timeframe (~24 h)
Possible go-to-market approach
• Initially target smaller aid organizations and
specific projects, e.g., Flykningehjelpen, Kirkens
Nødhjelp, to prove product qualities and gain
recommendations
• Partner with low cost production company
• Approach larger, international aid organizations
like UN when the product is a proven success
and production ready to be scaled up
Source: Interviews
Key challenges
• Gain access to aid organizations and
convince them of product qualities to
build portfolio of success stories
• Convince international aid organizations
to try new, innovative solutions over well
known products
• Ability to deliver large qualities of product
in short time frame
• Team up with established chain (e.g.
Toyota) and offer GT to expand their
product range
14
4. “The multipurpose transporter”
Product
• Robust and flexible vehicle target at western customers with high quality demands,
Value to
customer
• Robust and flexible vehicle for high demanding customers
• Most common add-on options easily available
Ability to pay vs.
production cost
Potential
partners
Source: Interviews
but limited need for costly special solutions
• Selected basic add-on options available, e.g., water pump, electricity generator,
forestry tools
• Additional supply of spare parts and after-sale service
• Willing to pay for high quality product, but not for add-ons/unnecessary advanced
technology
• Global construction equipment / automotive manufacturer, e.g., Terex
15
Key challenges: “The multipurpose transporter”
Scale
• A flexible solution can cover multiple user
needs and segments with same base model
• Niche product with relatively limited scale
potential
Competition
• High cost agricultural or construction
equipment, often with more advanced, but less
flexible solutions
Possible go-to-market approach
• Develop prototypes in collaboration with
selected local customers, e.g., Kran
Entreprenøren
• Partner with global agricultural equipment/
automotive manufacturer to enable production
and gain access to niche customers
Source: Interviews
Key challenges
• Build “one model that fits all” without
making it to costly
• Successfully partnering with global
company to reach customers and support
product with well known brand
16
5. “The ultimate transporter”
Product
• Technologically advanced and robust vehicle target at western customers with high
Value to
customer
• Advanced, robust and flexible vehicle
• High flexibility in choosing final solution
Ability to pay vs.
production cost
• High will to pay for right solution
• Solution developed in collaboration with final customer
Potential
partners
Source: Interviews
demands and special needs, e.g., construction industry, forestry industry, military
• Custom made vehicle developed in collaboration with customer
• Advanced options for specific purposes available or tailor-made, e.g., remote control,
mine sweeping, in addition to basic add-on options
• Additional supply of spare parts and after-sale service
• Global construction equipment / automotive manufacturer, e.g., Caterpillar
• Military
• UN
17
Key challenges: “The ultimate transporter”
Scale
• Limited volume production, but potentially high
margin product
Competition
• High cost, custom build or tailored equipment
• Specialized construction, automotive or
defense equipment providers
Possible go-to-market approach
• Close partnership with potential customers,
designing and developing tailored solutions
• Promote flexibility and tailor made solutions
towards new customers, rather than pre-made
products, e.g., “We can make the perfect
product for your needs”
• Identifying production partner that can build
tailor made solutions from base model at low
cost
Source: Interviews
Key challenges
• Convince users of product qualities and
ability to develop tailored solutions to that
will meet their needs
• Develop and build customer tailored
products at low cost
• Ability to re-use learning when developing
new solutions
18
Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
19
Company profiles potential partners
• John Deere
• Valtra (AGCO Corporation)
• CNH
• Toyota
• Terex
• Caterpillar
• Volvo
• Hitachi
• Tata Motors
• Kverneland Group
20
Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
21
Assessment of match/ability to acheive traction
Large segment
Summary of hypothesis
Sizeable segment
Ability to
achieve
traction
“The aid-to-aid
transporter”
• Special projects
• Some emergency
situations
4. “The
multipurpose
transporter”
3rd world
franchisees:
• Kit
• Chassis
5. “The ultimate
transporter”
• For niche use
• For rental firms
1. “The
transporter-in-a-box”
• Local farmers
Match of needs
(GT offering vs.
customer needs)
22
Recommended next steps
1. Zoom in on max 3 customer/product segments to pursue in
phase 1 – base selection on “match”/ability to achieve traction
assessment
2. Make targeted presentation material for 3 prioritized clusters
and decide on top 3 partners in each category to reach out to
3. As appropriate:
• Arrange for funding/partner arrangement
• Leverage World-Bank link
• Seek publicity to create “competition among partners”
4. Do road show to 3 x 3; Start with top priority category
23
Suggested top 3 segments and potential partners
Potential partners
“The transporterin-a-box”
“The low cost
professional
transporter”
“The ultimate
transporter”
• 3rd world manufacturers/franchisees, e.g. in Mozambique
– link through NORAD’s MatchMaking Program?
• Tata Motors, or other kit/chassis producer respecting IP
• Danfoss (?)
• John Deere
• Valtra (AGCO Corporation); CNH
• 3rd world manufacturers/franchisees, e.g. in Mozambique –
link through NORAD’s MatchMaking Program?
• Toyota European Aid Centre (Portugal)
• Caterpillar
• John Deere
• Terex
• Rental company, e.g. HSS, Hertz
• Norwegian Armed Forces
24