Nicole Barnao in Ecuador
Please describe what the organization/company you work with does, how it is set up and where it is located?
Terrafertil is an agricultural company based in Quito, Ecuador that dries and markets tropical fruit either in wholesale format for the export market or retail products for the domestic market. They do conventional, 100% natural and organic dried fruit. The business has an office based in the outskirts of Quito and a manufacturing plant about 50 minutes drive out of town.
What is the organization/company doing well?
The CEO is extremely well networked both locally and with international distributers. This allows him access to the major supermarket chains locally to get products on the shelves. These relationships are less powerful internationally, however he has shown good initiative to source and develop commercial relationships with overseas distributors.
Where could the organization/company improve?
At present the business really is still in “start-up” mode and while there are concerns about cash-flow and existing capital reserves are being depleted (some costs have been under-estimated and the company will have to look to debt to fund operations for a while), the CEO is looking for revenue wherever he can find it at the expense of staying true to the business strategy. This is not necessarily a problem – a small business needs to take opportunities when they present themselves, but money has been sunk into the retail operations of the business without properly considering the marketing requirements of running this business.
What are some aspects of the local cultural that should be understood when foreigners consider doing business in this country?
People can be very, very late to meetings. English is spoken by the elite class very well, but in dealing with others Spanish is required. Families are very important. America is having a huge influence on the culture of Ecuador.
What are some aspects of the local business environment (e.g. registration of company, government’s role in business, business items unique to this country) that should be understood when foreigners and locals consider doing business in this country?
There is a small number of people who control majority of the resources in the country. In order to be successful at scale, this network will need to be penetrated. Also, recent elections have lead to considerable uncertainty in the business world, including the banks where there are concerns they will tighten lending.
A percentage of the profits of all businesses must be distributed to staff, so most business owners will pay themselves a progressively larger salary as the profitability of businesses increases to avoid distributing it to staff.
What were the direct and indirect results/deliverables as a result of your placement? Please be as specific as possible. Please provide both soft and hard examples. Hard examples include number of clients/people trained, dollars raised, people impacted, etc)
We produced a marketing plan for the retail operations of the business, a financial model forecasting profit/loss for the financial year with sensitivity analysis and a strategic summary suggesting how the company should be steered for the next 6 months to 5 years.
How these will impact the business is difficult for us to answer because they are plans and models and we did not see their implementation through.
In some respects it would have been desirable for us to stay around to implement the marketing plan because even though it was deliberately kept as resource un-intensive as possible, it will still require someone to drive/manage it and Terrafertil does not currently have dedicated marketing staff. If the plan does get implemented it will lead to increased sales for existing products, but more control over the plans for introducing new products. A market research function also will be introduced which will involve development of a list of target customers and much better knowledge of target markets. This will enable more focused product development and more power in negotiating and dealing with the supermarkets who are their major distribution channel locally.
The financial model will allow the organization to better manage cash requirements this year; This modeling will assist in securing this capital.
Are there opportunities in this field (e.g… health, agriculture or finance) for local and international entrepreneurs?
Yes. Ecuador has a competitive advantage in agriculture due to its rich volcanic soil, cheap labour and large exposure to sunlight. Several US companies have approached Terrafertil to open negotiations to develop new dried fruit products. Because of Terrafertil’s network with local farmers and other local manufacturers they have the capability and flexibility to set up the manufacturing processes for new products as long as international investors can guarantee a minimum and stable return.
Locally it is more difficult for anyone to just enter the market. Because majority of resources in the country are controlled by the elite, this network will need to be penetrated for an outsider to be successful. In addition, because most of the country is poor by western standards, they don’t have the capital to purchase the land or equipment that is required in the agriculture industry.
Having said that, Ecuador’s growing middle class and the positioning of its growing chain of western-style supermarkets provides opportunities for many international food manufacturers to introduce their products where there are currently big gaps in Ecuador’s food categories.
Questions about Personal Experience:
Why are you interested in international development and private sector development?
Because I come from a wealthy country it is an opportunity to give something back to the world and help people that are not as privileged. It also contributes to my experience of the world and knowledge-base to learn about other ways of business.
Originally, why did you want to participate in this program?
Because I was traveling in Latin America and this was another way to immerse myself in the culture.
What were your main challenges, both personally and professionally?
To make a difference (however small) to a poorer country to help them grow economically and improve living conditions for a few people who would benefit from that.
What would have made this experience even better for you?
Because Terrafertil’s office is on the outskirts of the city and our accommodation was in the city, we didn’t work onsite, rather at a spare office in the city. Being onsite would have been preferable because we would have gained a richer experience than the ‘remote consultants’ that we were.
Also – for most of the time we had to share a computer between two of us. It would have been better if we’d had one each, much more productive!
What advice would you like to offer future MBAs who work abroad for MBAs Without Borders?
Be aware that when you are volunteering for a business in a 3rd world country, you are probably going to be helping the rich get richer, because they are the ones who can afford to own businesses. But if you can contribute to the economic productivity of the business, this will cascade into the wider economy and hopefully ultimately reach the people who need it most.
Why would you recommend others to participate on MWB programs?
You will be given access to real business problems in a third world context, and without tapping into MWB’s network this work is very difficult to find. You will discover a whole set of skills you never knew you had and will have the opportunity to learn new cultures, speak new languages and really grow as a person.
What are some of your goals and aspirations (i.e. job, personal, etc), that you are planning for once this placement has concluded ?
I would like to work in Management Consulting. This project has helped me understand how to enter a company, understand it’s business and industry and recommend improvements and a short period of time.