Download - The way forward for GT
The way forward for GT
CONFIDENTIAL
Summary of reviewDecember 5, 2006
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Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
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Possible product and customer/partner segments
Source:Interviews
INITIAL HYPOTHESIS
Attractive
Unattractive
Industrial, western users, e.g.,
construction, forestry work, military
Productdefinition
Customer / Partner
Hi-tech, niche
version
Flexible ready made model with multiple
features
Basic model with selected
options
Self-assembly kit with critical
parts
Local manufacturers/
Individual users in developing countries
High-end players developing countries
(companies, local authorities)
International aid organization e.g., Red Cross, UN
• For special situations, e.g., mine sweeping
• For special situations, e.g remote control
• Tailor made solution
• Large segment, but low income
• Good “value for money”
• Local manu-facturing
• Use of local companies as agents/franchisees
• For aid-projects• For
development programs
• Too expensive • Possible solution with low cost manufacturing
• For aid/ emergency use
• For specific projects
• Affordable solution for mid-tier
• Too sophisticated and expensive
• Too sophisticated and expensive?
• Difficult to meet customer needs with one model
• Scale needed
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2 3 4
5
x Assessed in further detail
Increased cost and quality
Increased buying power
• Want ready-made
• An alternative for DIY-segment?
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Possible product and customer/partner segments
Source:Interviews
INITIAL HYPOTHESIS
Attractive
Unattractive
Industrial, western users, e.g.,
construction, forestry work, military
Productdefinition
Customer / Partner
Hi-tech, niche
version
Flexible ready made model with multiple
features
Basic model with selected
options
Self-assembly kit with critical
parts
Local manufacturers/
Individual users in developing countries
High-end players developing countries
(companies, local authorities)
International aid organization e.g., Red Cross, UN
1. “The transporter-in-a-box”
x Assessed in further detail
Increased cost and quality
Increased buying power
5. “The ultimate
transporter”
3. “The aid-to-aid
transporter”
2. “The low-cost
professional transporter”
4. “The multipurpose transporter”
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• Kit with patented joints
• Assembly manual for illiterate (ref. IKEA)
Most attractive product/customer mix-combinations
5. “The ultimate transporter”
• Construction• Forestry industry• Military
• Flexible and robust vehicle
• Customer tailored solution
3. “The aid-to-aid transporter”
• International aid organizations, e.g., UN, Red Cross (can also act as door openers for number 1 and/or 2)
• A vehicle with valuable re-use properties
2. “The low-cost professionalized transporter”
• Local companies• Local 3rd world
manufacturers building from ready made chassis
• Local authorities in developing countries
• Simple, robust, low cost tractor. Either sold as basic version or as chassis
1. “The transporter-in-a-box”
• Local 3rd world manufacturers “franchisees”
• Local farmers/ project developers in developing countries
• Aid agencies with local projects
Customer
Core technology
4. “The multipurpose transporter”
Example of add-on accessories and services
• Water pump• Electricity
generator• Remote control• Mine sweeper• Forestry tools• Spare parts
• Water pump• Electricity
generator• Grinder• Biofuel engine
• Water pump• Electricity
generator• Grinder• Biofuel engine• Other agricultural
equipment
• Water pump• Electricity
generator• Grinder• Biofuel engine• Other agricultural
equipment
• Water pump• Electricity
generator• Forestry tools• Spare parts
• Construction• Forestry industry
• Flexible and robust vehicle
• Produced at one global plant, potentially with local modifications add-ons
• Produced at one global plant
• Also potentially entry point for #1 and #2
• Chassis made at “one” central plant
• Local assembly (ref. production system for buses)
• Kit made at “one” central plant in low-cost country
• Local assembly
Production system
• Produced at one global plant
Most attractive
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Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
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1. “The transporter-in-a-box”
Product • 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
Value to customer
• 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”
Ability to pay vs. production cost
• 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
• 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
Source:Interviews
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Key challenges: “The transporter-in-a-box”
Source:Interviews
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 marketOr….• Local manufacturers and individual users in a
franchise system
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 – Countrieswith weak infrastructure, but in commercialization stage (e.g Mozambique)
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Average income in African developing countries typically ~1 USD/day
Source:EIU
Private consumption per head; USD/year
0
100
200
300
400
500
600
2002 2003 2004 2005 2006
Kenya
NigeriaAngola
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2. “The low-cost professionalized transporter”
Product• 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)
Value to customer
• 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
Ability to pay vs. production cost
• Requires will from local companies / government to invest in this type of equipment
Potential partners
• 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(?)
Source:Interviews
11Source:Centro de Estudos Avançados em Economia Aplicada, H. Ruete, IEA meeting 2005
Optimum temperature for sugar cane cultivation from 25 to 35C
Example Brazil alone – Potential to quadruple global bioethanol production
Example: Optimum conditions for biofuel production in developing countries – “The low-cost professionalized transporter” can solve transportation issues and accelerate growth
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Example: Potential for significant bioethanol production in Mozambique at competitive cost, lack of infrastructure limiting development
Bioethanol volumes Billion gal
35.0Potential in Mozambique
3.3EU mandate
Production cost 2005USD/gal
1.60Production cost of gasoline at
60 USD/bbl
~0.8-1.0Mozambique
1.89Europe
Mozambique
5.7Malaysia palm oil*
1.1Global biodiesel*
660Rapeseed oil EU
390Palm oil Malaysia
Production volume Billion gal
Feedstock cost for biodiesel productionUSD/ton
Malaysia
*Assuming same specific density, given existing mandates in 2010**Includes gasoline and diesel Source:FAOSTAT; NREL; SRI; Oil world
Domestic fuel consumption – 2005Billion gallon
0.1Mozambique
Domestic fuel consumption – 2005**Billion gal
4.4Malaysia
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Key challenges: “The low-cost professionalized transporter”
Source:Interviews
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
Key challenges• Understand needs of local authorities
and companies• Identify and successfully enter
partnership with low cost manufacturer and distributors with access to customers
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3. “The aid-to-aid transporter”
Product • 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
Value to customer
• 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
Ability to pay vs. production cost
• 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 low-cost-village tractor”
Potential partners
• International aid organizations• Global agricultural equipment/automotive manufacturer seeking exposure to
developing markets, e.g., John Deere (already has a Gator model)
Source:Interviews
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Key challenges: “The aid-to-aid transporter”
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
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
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4. “The multipurpose transporter”
• Robust and flexible vehicle target at western customers with high quality demands, 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
• Robust and flexible vehicle for high demanding customers• Most common add-on options easily available
• Willing to pay for high quality product, but not for add-ons/unnecessary advanced technology
• Global construction equipment / automotive manufacturer, e.g., Terex
Source:Interviews
Product
Value to customer
Ability to pay vs. production cost
Potential partners
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Key challenges: “The multipurpose transporter”
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
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
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5. “The ultimate transporter”
Source:Interviews
• Technologically advanced and robust vehicle target at western customers with high 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
Product
• Advanced, robust and flexible vehicle• High flexibility in choosing final solution
Value to customer
• High will to pay for right solution• Solution developed in collaboration with final customer
Ability to pay vs. production cost
• Global construction equipment / automotive manufacturer, e.g., Caterpillar• Military• UN
Potential partners
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Key challenges: “The ultimate transporter”
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
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
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Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
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Company profiles potential partners
• John Deere• Valtra (AGCO Corporation)• CNH• Toyota• Terex• Caterpillar• Volvo• Hitachi• Tata Motors• Kverneland Group
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Content
Product and customer segment overview
Deep dive selected segments
Company profiles potential partners
The way forward
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Assessment of match/ability to acheive tractionSummary of hypothesis
Match of needs(GT offering vs. customer needs)
Ability to achieve traction
1. “The transporter-in-a-box”
• Local farmers
5. “The ultimate transporter”
• For niche use• For rental firms
“The aid-to-aid transporter”
• Special projects• Some emergency
situations
3rd world franchisees:
• Kit• Chassis4. “The
multipurpose transporter”
Large segment
Sizeable segment
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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
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Suggested top 3 segments and potential partners
Potential partners
“The low cost professional transporter”
• 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)
“The transporter-in-a-box”
• 3rd world manufacturers/franchisees, e.g. in Mozambique – link through NORAD’s MatchMaking Program?
• Tata Motors, or other kit/chassis producer respecting IP• Danfoss (?)
“The ultimate transporter”
• Caterpillar• John Deere• Terex• Rental company, e.g. HSS, Hertz• Norwegian Armed Forces