ELEMENTS FOR DESIGN OF ADVANCED DEVELOPMENT PROGRAMMES

LARGE REGIONAL FIRMS IN THE CARIBBEAN: DRIVERS OF GROWTH AND OPPORTUNITIES FOR EXPANSION INTO NEW MARKETS

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Prof. Miguel Carrillo, Ph D.

ELEMENTS FOR DESIGN OF ADVANCED DEVELOPMENT PROGRAMMES

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• Objective of the Study: Understand and Document Growth Strategies, Trajectories and Patterns in Large Regional Caribbean Firms.

• Large: Typically >> 500 employees• Countries:– DR– Guyana– Jamaica– Suriname– Barbados– Trinidad and Tobago

LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets

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• Project Funded by Compete Caribbean.• Progress:– 37 in depth interviews with CEOs, Chairman and

Top Executives of Largest Corporations in the Caribbean

– 6 Surveys of Base of the Pyramid Market Profile– Identification of about 9 Growth Trajectories– Mapping of LRF– Cases and Mini Cases

LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets

Business Mapping ofLarge Regional Firms in the Caribbean

Goddard Enterprises

Grace Kennedy

Ansa Mcal Guardian Holdings

Kersten Republic Bank

First Carib-bean Bank

Sagicor Massy Holdings

Ltd

Costs/Cost 116 119 62 150 40 20 45 54 64

Efficiency 0 5 2 2 0 0 25 0 3

Risk/Risks 100 326 26 218 36 21 420 293 81

Control 31 26 7 33 24 45 170 27 41

Profits 9 14 1 16 0 26 6 10 110

Profitability 6 7 1 3 0 5 3 0 18

Competition/Compete

5 6 0 2 9 2 2 7 5

Local 9 8 7 7 0 0 0 3 10

Same 13 9 1 13 9 7 5 10 7

Short Term 10 6 11 35 7 6 29 17 23

Innovation 0 6 1 1 1 6 20 7 0

Growth 5 58 14 36 0 0 5 2 97

New 36 45 19 26 34 29 61 23 86

50150250350450550650750850

Content Analysis of Selected Variables for 2012

Global Interna-tional

Oppor-tunities/Oppor-tunity

Explore Compet-itive

Alliance Joint Venture

Collabo-ration

Insight/Insights

Long term

Sustain-ability

Projects Start

Goddard Enter-prises

2 23 5 0 3 0 5 2 1 17 0 2 1

Grace Kennedy

41 45 14 0 5 1 6 0 0 16 3 1 5

Ansa Mcal

1 0 1 0 0 1 5 0 0 2 0 3 1

Guardian Holdings

4 26 7 1 6 12 8 2 0 53 1 5 2

Kersten 34 1 18 3 0 4 0 5 5 1 3 1 25

Republic Bank

21 10 22 2 0 4 7 0 0 5 1 9 1

First Car-ibbean Bank

30 80 5 0 9 46 0 1 47 5 4 1 1

Sagicor 46 56 7 0 5 5 0 1 34 1 7 2 2

Massy Holdings Ltd

34 1 0 5 34 1 1 12 0 12 4 17 4

25

75

125

175

225

275

Content Analysis of Selected Variables 2012

Top large Non Financial Firms Employment Size

Company Head quarters Employment

Size    Year 2013Neal and Massey Trinidad and Tobago 8988Ansa McAl Trinidad and Tobago 6000Digicel Jamaica 5500Goddard Limited Barbados 5023Grace Kennedy Jamaica 2633Cerveceria Nacional Dominicana, S.A Dominican Republic 2500Jamaica Producers Jamaica 1534Agostini Trinidad and Tobago 1025TCL Group of Companies Trinidad and Tobago 1000Kersten Suriname 999The Generating Company Haina Dominican Republic 600Bank Holdings (Beverages company) Ltd Barbados 589Light and power holdings Barbados 451Jamaica Broilers Group Jamaica 273Angostura Holdings Limited Trinidad and Tobago 250

Top large Financial Firms Employment Size

Company Head quarters

Employment

Size

    Year 2013

Grupo Popular Dominican Republic 6500

CIBC First Caribbean International Bank Barbados 3424

Republic Bank Trinidad and Tobago 4091

Memoria Banco BHD Dominican Republic 4000

Guardian Holdings Ltd Trinidad and Tobago 2529

Sagicor Trinidad and Tobago 1500

First Citizen Bank Trinidad and Tobago 900

Revenue Positioning of Top Non Financial and

Financial Firms

Revenue Positioning of Top Non-Financial Firms in the Caribbean 2010 to 2013

Revenue Positioning of Top Financial Firms in the Caribbean 2010 to 2013

Assets Positioning of Top Non Financial and

Financial Firms

Assets Positioning of Top Non Financial Firms in the Caribbean 2010 to 2013

Assets Positioning of Top Financial Firms in the Caribbean 2010 to 2013

Basic Benchmarking some LRF

Goddard Ansa Mcal Neal & Massy

Grace Kenedy

Market Valuation 185 Million 1.829 Billion 1.02 Billion 182 Million

P/E 17.5 13.9 10.9 5.7

# Companies 53 39 73 36

Sales USD 487 Million 1.6 Billion 1.466 Billion 850 Million

Territories 22 8 11 12

Employees 5,023 6,000 10,000 1,800

Net Profits USD 21 Million 174 Million 131 Million 20 Million

Asset BasenUSD 335 Million 2 Billion 1.4 Billion 350 Million

Share Price 3.08 11.75 10.8 0.50

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• Geographic Growth Trajectories:– Trajectory 1: Country Centric– Trajectory 2: Caribbean Centric– Trajectory 3: Caribbean as platform for Global

Growth

LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets

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Location of HQ.

• Caribbean HQ serving the Caribbean Region: Ansa Mcal Sagicor, Guardian

• Non Caribbean HQ serving the Caribbean Region: PALIG, UNICOMER, Goddard Catering Group

• Caribben HQ serving non-Caribbean Regions: SM Jaleel, Grace Keenedy. Goddard.

LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets

ELEMENTS FOR DESIGN OF ADVANCED DEVELOPMENT PROGRAMMES

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• Growth Patterns relative to Markets:– Pattern 1: Market Dominance. Have a bigger slide.– Pattern 2: Market Development. Have a bigger pie– Pattern 3: Market Dominance as the platform for

Market Development. Have a bigger slide of a bigger pie.

LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets

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• Growth Generic Strategies:– Strategy 1: Integration of new value chain steps– Strategy 2: Value deployment through new

channels– Strategy 3: Old Growth

LARGE REGIONAL FIRMS IN THE CARIBBEAN: Drivers of Growth and Opportunities for Expansion into new markets

Growth Playbook of LRF in the Caribbean

CoreBusiness

Horizon 1

AdjacentSpace

Horizon 2

Entirely NewSpace

Horizon 3

Old

Gro

wth

New

Gro

wth

Organic Growth Inorganic Growth

Growth Matrix

• Operations in New Locations

• Conquering new customer segments

• New Products/Services• New business model

• Market Penetration• Replication• Operational Effectiveness

• M&A in same sector/value chain step

• M&A in related Markets• JV with traditional

players

• M&A/ JV’s in new value chain step

• M&A/ JV’s of unrelated new businesses

• M&A/JV’s within new channels

How will your company grow in the next 3 years?

OLD

NEW

ORGANIC INORGANIC

65%

15%

15%

5%

N=11 LDF

How will your company grow in the next 5 years?

OLD

NEW

ORGANIC INORGANIC

40%

30%

20%

10%

N=11 LDF

Angostura(Alliance)

Kersten’s Housing (IJV)Ansa’s Water Treatment Solutions (Alliance)

Massy Auto InsuranceMicro Insurance for BOP(GF)

Beverage Company Access Colmados in DR (Alliance)

Almonde PopularEngineering (GF)

Massy Ecosystem (GF)

Goddard Enterprises(IJV)

What growth vehicles are preferred?

• Acquisitions

• Distribution Alliances

• Greenfield

• Least Used: International JV

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Key Findings of the Study

• First Mover Advantage Vs. Unique Mover Advantage

• Lack of Volume/Critical Mass not enough to attract enough competition

• Most growth is based on the attaining operational excellent in already mature markets/businesses

• LRF are too regional centric. Global benchmarks are rarely used.

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Key Findings of the Study

• Fear of Cannibalization (Innovations might not create new markets but cannibalize existing ones)

• Success breeds conservatism (fear of failure)• Localization of assets, resources, and

capabilities constrain expanding behavior• Technology is not a mainstream ingredient in

growth trajectories

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