global marketing-caterpiller & haiti
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A BETTER HAITI TRAINING PROGRAM
Brittagh Flynn Ashley Berry Rochelle Bellinger Sheri Kotas Rachel Poritz
CA
ICO
M -
TEA
M 4
Sunday, April 30, 2014
ProblemsAfter the Earthquake:
● Earthquake followed by the destructive Hurricane Tomas which rekindled the almost dormant cholera outbreak that claimed many lives
● It is estimated about 700 million cubic feet of rubble have yet to be cleared
○ enough to fill six Superdomes.● Only 10 percent of the rubble has been removed
○ This is Haiti’s biggest challenge ● Adult literacy is about 62%● 10% of population has electricity- 20% have piped water- 20% have
telephones ● Almost all roads in Haiti are in terrible condition
Problems / Opportunities● The frailty of Haiti’s infrastructure & development has been made worse by numerous natural disasters,
which also compound its social, cultural and economic poverties.● The island is routinely battered by hurricanes that generate life threatening & erosive wind, rain and
flooding.● With Haiti’s poor infrastructure and the conditions after the earthquake there is a large opportunity for
Caterpillar ○ Implement our training program
● Overall Opportunity International has announced two grants totaling $19.2 million from the Caterpillar Foundation to scale its microfinance offerings and training programs and provide financial products and services to approximately 16.7 million people.
● With nearly 2.5 billion people living on less than $2 a day, the Caterpillar Foundation's support is vital to helping Opportunity bring life-sustaining empowerment through financial services to the poor
○ including educating children and offering agri-finance, business, and financial literacy training, all of which contribute to the long-term growth of families, communities, and nations
Why CATERPILLAR?● The frailty of Haiti’s infrastructure & development has been
made worse by numerous natural disasters, which also compound its social, cultural and economic poverties.
● The island is routinely battered by hurricanes that generate life threatening & erosive wind, rain and flooding.
● With Haiti’s poor infrastructure and the conditions after the earthquake there is a large opportunity for Caterpillar to help educate gov’t employees and foundation volunteers on the importance of rebuilding infrastructure through CAT equipment training programs.
Management Orientation● GEOCENTRIC ORIENTATION
○ CAT is a successful, global company.○ More than 50% of profits comes from outside
of the US. ○ CAT will use a standardized management
style that has allowed the company to become so successful over the years.
○ CAT will also use a localized management style by creating a program that fits the needs of the Haitian community (adapting to the localized area).
Economic System● Haiti imposes a free market economy
(market capitalism).○ Demand is constantly greater than
supply. ○ No tariffs with the United States for
access to many exports. ○ The Government relies heavily on other
countries for economic support, especially after 2010.
○ Very low labor costs. WHY?
MarketPeople: Population 9,993,247.0
● Overall incidence of poverty in the country is 77 per cent.● In rural areas, which are home to 52 per cent of Haiti’s population, 88 per cent of people are
poor and 67 per cent are extremely poor● There is a dramatically large gap between rich and poor● Inequality is likely to increase as the income gap widens even further● The poorest 40 per cent of the population have access to less than 6 per cent of the country’s
income● The richest 2 percent of Haiti’s people control 26 per cent of national wealth● Haiti’s poorest people depend mainly on self-employment and remittances for their income,
while poor people who are relatively better off derive their income mainly from wage earnings and remittances
● Haiti has a very large young population, in part because of a high birthrate and shorter life expectancies – 37% of Haitians are younger than 14, 59% are between 15 and 64 years old, and just 3% are 65 and older
MarketGeographic● Natural Hazards: lies in the middle of the hurricane belt and subject to
severe storms from June to October● Extensive deforestation, soil erosion, inadequate supplies of potable water ● Climate-Tropical; semiarid where mountains in east cut off trade winds● Second most densely populated● Haiti is slightly smaller than the U.S. state of Maryland● Tropical; semiarid where mountains in east cut off trade winds● Occasional flooding and earthquakes
○ Periodic droughts
MarketPsychographics
● Most Haitians place great importance on family life, no matter what class they belong to○ Family comes first, above work or other responsibilities
● Strong work ethics○ Both Haitian men and women work, though men are typically responsible for making
money to support the family. Haitian women can work outside the home, but they are also responsible for taking care of the house and children.
● Most people would describe themselves as very religious, and religion affects almost every aspect of Haitian society
● Values education○ Most children want to learn english and continue a higher education but their economy
doesn't allow it■ Only one college in Haiti
● Good Attitudes○ The wall around their “great farm” was destroyed in the earthquake- instead of getting
upset they built another (large success)
Regional AgreementThe CARICOM region functions as a Customs Union and may ultimately function as a Common Market.
● A Customs Union represents the logical evolution of a free trade area and eliminates internal barriers to trade. Members of a customs union agree to the establishment of Common External Tariffs (CETs).○ In Haiti, as part of a move in 1986 to liberalize trade, export tariffs were
eliminated and the average import tariff dropped from 40% to 20%. Certain food commodities in Haiti are still subject to import licenses.
● A Common Market is the next level of economic integration. Common Market allows free movement of factor of production, including labor and capital.
About Training ProgramA Better Haiti Training Program will allow the Haitian community and other CARICOM countries to work alongside donating foundations and government to gain working skills to help develop their country, and construction equipment knowledge that promotes:
● Rebuilding from the Ground Up● Provides Industry Solutions● Endorses Sustainability● Provides Employable Skills
Caterpillar Foundation
Features - Benefits - Value
Features● 4 weeks - $15,000 (pp) training ● Operator Certification ● Access to Demonstration and
Learning Center (HAITI) ○ Facility Built by CAT○ Equipped by CAT ○ Includes Overnight Stay
(travelers)● On going training on equipment● 5 year equipment maintenance
program (ex. wheel loader $20,000 per year)
Benefits ● Option to include in
Financing● Equipment Buy- Back
Program● Dealer Incentive● Demonstration and
Learning Center (HAITI)
Value● Governments and
Foundations contributes less after disaster
● Government and Foundation financial relief of Haiti or CARICOM dependency
● Continuous Improvement for developing countries
Caterpillar will offer foundations, government and government agencies the training program and access to CAT Demonstration and Learning Center with the purchase or lease of Caterpillar Equipment to help sustainability endeavors for Haiti and CARICOM developing countries.
Pricing StrategyGeocentric Pricing: The practice of using both extension and adaptation pricing policies in different country markets.
Short Term● Headquarters might decide to set a market penetration objective and price at less than
the cost-plus return figure by using export sourcing to establish a market.● Arrive at an estimate of the market potential at a price that would be profitable
Long Term● Local cost plus a return on invested capital and personnel fix the price floor
Price Point / 5 Year AnalysisPricing (938K CAT Wheel Loader) Leased (assumption):
Lease: $1,700/MonthTerm: 60 Month FMVMaintenance Program: $1,375/MonthTraining (PP): $15,000
5 Year Sales (assumption):Revenue = $184,500 + $15,000(X) X = Number of People Trained
MetricMetric (Equipment):Cost-based pricing: Pricing based on an analysis of internal costs(e.g., material, labor, etc) and external cost.
*Explanations::● Ex-work price based on 938K model sales
price● Shipping assumed ● Custom Fees assumed● Final Price (Amount of Escalation) include
10% mark-up)
ItemAmount of Escalation Total
Ex-works* $0 $240,000
Shipping* $19,400 $259,400
Custom Fees*
$1000 $260,400
Final Price* $26,040 $286,400
Revenue Contribution(Contribution assumption based on training)
Revenue: $15,000 (160 Hours of Training)Variable Cost: $6,000 (Labor at $30/hour)Contribution Margin: $9,000
Fixed Expenses: $3,000 (energy, fuel, equipment costs, etc.)Operating Income: $6,000
Built For It (cont..)
● “TRAINING PROGRAMS”○ Distribution○ Purchasing / Leasing○ Features
■ 4 week program■ $15,000■ Operating Certification
○ Financing and Insurance
Distribution
Training Program
Foundations
GovernmentAgencies
Haiti Community
Demonstrating & Learning
Center
Putting Words into Actions
MAKING CONNECTIONS AND SPREADING THE WORD
Getting Involved with Mission Haiti
Creating Connections
Thank you Jack and Connie Pelner, Father Tom Hagen, and Casey Flynn!
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