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The way forward for GT CONFIDENTIAL Summary of review December 5, 2006.

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Presentation on theme: "The way forward for GT CONFIDENTIAL Summary of review December 5, 2006."— Presentation transcript:

1 The way forward for GT CONFIDENTIAL Summary of review December 5, 2006

2 1 Content Product and customer segment overview Deep dive selected segments Company profiles potential partners The way forward

3 2 Possible product and customer/partner segments Source:Interviews INITIAL HYPOTHESIS Attractive Unattractive Industrial, western users, e.g., construction, forestry work, military Product definition 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 1 234 5 x Assessed in further detail Increased cost and quality Increased buying power Want ready- made An alternative for DIY- segment?

4 3 Possible product and customer/partner segments Source:Interviews INITIAL HYPOTHESIS Attractive Unattractive Industrial, western users, e.g., construction, forestry work, military Product definition 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

5 4 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 3 rd 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 3 rd 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

6 5 Content Product and customer segment overview Deep dive selected segments Company profiles potential partners The way forward

7 6 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 NORADs MatchMaking Program Source:Interviews

8 7 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 market Or…. 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 – Countries with weak infrastructure, but in commercialization stage (e.g Mozambique)

9 8 Average income in African developing countries typically ~1 USD/day Source:EIU Private consumption per head; USD/year Kenya Nigeria Angola

10 9 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 NORADs MatchMaking Program Export/import agencies Local manufacturers and individual users in a franchise system(?) Source:Interviews

11 10 Source: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

12 11 Example: Potential for significant bioethanol production in Mozambique at competitive cost, lack of infrastructure limiting development Bioethanol volumes Billion gal 35.0 Potential in Mozambique 3.3EU mandate Production cost 2005 USD/gal 1.60 Production cost of gasoline at 60 USD/bbl ~0.8-1.0Mozambique 1.89Europe Mozambique 5.7Malaysia palm oil* 1.1Global biodiesel* 660 Rapeseed oil EU 390 Palm oil Malaysia Production volume Billion gal Feedstock cost for biodiesel production USD/ton Malaysia *Assuming same specific density, given existing mandates in 2010 **Includes gasoline and diesel Source:FAOSTAT; NREL; SRI; Oil world Domestic fuel consumption – 2005 Billion gallon 0.1Mozambique Domestic fuel consumption – 2005** Billion gal 4.4Malaysia

13 12 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

14 13 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

15 14 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

16 15 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

17 16 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

18 17 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

19 18 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

20 19 Content Product and customer segment overview Deep dive selected segments Company profiles potential partners The way forward

21 20 Company profiles potential partners John Deere Valtra (AGCO Corporation) CNH Toyota Terex Caterpillar Volvo Hitachi Tata Motors Kverneland Group

22 21 Content Product and customer segment overview Deep dive selected segments Company profiles potential partners The way forward

23 22 Assessment of match/ability to acheive traction Summary 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 3 rd world franchisees: Kit Chassis 4. The multipurpose transporter Large segment Sizeable segment

24 23 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

25 24 Suggested top 3 segments and potential partners Potential partners The low cost professional transporter John Deere Valtra (AGCO Corporation); CNH 3 rd world manufacturers/franchisees, e.g. in Mozambique – link through NORADs MatchMaking Program? Toyota European Aid Centre (Portugal) The transporter- in-a-box 3 rd world manufacturers/franchisees, e.g. in Mozambique – link through NORADs 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


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