Feed Your Learning Prototype

Transcription

Feed Your Learning Prototype:
A Social Franchise Model implemented as a CSR
Program in Cali, Colombia
International Master in Sustainable
Development and CR
2010-2011
STUDENTS
Alves da Silva, Sofia
Ávila Blanco, Jholany
Pichardo García, Laura
Sanabria Benítez, Carolina
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2
INTERNATIONAL MASTER IN SUSTAINABLE DEVELOPMENT AND CR
Feed Your Learning Prototype: A Social Franchise Model implemented as a
CSR Program in Cali, Colombia
Index
1. Introduction .................................................................................. 5
2. The Problem ................................................................................. 6
2.1. Global Overview .................................................................... 6
2.2. Latin America Overview ........................................................... 8
3. Current Actions and Policies ............................................................ 10
3.1. Theoretical Framework .........................................................
3.1.1. Corporate Social Responsibility ......................................
3.1.2. Share Value .............................................................
3.1.3. Entrepreneurship .......................................................
3.1.4. Franchise Model ........................................................
3.2. Case Studies ......................................................................
3.2.1. Nutritional Cases .......................................................
3.2.2. Educational Cases ......................................................
10
10
11
11
12
14
14
15
4. The Solution ............................................................................... 17
4.1. Feed Your Learning ..............................................................
4.1.1. FYL and Entrepreneurs .................................................
4.1.2. FYL and CSR Strategies .................................................
4.1.3. FYL and Creation of Partnerships .....................................
4.1.4. FYL as a Vehicle to Inform Communities .............................
4.1.5. How FYL tackles malnutrition .........................................
17
19
20
20
21
22
5.FYL Target .................................................................................. 24
5.1. Analysis of the current situation of the targeted countries................ 24
5.1.1. Situation in Venezuela........................................................
5.1.1.1. Education .............................................................
5.1.1.2. Nutrition ..............................................................
5.1.1.3. CSR Initiatives ........................................................
5.1.1.4. Entrepreneurship ....................................................
24
25
25
26
27
5.1.2. Situation in Dominican Republic .............................................
5.1.2.1. Education .............................................................
5.1.2.2. Nutrition ..............................................................
5.1.2.3. CSR Initiatives ........................................................
28
29
30
31
32
5.1.3. Situation in Colombia .........................................................
5.1.3.1. Education .............................................................
5.1.3.2. Nutrition ..............................................................
5.1.3.3. CSR Initiatives ........................................................
33
34
35
36
37
EOI Escuela de Organización Industrial
http://www.eoi.es
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5.2. Identifying a City to Focus the FYL Prototype ...............................
5.2.1. Venezuela ...............................................................
5.2.1.1. Caracas .........................................................
5.2.1.2. Maracaibo ......................................................
5.2.1.3. Valencia ........................................................
5.2.2. Dominican Republic ....................................................
5.3.2.1. Santo Domingo .................................................
5.3.2.2. Santiago de los Caballeros ...................................
5.2.3. Colombia ...............................................................
5.3.3.1. Bogotá ..........................................................
5.3.3.2. Medellín ........................................................
5.3.3.3. Cali ..............................................................
5.3. Choosing Cali, Colombia, to Implement FYL Prototype.....................
5.3.1. Why Colombia ..........................................................
5.3.2. Why Cali .................................................................
5.3.3. Profile ...................................................................
5.3.4. Private sector and CSR ...............................................
5.4. Target Profiles ....................................................................
5.4.1. CSR Departments .......................................................
5.4.1.1. National companies ..........................................
5.4.1.2. International companies .....................................
5.4.2. Entrepreneur ...........................................................
5.4.3. Community ..............................................................
38
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42
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42
43
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49
52
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54
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60
6. FYL Operational Structure .............................................................. 65
6.1. Stakeholders .....................................................................
6.2. Creation of Partnerships ........................................................
6.3. Service Description ..............................................................
6.3.1. Implementation of FYL model .........................................
6.3.2. FYL´s operational manual .............................................
6.3.3. FYL´s training programs ...............................................
65
66
67
67
73
75
7. Legal Obligations ..........................................................................
7.1. Franchise legal agreements .....................................................
7.2. Organizations/parties involved .................................................
7.3. Ongoing obligations ..............................................................
76
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79
79
8. Marketing Plan ............................................................................
8.1. Market trends .....................................................................
8.1.1. CSR market trends in Latin America ...................................
8.1.2. CSR market trends in Colombia ........................................
8.2. FYL’s competitors ................................................................
8.3. SWOT Analysis ....................................................................
8.4. Product ............................................................................
8.5. FYL benefits .......................................................................
8.6. Objectives and strategies .......................................................
8.7. FYL Marketing Mix ................................................................
8.8. Calendar of activities ...........................................................
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9. Social Impacts.............................................................................. 98
9.1. Objectives and Goals
................................................ 98
9.2. Tools and Indicators ............................................................ 99
9.3. Limitations ...................................................................... 100
10. “FYL COMPANY” ........................................................................ 101
10.1. Mission and Vision of F4D Company ......................................... 102
10.2. F4D Organization Structure .................................................. 102
10.3. Team Members ................................................................ 103
11. Financials ................................................................................ 107
11.1. Financial Aspects .............................................................. 107
11.2. Statements of the Enterprise ................................................ 112
11. Conclusions .............................................................................. 116
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1. Introduction
Nowadays it is crucial to find social business solutions to the problems the world is facing. In the
public and private sector of every country, global problems are increasing. We are facing an age of
environmental, social and economic degradation. In Latin America there are higher rates of
unemployment, poverty, malnutrition than other decades ago. This Project proposes a model to
tackle some main problems of humanity, in this case in Cali, Colombia. Poverty, malnutrition and
education, are approached in one solution based on Corporate Social Responsibility (CSR), social
entrepreneurship and social franchise concepts. The important issue in the presented project is
based on creating capacity building for individuals in order to empower them to become
independent entrepreneurs while helping a region and with the possibility to reach other places.
In Latin America, poverty and malnutrition are really important issues affecting the majority and
this is caused by the lack of education the people is receiving, mostly children. Feed Your Learning
(FYL) is a social franchise model that enables communities to address their rates of poverty,
malnutrition and illiteracy. It does so by increasing their awareness of what they eat, making them
understand the connection between healthy food and their development on well being. Further it
develops local entrepreneurs who become locally independent and address the needs of the
surrounding community.
FYL is an innovative project that addresses global issues allowing global replication. These
documents start with a global overview and then focus on some relevant key issues in Latin
America. It then provides a theoretical framework explaining the terms and definitions mention in
the project. In the following chapters the reader will understand the situation in Venezuela,
Dominican Republic and Colombia in terms of development, nutrition and education. Then the FYL
solution will be explained showing how the holding organization Franchise For Development (F4D)
will offer FYL services, where the prototype will be located and the operational structure and social
impacts that the project will have. This document ends with the financial analysis will be presented
followed by the conclusions.
The upcoming generation and the generation that is working nowadays to find solutions for the
challenges humanity is facing, would agree on the fact that sufficient knowledge and experience
exists to understand what is happening and to find ways to address the concerns. The Franchise For
Development (F4D) believes that we live in a unique moment where we need to move from
implementing individual projects that have limited effects to scaling up creating solutions that
could go from local to global thus widening the social impacts.
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2. The Problem
2.1 Global overview
Poverty, malnutrition and low educational levels –in many cases associated to school dropout- are
considered global issues that are affecting a big percentage of the population around the world.
These problems present alarming numbers and consequences that have captured the attention of
several governments, international organizations, multinationals and civil society.
For
instance,
according
to
the
Multidimensional Poverty Index 2010 (MPI)
made by the Oxford Poverty and Human
Development
Initiative
(OPHI)
and
the
United Nations Development Programme’s
Human Development Report (40), there are
1.7 billion people living in poverty. The
study evaluates 104 countries representing
5.2 billion people -92% of the population of
developing countries-, the equivalent to the
78% of the world’s population. Additionally it
takes into account different variables that are related with the quality of life and people’s
development. These variables refer to education, health and standards of living (see figure 1).
This kind of studies shows interconnections with global initiatives such as the United Nations
Millennium Development Goals (MDG’s), especially with the goals 1 and 2 which are oriented to
eradicate, by 2015, poverty and hunger and achieve universal primary education respectively. In
fact, The Millennium Development Goals (MDGs) recognize many dimensions of poverty, have
increased comparable international data related to the goals and targets, provided feedback on
development outcomes, galvanized political will and civil society engagement in many contexts, and
created incentives to address core deprivations. The goal from 2010-2015 is to accelerate progress.
One key way to accelerate progress is to address the multiple deprivations that people experience
at the same time, synergistically.
In fact, the MDGs, as mentioned, are about improving welfare of the poor, and in most instances
this cannot occur without improvements in nutrition. While the links among poverty, hunger and
malnutrition, which is the focus of MDG1, are obvious, nutrition also has an important role to play in
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the other MDGs as well. Nutrition is central to efforts to improve maternal and child health (MDGs 4
& 5) and to combat HIV/AIDS and other diseases (MDG 6). In the presented project, a better
nutrition among schoolchildren is a goal. Also, well-nourished children contributes to achieving
MDG2, universal primary education, by reducing absences and enabling students to better
concentrate and learn more, which furthermore will impact the development index of the
population (67).
According to Food and Agriculture Organization of the United Nations, international leaders on
fighting hunger, and as explained on their site on Nutrition Education chapter, eating well is vital
for a healthy and active life, but many people, in virtually, all countries, do not eat well because of
poverty and a lack of nutrition education (68).
Also, FAO stresses, on the “Designing CCT Programs to
improve Nutrition impact: Principles,
Evidence and Examples” (69) working paper, that nutrition education is a key for developing the
skills and motivation needed to eat well, and is especially important in situations where families
have limited resources. It is also in those same low-income situations that the challenge of providing
nutrition education is often the greatest. A lack of trained personnel, coupled with a shortage of
libraries, books, guidelines, other sources of information, and non-existent or slow internet
connections, make educating people about nutrition a formidable challenge. The connection
between malnutrition and poverty and education describes a proven link, especially at the lowest
income levels. Countries with the lowest economic indicators report the highest rate of
malnutrition, especially in children. An important point since children typically represents the
economic future of a country, prompting efforts to address malnutrition as a way to
promote economic growth and decrease poverty rates. As can be seen in figure 2 bellow (70):
Figure 2: GAPMINDER World 2007 (70)
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Furthermore, according with the World Bank study- “Why invest in nutrition?” (71) it is showed
direct and indirect consequences of malnutrition and poverty. A direct result of better health allows
people to perform physical work and earn more. These workers might become more productive
when their nutritional requirements are met, leading to higher wages and the ability to afford
health care.
Also, malnutrition in childhood causes lifelong consequences because it affects a child’s intelligence
and ability to learn. Those suffering from malnutrition and poverty typically drop out of school
early, reducing their ability to obtain good-paying jobs as adults. Health problems linked to
malnutrition and poverty also relate to time missed from work or school, which might further
complicate the cycle. These children face greater challenges in their ability to learn and thrive, and
become more susceptible to illness and disease. Their compromised ability to perform physically
and mentally typically continues the cycle of poverty.
Also an important fact is reducing poverty alone does not always lead to a healthy population, but
that addressing malnutrition does impact poverty levels. In some developing countries, malnutrition
represents a significant problem that hinders economic development. It accounts for more than half
of child deaths in some regions, reducing the number of future healthy individuals to aid economic
growth.
Another faced problem is the fact that malnutrition and poverty passes from generation to
generation in some undeveloped and underdeveloped countries. So, to provide nutritional education
for itself doesn’t solve the cycle of the problem. A fact is that tools must be provided,, not just
giving access to children to a better nutritional diet, as also allowing parents and communities
where those problems exist to develop sustainable capacity to face and deal with the situation.
2.2. Latin America Overview
Latin America is a relatively rich region. As Helwege and Birch (16) explain, its per capita GDP of
$4044 is three times that of East Asia, and seven times that of South Asia and Sub-Saharan Africa.
Despite this, data shows that 120 million (out of 550 million) Latin Americans live on less than $2
per day, and 47 million live on less than $1 per day rightly appalls even many rich Latin Americans.
Acknowledging the inequality in which Latin Americans live, the project chose this region as for its
first approach.
In addition to the global trends such as MDG’s, it is important to mention that the issues need to be
solved also in a local way, taking into account specific contexts and needs. From this perspective,
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according to the Economic Commission for Latin America and the Caribbean (41) in the case of Latin
America, poverty, malnutrition and low education levels are still problems to solve. Latin America
has 180 million of people in poverty and 72 million of them are living in extreme poverty. This
situation affects the capability of the people to meet basics needs such as education and the
minimum range of dietary energy consumption.
According to Luis Alberto Moreno, Interamerican Bank for Development’s President (1); in the
Central American and Caribbean countries, the majority of which are net importers commodities
and receive significant external revenue from remittances or tourism, are places depressed by the
crisis, and the recovery to these problems has been really slow to not say not recovery at all. Their
economies are unstable and poverty is affecting in extreme ways and the conditions in aspects such
as nutrition, child labor or possibilities for poor people to be able to increase their money incomes
are in fact difficult.
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3. Policies and Current Actions
The approaches towards development and towards social problems have become a focus for many
researchers in economics. Nowadays, the urgent need to understand, analyze and propose solutions
to the problems that characterize Developing Countries, have been shaped into theoretical
frameworks and innovative strategies. New policies and actions are implemented everyday as an
approach to provide the best solution that could be adapted to the different contexts of the
populations in developing countries. This session helps conceptualize the different solutions to the
explained problem and to create a framework for the actions this project will state.
3.1 Theoretical Framework
In order to have a better understanding of our project, concepts as Corporate Social Responsibility,
Entrepreneurship, Franchise Model and Social Franchise must be explained. By analyzing these
concepts, base of the project, it will be easier to have in mind the advantages of the presented
project.
3.1.1 Corporate Social Responsibility
The definition of Corporate Social Responsibility (CSR) implies voluntary and responsible behaviours
between corporations, governments and individuals citizens. Its goal embraces the responsibility of
the company´s actions, integrating social and environmental concerns in their business operations
and in their interaction with their stakeholders.
The approaches to social problems and greater understanding of the context in which companies
operate have been installed in the basic strategies of the leading companies. Today many
enterprises are looking to optimize their management to improve their performance in social
development. (17)
A) Integrating Sustainability into CSR practices
Sustainability and CSR have progressively converged and today they encompass similar dimensions
and are often applied as synonymous of comparable terms. Both concepts involve multiple levels of
analysis (individual, group, firm, community, etc.) and multiple stakeholders (employees,
shareholders, clients, suppliers, partners, community members as others). Secondly, CSR and
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sustainability deal with issues related to three distinct spheres that sometimes overlap: social,
environmental and economic. (2)
Top management commitment towards sustainability is seen as the starting point for integrating
sustainability into business. This high-level commitment enables changes in the structure of the
business. Top level commitment act as a promoter of the sustainability vision, making possible the
emergence of sustainability leadership at different organizational levels. Leadership, in turn, is
reinforced by formalization of the sustainability area within the structure of a company.
Finally, corporate view and organizational structure allow implementation of a set of organizational
mechanisms that will legitimize and consolidate the integration of sustinability by; providing a clear
deficnition of sustainability’s role within the firm; implementing and educational program to
promote sustainability internalle and externally; implementing clear mechanisms for communication
and monitoring; implementing a system of recognition and valorization of sustainable practices and
initiaves.
3.1.2 Shared Value
As explained by Porter and Kramer (18), “the concept of shared value can be defined as policies and
operating practices that enhance the competitiveness of a company while simultaneously advancing
the economic and social conditions in the communities in which it operates”. It is focused on
strengthening the connections between social development and economic progress.
3.1.3 Entrepreneurship
An entrepreneur is a person who identifies an opportunity and translates it into an effective
solution. Identifies and organizes resources to develop. Generally describes a self-starter with terms
such as a visionary, innovative, creative, adventurous, and dynamic.
Global Entrepreneurship Monitor (GEM) is a research project on the level of business and
entrepreneurship, which is conducted annually nationwide in 42 countries around the world. It is led
by London Business School and Babson College, and has existed since 1999. The ultimate indicator of
the Global Entrepreneurship Monitor is the TEA index, which refers to the Entrepreneurial Activity
in the initial stages. Is an indicator used to measure business activity in the countries studied,
resulting in a reference for comparing the propensity of a country to be an entrepreneur. (19)
Some of the Latin America countries that are part of all nations team of GEM includes Peru,
Colombia, Venezuela, Chile, Brazil, Argentina, Uruguay, Ecuador and Dominican Republic. This is a
sign of the importance that these countries give to the researched and development of
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entrepreneurship.
3.1.4 Franchise Model
A) Commercial Franchise
Gathering information from diverse sources we may identify a Commercial Franchise as a model of
marketing products or services, based on a collaboration close and continuous relationship between
the franchisor (owner of the know-how of a product or service) and their franchisees (person
interested in license a business), whereby the franchisor grants its franchisees the right and imposes
the obligations performing the standardization of business concept developed by the franchisor.
The International Franchise Association (21) describes a Franchise as the agreement to perform a
business model, where assistance on training, merchandising and management is provided by the
franchisor in return for an economic consideration from the franchisee. Two types of Franchises are
identified: 1) product distribution franchising, which allows only the license of trademark and logo;
and 2) business format franchising which grants not only the license the trademark and logo, but
also the entire system for starting and running the business. (20)
In the context of a Franchise Model, both franchisors and franchisees are been considered as
entrepreneurs. As people who identifies opportunities and transform ideas into their own project,
by identifying resources to develop it. Generally both of them can be described as visionaries,
innovative, creative, adventurous, and dynamic. The partnership in franchising between them is
detailed in a contractual franchise agreement and manual which precisely specifies all rights and
duties of both parties.
As experts of Best Franchise explain (22), the application of the franchising system is widespread
and across many different industries. Franchising has been an effective strategy for replicating
successful in the commercial world. Numbers confirm the accomplishment of this marketing model:
franchises have one-quarter the failure rates of start-ups in U.S.; franchising accounts for 10-25% of
GDP among OECD member-nations, also, in 2008, growth in U.S. franchising market was driven by
service businesses.
B) Social Franchise
Because of its success, nowadays, Franchise model, is beginning to be greeted with enthusiasm in
the Social Development sector, as Social Franchises.
By creating social value together with
economic value and engaging commercially with Bottom of the Pyramid sectors, resulting in poverty
reduction. Social franchise consists on developing business models that contribute to solve social
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problems and needs such as food, health, education and other, as they offer a guarantee quality of
standardized products and services. While helping to introduce valuable know-how into
Communities, involving overall training in how to run a specific business, it stimulates the
development of local markets and can create numerous local SME’s, a key component in overall
economic development. (LaVake S., 23)
Just as Commercial Franchises, Social Franchises may be categorized: 1) Commercially Organized
Franchise system for achieving social benefits; 2) Subsidized Franchise system to make services
available at low cost. This may include profit-making entrepreneurs at the franchisee level; 3) Nonprofit Replication system which includes core elements of Franchising, but without the classical fee
and profit elements. (24)
C) Why Social Franchising Works
There are many variations of the definition of a social enterprise; the one recognized by the Social
Enterprise Alliance (25) is relatively universal: “an organization or venture that advances its social
mission through entrepreneurial earned income strategies.” When combining the concept of social
enterprise with the idea of Franchise, the result is the replication of a successful project. This
success is linked to the increase number of beneficiaries, the reduction of start-up costs and risks
and consequently a greater social impact. In developing countries, Franchising enables
entrepreneurship ventures, to find or give employment and to spread the knowledge or build up
themselves for a better future in their communities.
Social Franchising is a form of sustainable business cooperation, as it provides a win-win situation
for parties. Like entrepreneurs, both franchisor and franchisees have the common objective of
maximizing profit at minimum risk; providing a social benefit into Communities (25). The System
accelerates learning process, assures best practices and enables the growth of the business much
faster than through developments based on individual experiences. By its standardization method, it
defines and describes procedures aiming high level results, driven by any employee previously
trained. The quality expected from this method is the one that ensures reputation, positioning and
thereby market stability.
D) Franchising Model in the Developing Countries
In the developed world, the franchising market is already substantial, and presents rapidly growing
in developing countries, as the most effective network business model.
As we have seen before, the risk reduction by having business-in-a-box model, the unneeded of
‘creative burden’ from new entrepreneurs and the consistent standard-setting makes replication
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relatively simple, are strong advantages of a business model to be applied in nations with a low
level of material well-being. Furthermore, franchising has proven to be a stimulus for economic
growth in the developing world. For example, Magleby K. (26) explains that in India, franchising
growth has outpaced GDP growth by ratio of 3 to 1 in past decade, in Mexico, GDP has grown in low
single digits, while franchises have expanded 15-20%, and in Brazil, approximately 25% of Small and
Medium Enterprises (SMEs) are franchises.
3.2 Case Studies
Using Case studies as research method helps to bring a better understanding of how can the projects
be design in order to guarantee a greater success. The following session describes some outstanding
nutritional and educational programs and actions that are been implemented around the world.
3.2.1 Nutritional Cases
A) The Mobile Farmers Market Program is managed by the County of Stockton, California. The
County’s Hunger Task Force, launched this ”Nutrition on the Move” Program in an effort to give a
growing underserved population no-cost access to the fresh fruits and vegetables that are lacking in
many diets. The program is a market on wheels, distributing healthy, nutritional items, particularly
fresh fruits and vegetables, and nutrition education free of charge. The goal is to enable the lowincome families to understand the long term health benefits of including fruits and vegetables in
their daily diet. Nowadays, the Mobile Market serves 47 sites through partnership with food
pantries, community and senior centers (32).
B) School feeding, this program is being implemented by humanitarian agency World Food Program
(WFP). Helping eliminate hunger for millions of children around the globe and contributing to their
education, nutrition, health and future productivity as adults, the WFP supports school feeding in 68
countries. After the year 2008, more than 20 national governments choose to scale-up school
feeding programs as a response to the high food price crisis, to benefit those most in need. School
feeding is a safety net that has proved effective in protecting vulnerable school children while
providing nutrition, education, and gender equity benefits, along with a wide range of socioeconomic gains (27).
C) Daunis Social franchise offers integration to employment for people with Down syndrome,
developing in them self-sufficiency for a full life. Daunis is integrated into the market by selling the
franchises to entrepreneurs and locating them in the communities where customers may have
access to the traditional Tamal. The Daunis Franchise operates as any Commercial Franchise and
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gives the same benefits to the franchisee as support in sales, administrative and marketing issues
and the Model´s manual (28).
D) Save the Children Institution developed a Program tackling Nutrition in Dominican Republic.
In 30 years their fruit and vegetable gardens have brought to the children living on the border a
variety of new foods rich in nutrients which are needed for the psychomotor development. The solar
food drying project goal is teaching women the innovative technique of dehydrating foods rich in
vitamin A which is considered an excellent nutritional strategy for communities. This program was
implemented with support from USAID and VITAL. The innovation and creativity reached with
women from the communities was centered mainly on the activities of harvesting fruit and
vegetable gardens, solar drying of fruits rich in vitamin A and the planting of fast growing trees. The
Milk Bank Program has been very successful registering improvement for both the environment and
in nutrition, milk rations are delivered to families in exchange for their participation in our
reforestation efforts in their communities. This program is sponsored by the ADEMI Bank and the
Inter-American Institute for Cooperation on Agriculture IICA (72).
E) Target worked in a partnership with Feeding America and local food banks on "Meals for
Minds," to help feed these hungry school children. A quantity of $2.3 million were provided to fund
this school food pantry pilot program and its future expansion to more schools nationwide.
Currently, a number of school pantry models are being tested, including in-school and mobile
versions along with ways to drive parental engagement in schools. According to John Shaia, director
of programs and network services, Maryland Food Bank, in a news release, "We've seen the 'Meals
for Minds' pilot program have a tremendous impact at our participant schools here in Baltimore",
also, "The program is strengthening the relationship between the community and the school and
really increasing parental involvement. There's a positive difference in the school's overall climate"
(73).
3.2.2. Educational Cases
A) The Fundación Paraguaya is running a Social Franchise program in rural education by providing
the poor rural youth access to technical education / entrepreneurship relevant high quality that
gives them the power to overcome their own poverty, and also to help their communities to
overcome poverty. In just one year the Foundation has impacted in more than 20,650 youth around
the world through eleven replicas board, more than sixteen partnerships establishment and the
release of the Manual "School in a Box". Nowadays more than 600 institutions 80 countries interested
in their model (29).
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B) Committee for Democratization of Informatics (CDI), is the first social franchise known in Latin
America. It was created in Brazil in 1993, developing innovative work to promote social inclusion
using information and communication technologies as a tool for the exercise of citizenship. It is
current located in Rio de Janeiro, and has established offices in most Brazilian states and in several
Latin American countries such as Argentina, Colombia, Chile, Uruguay, Mexico and Ecuador, also
counting presence U.S. and UK (30).
C) Productive ProEmpleo Foundation is a non-profit association that promotes entrepreneurship
and supports the creation and improvement of micro, extending the capabilities Mexicans to have
higher income and opportunities. Their programs encourage people who want to achieve a dignified
and productive life through training and advice for self-employment and the creation or
improvement of their microenterprises (31).
Their objectives are:
• Promote self-employment, creating and improving small businesses.
• Encourage microenterprise training.
• Spread the entrepreneurial culture.
• Develop skills to enhance self-esteem of micro-entrepreneurs.
• Contribute to community development through employment support.
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4. The solution
FYL is an innovative solution to important problems occurring in areas in Latin America. In the
following chapter the solution to these problems through FYL will be explained. The section gives
explanation not only to what exactly is the FYL Model but also how will help and enable people to
become entrepreneurs, how can be embedded into CSR strategies of national and multinational
companies, how it create partnerships with these companies and not less important as a vehicle to
inform and help communities.
4.1. Feed Your Learning Franchise (FYL)
Feed Your Learning (FYL) is a social franchise model which helps poor people to develop, becoming
entrepreneurs by providing a service or facility to the community and becoming economically
speaking sustainable. FYL partners with national and multinational companies that have or intend to
introduce CSR strategies and provide them with entrepreneurial solutions through comprehensive
and complete manuals containing the methodology to develop nutrition related business
opportunities resulting in education and income to a particular community. FYL will start to develop
in a specific location within a city to learn, improve, prove it works and then be in a better position
to spread initially to specific Latin America countries and then worldwide. FYL will work with
relevant multinationals located in the Latin American locations taken into consideration throughout
the investigation and therefore companies that are key elements of development in the Latin
American context.
As illustrated in Figure 3, FYL works as a Social Franchise Network advised by a multidisciplinary
expert´s team on social development, business, marketing, communication, logistics and
operations. FYL´s scheme is based on the Social Franchise methodology designed to be offer and use
by local headquarters of multinationals and entrepreneurs. The Scheme aims to support individual
entrepreneurs, families and/or communities with low income. FYL aims to promote actions and
provide social tools that encourage a culture of sustainable economy. It also helps the increase of
formal economy promoting own businesses initiatives and generating new job opportunities to
decrease levels of unemployment.
For the sustainability of the Social Franchise, FYL proposes the creation of partnerships with
national and multinational companies, through the creation of FYL´s Social Franchise programs as
part of their Corporate Social Responsibility strategy. Companies interested in investing in Inclusive
Business and CSR programs, guarantee the success of Social Franchises by providing low prices of
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18
their products, training facilities and financing mechanisms for the initial investment.
Even though FYL´s scheme prioritizes quality over quantity in order to guarantee the success of the
franchise, any entrepreneurs may obtain a social franchise under an investment contract liability.
The Contract gives obligation to the franchisee to develop initiative, leadership, discipline,
administrative and other business skills.
Franchisee:
Social Entrepreneurs
Customers:
Communities
Feed Your Learning:
Model
Support/
Advise
Product/
Service
Franchisor:
Company
Figure 3: Feed Your Learning Scheme
FYL´s Social Franchise scheme is thought to be adapted and expanded in any Latin America´s
community. It is designed to be operated by Social Entrepreneurs looking forward to support their
communities with educational, nutritional, cultural, and with any other issues related to social
scarcity. The scheme is able to be customized to tackle the problems faced in the community and
to fulfill the goals of any company in creating share value as an approach of the CSR´s program.
One of FYL unique value proposition it’s in the way it operates: manuals are acquired by national
and multinational companies as a program to enable these future entrepreneurs thus providing them
with the necessary skills to perform efficiently. During the whole process, FYL monitors and controls
the activities ensuring the correct application of the FYL methodology, providing benefits to the
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Company and to the entrepreneur. FYL´s support will also be responsible for identifying areas of
improvement in the methodology.
As Julia Meuter in the paper called Social Franchise: A way to of Systematic Replication to increase
Social Impact say (3): “Social Franchising has already allowed the expansion of various great
projects and has contributed to an increase in beneficiaries reached. Considering that so many
people are still not reached, it should be considered much more as a viable option for increasing
social impact.”
4.1.1. FYL and entrepreneurs
FYL represents a significant chance for local entrepreneurs to develop themselves and become
professionals. The entrepreneur that acquires the franchise will be not only becoming sufficient in
terms of money and work but will also improve the community where the service is provided in
terms of poverty and nutrition among other important issues.
With FYL, the community will learn how to eat properly and will also have a source to buy not
expensive food but with a high nutritional content. Is important to state that the communities
where FYL will be implemented are communities that desperately need help and are locations
where inhabitants want to improve their quality of life and want to cooperate to build a better
future not only for them but for their children.
The entrepreneur will receive the social enterprise model, methodology and the ongoing technical
support from the franchiser, meaning that will be capable of improving the community services and
education in more many ways than just the mere fact of selling food.
A poor community can’t get out of poverty through mere charity and aid. With FYL motivated
individuals from the community are able to develop the necessary entrepreneurship abilities to start
and successfully manage businesses. Therefore the community will be gaining leaders with
successful business enterprises and it will create among fellow citizens an environment of progress
and willingness to become sustainable conscious. FYL transform a person into a change agent for
society. (see figure 4)
The support and communication between entrepreneurs is contemplated within the Model by the
creation of an intranet platform (social network) inside the F4D website which will be developed in
the medium term when the society of FYL entrepreneurs have been established.
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4.1.2. FYL and CSR strategies
Any company establishing a CSR program based on the FYL model will be guaranteed a standardised
solution directly contributing to tackle the social problems and needs targeted.
Nowadays, building a reputation as a responsible business sets a differentiation value. Consumers
increasingly don't accept unethical business practices or organizations who act irresponsibly. A
successful CSR program with FYL implemented will strength the customers’ loyalty and increase
differentiation from competitors. It won’t only have a positive effect on customers but it also will
enhance relationships with suppliers, networks and employees. In addition, it will create good
relationships with local authorities making operations for the business easier. Companies who
consistently demonstrate compliance to regulatory requirements are given greater freedom by both
national and local government.
The success of every business will depend on its relationship with its different stakeholders, not
least its customers. Enhancing the relationship a company has with its stakeholders increases the
potential support that each group has for the company and its strategic objectives. It is through this
relationship that a company creates value.
4.1.3. FYL and creation of partnerships
Creating partnerships with FYL will be a win win situation for all stakeholders involved. The
organizations, companies and members belonging to this partnerships will be able to share
knowledge and also learn from experiences, gaining not only a more effectively result but also
reducing risk and improving the reputation management. Companies that work separated from other
institutions are often less successful that the ones that create share value and its constantly in
contact with the community.
FYL will create a network where the awareness on particular issues will increase resulting in
responsiveness of the private and public sector within a city or country. The social impact will be
greater and stakeholders will be positively taking actions on important issues. By creating this
partnerships and having a scaling up plan the awareness and learning will be constant and will
increase as the time goes by. Companies will create brand consciousness, the entrepreneurs will
have a business and will improve life in the community and FYL will be continuously delivering
results.
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4.1.4. FYL as a vehicle to inform communities
Through the methodology of FYL, the person that obtains the franchise will become a change agent.
The training and the acquire skills will enable them to encourage others in the community to change
their habits, to give up to certain conditions of living and to aspire for more. Through the sale of
nutritional food, the entrepreneur will help to make the community understand how important is to
have a good nutrition, the necessity of food with nutritional content for children and how simple is
to provide them with the essential vitamins, proteins and minerals they need. FYL and partners will
also help to spread valid information about nutrition and its content in the food that will be sell
within the community. Some problems, as in this case malnutrition, it´s more than often more
efficiently solve by using these instruments. (see figure 4)
Nutritional
and Health
brochure
Nutrition and
Health education
Nutrition Facts
of the Food
Impact in
Community's behavior
Business
Success
People selects
healthy food for
their families
More entrepreneurs
(More Change Agents )
Figure 4: FYL a tool of information and replication
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4.1.5. How FYL tackles malnutrition
In addition to the information about the importance of good eating habits, FYL contributes to tackle
malnutrition through the products it can offer. As it is possible to see in the chart presented below,
the products (buñuelos and milkshake of maizena) that are going to be sold in the Entre Parces food
Cart have nutrients and calories that are important for the basic diet of the school boys and girls.
The nutrients are basically vitamins and minerals that come from the different ingredients needed
to prepare the buñuelo and the milkshake. In this case, these ingredients are recognized by the
Instituto Colombiano de Bienestar Familiar (ICBF) –an entity created to attend the needs of
Colombian families as malnutrition, child protection, among others- and are associated in the chart
with the identification number that this institution has assigned them.
The chart explains how many calories, proteins, fat, carbohydrates, calcium and iron can get a
person who eats one buñuelo and drinks one milkshake. This allows to identify what the
contribution of this snack is in relation to the needed daily dietary consumption of a scholar (see
Table 1 and 2). For children between 4 and 6 years old this snack provides the 22,6% of the
minimum of calories recommended, for children between 7 and 12 years old it provides 29% and for
teenagers between 13 - 17 years 14,6% of the calories needed.
Cod.
Tabla
ICBF
50
Buñuelo
Gr or
CC
Calories
Proteins
gr
White corn flour,
grain threshed
70,00
255,50
06,37
02,59
51,73
12,60
01,89
5,00
05,20
260,70
01,17
07,54
01,10
03,69
00,13
51,86
20,25
32,85
00,03
01,92
Corn Starch
(Maizena)
10,00
11,30
00,34
00,29
01,84
10,97
00,04
Milk powder, whole
15,00
39,15
04,16
04,05
05,62
141,00
00,12
Sugar cane sucrose
15,00
59,55
00,00
00,00
14,90
00,00
00,00
Total milshake
110,00
04,50
04,34
22,35
151,97
00,16
1156 Cheese Doblecrema
Total Buñuelo
1175
Milkshake
of
765
Maizena
858
NUTRIENTS
Fat Carboh. Calcium
gr
gr
mgr
INGREDIENTS
Iron
mgr
Table 1: Nutritional information of the products
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MINIMUN DIETARY ENERGY CONSUMPTION PER AGE
KCLS
PROTEIN
FAT
CARBOHY CALCIUM
IRON
Intake daily recommendation
(children 13 - 17 years old)
2.530,00
75,9
84,3
366,8
825
16
1.958,00
58,7
65,3
283,9
800
15
1.637,00
49,1
54,6
237,3
600
10,3
Table 2:Minimun Dietary per age
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5. FYL target
In the first part of this section the reader will find the analysis of the current situation in the
targeted countries and the key items that were taken into account in order to decide where
implement the FYL prototype. These items are related to the key factors that drive the successful
implementation of FYL in that region: high presence of educational, poverty and nutritional issues;
the fertility of the entrepreneurial environment and the presence of CSR initiatives and
entrepreneurial environment. The presence of related CSR activities in Venezuela, Dominican
Republic and Colombia; and specifically in 8 analyzed cities located in these countries.
Then, this segment presents the reasons to choose Cali, Colombia as the city to implement the FYL
prototype. These reasons include an explanation of the context of the country and the city, a
profile of Cali, and information about the private sector and local CSR initiatives and opportunities.
Finally, the section describes the profiles of our target: the companies that can be FYL clients, the
type of entrepreneur that the franchise needs to work properly and the kind of communities that
are going to be beneficiaries of goods provided by the social franchise.
5.1. Analysis of the current situation in the targeted countries
5.1.1. Situation in Venezuela
Venezuela has a territory that covers 912,050 square kilometers, with a population of 28,384,000.
According to the Instituto Nacional de Estadísticas (INE, 33), almost 90% of the population lives in
urban areas and Caracas, the country's largest city, has an estimated 3.2 million inhabitants.
Venezuela, like many countries of Latin America is experiencing rapid population growth.
Nowadays, the population growth rate is 1.6% per year.
Despites Venezuela is categorized as an upper middle income country, it has a gross national income
(GNI) per Capita of 12,000.00 and a high percentage of the population lives in poverty. Issues like
lack of work opportunities and insufficient income to satisfy basic needs of families, accounts as
obstacles for human development. Labor marginality is seen as a factor associated with poverty,
deepening social exclusion, especially those most disadvantaged cultural groups or their gender.
The Official unemployment statistics registered 6.6% unemployment at year-end 2009, although
such statistics do not account for workers in the informal sector of the economy, which constitutes
approximately half of the country’s total workforce. The public sector employs about 20% of the
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workforce. Only 12% of workers are unionized. Of those employed a significant proportion work in
the “informal” sector (33).
Economically, Venezuela´s real gross domestic product (GDP) contracted 3.3% in 2009, indicating a
decrease in government expenditures and private consumption as a result of a drop in oil prices.
The economic contraction continued in 2010 when real GDP decreased by 3.5% during the period
January-June 2010 compared with the same period of 2009. The Consumer Price Index increased by
27.9% from September 2009 until September 2010, following increases of 25.1% in 2009, 30.9% in
2008, and 22.5% in 2007 (33).
5.1.1.1 . Education in Venezuela
Venezuela´s Constitution recognizes Education as compulsory and free. In Venezuela, Education is
divided into: 1) first nine years, separated into basic education which is imparted by the primary
and secondary schools and 2) University´s studies which may be paid or provided by the Nation´s
Public Universities who subsides part of the students´ enrollment (34).
The All Global Monitoring Report 2010, UNESCO (35) released that Venezuela’s EDI increased by 5.1%
between 1999 and 2007 and by 2.4% between 2006 and 2007. The EDI attempts to measure progress
according to access, equality, and quality of education, based on universal primary education, adult
literacy, gender equality, and student survival rate to grade 5.
Data taken from the INE (33) show that the increase in basic education enrollment represents 8.6
percent of children age 5 through 14, or nearly a half-million children in school who would
otherwise be without education. For secondary education, the increase means that 14.7 percent of
children ages 15 through 19, or nearly 400,000 children, have been able to stay in school as a direct
result of improved social investment.
The Chávez administration has also initiated the Ribas Mission to provide secondary education for
returning adult students. The Ribas Mission began in 2003 and its first students graduated in 2005.
5.1.1.2. Nutrition in Venezuela
Regarding the nutritional status of Venezuelans, there have been important changes in the profile
food and nutrition of the population. In the last years the government of Venezuela has established
diverse
Food
security
programs
as
subsidized
food
markets
and
preventative
health
education/nutrition. According to Venezuela’s National Nutrition Institute (INE, 33), malnutrition
children under the age of 5 change from 21% in 1998 to 4% in the year 2007.
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Even though the government have been implementing these programs the economic instability of
the Country and the continuous inflation of food´s prices, creates an important problem regarding
malnutrition. As seen in the next table, the difference between the income per family and the cost
of the Basic Food Basket of the Venezuelan is upsetting. (see Figure 5)
Figure 5: Venezuela´s Food Basket (36).
5.1.1.3. CSR initiatives in Venezuela
As the studies made by Alianza Social (37) show, the business sector in Venezuela is following the
same trend on global CSR. Enterprises are considering business ethics exercises, aiming to achieve
the economic, social and environmental, in the context of sustainability and competitiveness.
Priority is being given to CSR projects in health, education and those that create jobs. These issues
are now part of the public agenda in Venezuela and the region, struggling in different areas as a key
element of development.
Among the most common CRS engagement strategies seen in Venezuela, are those projects
implemented by Companies’ Foundations. The implementation of these projects is usually within
the company´s management or by a third party. Also there are projects managed by volunteers
from the company, in partnership with the community, in alliance with civil society
government; or financially supported by
and
across Social Development Organizations and/or
government institutions.
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Companies as Kraft Foods Venezuela, Fundación Empresas Polar, Compañía Anónima Nacional
Teléfonos de Venezuela (CANTV), CATIVEN are promoting the private business sector commitment,
social responsibility and social investment to achieve sustainable development. Their Social
Responsibility Programs (SRP) are benefiting communities directly and indirectly with: education,
training and professional development in entrepreneurial skills; good nutrition and food security;
Social Inclusion and local encouragement of production; reduction of the digital gab and providing
access to new information and communication technologies; among others.
Some examples of initiatives that are nowadays being implemented in Venezuela are:
•
Kraft Foods Venezuela actions that enable people to adopt good eating habits and increase
the quality of life. Their initiatives have benefited nearly 180,000 people in the areas of nutrition,
food and community enterprise, since its launch five years ago. Among their programs we may
highlight: 1) Food Academy Project, 2) Cocoa Project: (development plan aimed at producing cocoa
and cocoa processors), 3) Women entrepreneurs, 3) The ABC of Feeding (teaching on issues of good
nutrition, food security and nutrition).
•
Empresas Polar is distinguished by the work done within it Foundation. The company and its
business supports Social Inclusion Actions by 1) Training people for personal growth, improved
production and local entrepreneurship, 2) Training people for developing their own local
production, 3) Building alliances and support for new productive activities (integrated
development).
•
CANTV has as a strategic objective of their CSR the participation and inclusion of all in the
benefits of development. Nowadays, their 3 main programs are: 1) Superaulas (provides access to
new information and communication technologies), 2) Virtual Training (provides training courses,
technical support and delivery of certificates to students), 3) Social Ally (focus in the development
of productive value chains, developed by artisans in rural communities).
5.1.1.4. Entrepreneurship in Venezuela
The 2005 GEM report for Venezuela (19) explains that in most countries the male population is more
likely to start new businesses. Unlikely, Belgium, Venezuela and Thailand are in the exception
showing a higher proportion of entrepreneurial activity in women than in men. The indicator for
women in Venezuela reached 23.8 percent and the indicator reaches 22.2 percent male. Even
though the report indicates that Venezuela index of new entrepreneurs is 25%, by the year 2010 the
index have decreased in an important amount, positioning in less than 15 %.
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5.1.2. Situation in Dominican Republic
While there has been economic growth rates relative importance in last three decades, income
distribution and access to benefits growth of large groups of the population show significant lags.
The Dominican Republic has a population of 8.23 million distributed in three major regions: Cibao,
Southwest and Southeast. The Eighth National Census Population and Housing 2002, shows that the
population under 18 is 3.3 million, representing a 40.22% of the country.(4)
The Dominican Republic is among the countries that show a degree medium human development.
Human Development Index (HDI) for the year 2000 was 0,729; it ranked 87 out of 174 countries.
However, when comparing the situation in the country with the regional environment we can
observe significant lags in child education and health.
Poverty indicators show that the economic growth process experienced in the last thirty years has
resulted in improvement of living conditions of most of the population. But according to ECLAC, out
of the countries of Latin America and the Caribbean, the Dominican Republic is one of least three
countries with registered social investment.
Studies show that a significant proportion of the poor people in the country is illiterate. According
to the Income and Expenditure Survey of Households 1998 implemented by the Central Bank shows
that 29.3% of the heads of 20% poor households lacked complete education, which shows the
marked relationship between education and poverty level of income.
The
mother's
education
affects
the
level
of
nutrition
of
children
and
the
rate
of
infant mortality. In the Dominican Republic for every thousand children born, 20 die in
households
where
the
mother
has
higher
education,
while
the
figure
rises
to
85 per thousand births in those where the uneducated mother heads the household.
Children from poor households have a higher propensity to participate in the labor market. A study
by FondoMicro reveals. (4)
A
significant
proportion
of
children
living
in
poverty
are
constrained
to
attend
school because the time in what they should be used to employ it in their learning, they have to
employ it in work activities. Of the children working, 32.3% did not attend any center of education
and 5.1% were illiterate. It is determined that in 100 adolescent girls (15-19 years), 19 were already
mothers. This number is relevant, which is at that stage of life that young people complete their
studies side and prepare to start university.
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Health and sanitation indicators have experienced significant improvements in the last 50 years.
However, there remains a condition with high mortality and morbidity related to lack of preventive
health care.
5.1.2.1.
Education in Dominican Republic
The Dominican Republic its one of the most efficient states in Latin America in rates of schooling,
91.3% of children in ages between 6 and 13 are subscribed in school but the global results revealed
that the country its classified as one of the less efficient states in terms of education. Dropout rates
and repetition are important. Thus, 20.1% of students have repeated in 2004 primary and 38% in
secondary education, the rural areas of course are the most affected. School its compulsory only
until age 14. At theage of 18 years, students have come to the average School of 12 11.8 years, and
only validated 8.3 levels of 12, placing the country behind Argentina or Chile. (4)
It’s important to reevaluate the quality of the education. According to UNESCO, in recent studies it
demonstrated that the Dominican alumni its particular deficient in subjects such as Literature and
Mathematics.(4)
The corruption, it’s as I’ve said a problem with multiple causes that affect directly to Education.
It’s necessary to come up with multiple solutions, which are not included in the Educational
Strategy Plan, in order to solve the problem. Several solutions have to be applied, not only one or
not only targeting one issue of the many. Other problems that are still important nowadays are:
• The Budget of the State directed to Education its still reduced in comparison with budgets for
other Ministries. According to the Ministry of Education, in order to improve the issue they will need
a budget of US $2,129,000 when the actual budget its US $1,064,000. (4)
• The Budget for this Ministry it’s really low also in comparison to the budget of other Ministries in
the region.
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Figure 6: Iliteracy in Dominican Republic (4)
5.1.2.2. Nutrition in Dominican Republic
According to the results of the Demographic and health Surveys of 1991 a 1996, there has been a
marked improvement of the nutritional status of children under five years of age in Dominican
Republic. In 1996, the prevalence of low height for age (stunting) was 11% (in 1991, it was 19%);
that of low weight for age was 6% (10% in 1991), whereas wasting (low weight for height is low (1%)
and does not represent a public health problem. Levels of stunting prevalence in rural areas (15%)
are twice those in urban areas (7%). The regions IV and VI are those most affected by stunting
(prevalence reaches 20% of preschool children), more than three times the level found in Distrito
Nacional or in the Cibao Central (6%). (5)
Among school age children, 19% suffer from stunting at national level. The provinces with the
highest prevalence rates were Bahoruco in the South, Elías Piñas and Monte Plata. Micronutrient
deficiencies, mainly iodine, vitamin A and iron, are public health problems in Dominican Republic. It
is estimated that 5% of school-age children at national level have goiter, although this prevalence
reaches up to 13% in region I (San Cristóbal, Peravia, Monte Plata). (5)
Although Dominican Republic experienced an economic crisis during the 1980s, in the following
decade the country made considerable advances to stabilize the economy. Unemployment rates
diminished from 27% to 20% between 1980 and 1990 and poverty was hereby greatly reduced. Food
insecurity affects the most vulnerable population groups, especially young children and those
regions with the highest poverty indices.
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5.1.2.3. CSR initiatives in Dominican Republic
•
Helados Bon: Helados Bon is large progressive ice cream company based in the Dominican
Republic, whose interest in diversifying its ice-cream led to the introduction of a new flavor,
macadamia, and the opportunity to help the country's ecology. A partnership was forged between
Helados Bon and an environmental non-profit, Plan Sierra. The business idea leveraged each of the
partners' knowledge and assets, marrying Helados Bon's ice cream industry expertise with Plan
Sierra's conservation efforts. The social enterprise that emerged helps local farmers grow
macadamia trees and reforest farmland through the sale of delicious ice cream. (6)
Macadamia trees, which are capable of growing to a height of over 500 meters on infertile land, are
ideal for reforestation and conservation of natural resources. In the partnership, Plan Sierra
manages and coordinates local farmers growing macadamia nuts which are used to make the new
ice cream flavor; Helados Bon operates the production and sale of the macadamia ice cream. The
social enterprise earns one peso for each double macadamia ice cream sold to fund macadamia
conservation efforts and local farmers gain a steady customer for their macadamia nuts. Helados
Bon also disseminates information about conservation and the importance of growing macadamia to
its customers. Plan Sierra uses the revenue generated by the social enterprise to promote and
develop its macadamia program.
The partnership is a win-win proposition for all of those involved: Helados Bon increased its sales;
Plan Sierra achieved the reforestation of more than 140,000 hectares with macadamia trees; and
farmers have benefited with higher paying jobs and marketable crops.
• Hive Five at School, NESTLE DOMINICANA: The "high five at School" program is an offshoot that
implements Nestlé. The objective is to develop model schools in knowledge about nutrition and
health, promoting changes in eating habits of teachers, students and tutors in the participating
schools. On the second, the company is pushing for national strength and FIVE STEPS FOR LIFE: Eat
healthy, portion control, Health Care, Exercise and be happy.
Since 2008, Nestlé Dominicana has been working with this program in the School Marcos Castañer
(Faith and Joy) in San Cristobal and San Vicente de Paul in Los Minas. In 2009 they also added four
new schools to the program. (7)
• Early Childhood Education Project (8): The purpose of the Early Childhood Education Project is
to assist the government of the Dominican Republic to increase the availability of high quality
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32
educational services for young children ages zero through five by means of targeted early childhood
interventions. With a particular focus on the poor, the project will expand access to and improve
the quality of integrated services that address young children's basic needs, including preprimary
education, psycho-social stimulation, health care, and nutrition. Specifically, the project assists the
State Secretariat of Education (SEE) to expand and improve formal, center-based preprimary
services for five-year olds and will work with sub-national governments, local communities, and
non-governmental organizations to increase access to high-quality, non formal early childhood
development services for children between the ages of zero and five.
There are three main components. The first component expands preprimary educational services by
establishing Regional Model Centers and new classrooms. The second component improves the
educational quality of early childhood development centers (ECD) by funding teacher training and
staff development, applying the pedagogical model, creating educational resource centers,
providing educational materials, renovating classrooms, and launching a family-based initiative. The
third component supports policy and strategy development and institutional organization, and sets
up a grant program.
5.1.2.4.
Entrepreneurship in Dominican Republic
The Dominican Republic is part of the GEM countries. The GEM Dominican Republic team is based at
Pontificia Universidad Catolica Madre y Maestra and it is managed with the support of the National
Competitiveness Council (CNC), the Center for Export and Investment of the Dominican Republic
(CEI-RD), the Chamber of Deputies, Gallup Dominicana, and the Vicini Group, among others. GEM
published in 2009 (19) that the Dominican Republic ranks as the sixth country with the highest TEA
rate among the 42 countries surveyed and in fourth place in Latin America. By the time of the study
approximately 15% of the adult population is currently involved in opening a new business or new
company was managing its own.
There are several institutions that promote entrepreneurship in Dominican Republic, promoting and
strengthening the development of new businesses, supporting entrepreneurship, creating new job
opportunities and promoting business leadership. Some of these institution, worth to be mentioned
due to the impact of their actions are: Consejo Nacional de Competitividad (National
Competitiveness Council), National Plan for Systemic Competitiveness (NACP), Red Dominicana De
Incubadoras De Negocios Y Emprendimiento (Dominican Network of Business Incubators and
Entrepreneurship), Fundación Parque Cibernético de Santo Domingo (Foundation Cyber Park of
Santo Domingo) and Santo Domingo Catholic University (19).
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5.1.3.
Situation in Colombia
Colombia has a territory that covers 1,138,910 square kilometres, with a population of 44,725,543.
Colombia has the 29th largest population in the world and the second largest in South America,
after Brazil.
According to the CIA (The Centre of Intelligence Agency) data, the country presents a population
growth rate average of 1.156% per year. In Colombia, 75% of the Colombian population lives in
urban areas and the country's largest cities are: Bogotá (capital) as a population of 8.262 million,
Medellin as 3.497 million people; and Cali a population of 2.352 million (74).
Economically, Colombia is the fourth largest economy in Latin America, considered as a
standing middle power. However inequality and unequal distribution of wealth are widespread all
over the country. In the 90’s, the ratio of income between the poorest and richest 10 per cent was
40-to-one. After a decade of economic restructuring and a recession, these numbers had climbed to
80-to-one in the year 2000. By 2009, Colombia had reached a Gini coefficient (measure of statistical
distribution of inequality of a distribution- a value of 0 expresses total equality and a value of 1
maximal inequality) of 0.587, which was the highest in Latin America. According to the Office of the
United Nations High Commissioner for Human Rights (75), there has been a decrease in the poverty
rate in Colombia in the recent years, however, around half of the population continues to live under
the poverty line. In 2009, the numbers presented, by the same identity, were: 46% of Colombians
lived below the poverty line and some 17% in "extreme poverty".
Regarding Colombia’s Market economy, and despite of the serious internal difficulties of armed
conflict common in Colombia, it grew steadily in the latter part of the twentieth century, with a
GDP increasing at an average rate of over 4% per year between 1970 and 1998. But, the country
suffered a recession in 1999 (the first full year of negative growth since the Great Depression), and
the recovery from that recession was long and painful. However, in recent years Colombia’s
economic growth has been impressive, reaching 8.2% in 2007, one of the highest rates of growth in
Latin America (74).
According to International Monetary Fund (76) estimates, in 2010 Colombia's GDP (PPP) was
US$429.866 billion (28th in the world and third in South America). The GDP per capita stands at
$7,968, placing Colombia 82nd in the world. However, in practice, these numbers are relatively
unevenly distributed among the population, and, in common with much of Latin America situation,
Colombia scores poorly according to the Gini coefficient, with UN(3) (77) figures placing it 119th out
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of 126 countries. In 2003 the richest 20% of the population had a 62.7% share of
income/consumption and the poorest 20% just 2.5 %, and 17.8% of Colombians live on less than US$2
a day (74).
Regarding the urban context of the country, with, historically, an agrarian economy, Colombia
urbanized rapidly in the twentieth century, by the end of which just 22.7% of the workforce were
employed in agriculture, generating just 11.5% of GDP, according with C.I.A. data (74). Also, in
Colombia,18.7% of the workforce population is employed in industry and 58.5% in services. These
percentages represent 36% and 52.5% of country’s GDP, respectively.
To conclude is important to mention that Colombia is a rich country in natural resources. Mainly, its
exports include petroleum, coal, coffee and other agricultural produce, and gold (74).
5.1.3.1. Education in Colombia
According to the article “La calidad de la educación en Colombia: un análisis y algunas opciones
para un programa de política” published by the World Bank (42), Colombia, as many countries in
the Latin America and The Caribbean, has made significant progress over the past two decades,
especially in the issues related to educational access and internal efficiency of the educational
system. However, the equity and quality about education are still important challenges.
Regarding the previous paragraph, the article also says (42) that the country has increased the net
primary enrollment to roughly 90% and increased net secondary enrollment to 65%. These rates are
above the regional average, nevertheless is not enough because in spite there are several students
going to secondary school, many of them do not finish it or do not the option to access to a high
quality learning process.
The performance of the country in the international evaluations indicates that the country needs to
take measures in order to improve the quality of the educational system. Additionally, the
differences of quality and access between the richest and poorest departments and rural and urban
areas are issues that must be attended.
In fact, the improvement in the quality of the education will be vital in order to improve the
learning process and increase the enrollment in the institutions and the completion rates, especially
in the rural and poorest areas of the country.
As an additional factor, Colombia has a particular situation because of the country’s context. It
affects the access to education of the population; especially because of each student has a specific
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history and background. Family characteristics such as income and parents' education are important
to student learning in Colombia and could influence and determine what schools the students can
attend and the rapidness and effectiveness of the learning process. Also, there are other factors
that makes difficult for student to access schooling such as commuting distance, child labor,
school’s infrastructure and academic materials
5.1.3.2.
Nutrition in Colombia
According to the Colombian magazine Semana (43), one of each 5 Colombians has not incomes
enough to supply his/her minimum level of dietary energy consumption, which is the technical way
to say that they suffer from hunger.
According to the last survey about the nutritional situation in Colombia (44) made in 2005, the 40%
of the Colombian homes has not food security, especially those that are in the rural areas. For
instance in the rural zones the percentage of malnutrition in children between 0-4 years old is 17,1%
and in the urban zones 9,5%; and the severe chronic malnutrition is of 3.7% in the rural areas and
1,4% in the urban ones.
In the case of the children between 5 and 9
year old the situation is not better.
Nineteen of the 32 Colombian departments
are in a very bad situation with numbers
much higher than the malnutrition average
in the country.
In addition, the half of the deaths in oneyear-old minor children is associated to the
malnutrition. Additionally, the 12% of the
five-year-old minor children has chronic
malnutrition and 5% global malnutrition.
That is why in Colombia 15.000 five-yearold minor children died each year because
of illnesses related with the inadequate and
deficient diet (45).
Figure 7: Mapping Malnutrition in Colombia (45)
In Colombia children malnutrition is also associated with the poverty and displacement. Regarding
this is important to mention that, according to the report of the nutritional situation of displaced
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people in Colombia (46), the 28% five-year-old minor children of the displaced population have
insufficient dietary energy consumption. The displacement and the high cost of the family shopping
basket do not allow the families to pay for a balanced diet.
5.1.3.3. CSR initiatives in Colombia
The corporate social responsibility in Colombia has its origins around the 60’s, when the first
foundations were created and some academicians and businessmen started with the debate about
the concept (47), which there is no already consensus about.
Then, in the 90’s the CSR was
adopted as a solution, basically, to have a better image and avoid the problems with the employees
and the trade unions.
Nowadays, the CSR is being adopted for some companies in the country, especially the big ones,
which has implemented different ways to do social contributions. Here there are some examples
about the CSR initiatives in Colombia:
• Ecopetrol S.A. is the largest company in the country and the principal petroleum company in
Colombia. Because of its size, Ecopetrol S.A. belongs to a group of the 40 largest petroleum
companies in the world and it is one of the four principal petroleum companies in Latin America
(48).
Since 1986 Ecopetrol offers the program Bachilleres por Colombia in order to strength the human
talent and capacity of the country, through reinforcing the conducts of excellence and personal
efforts in the students of secondary school.
Bachilleres por Colombia is a recognition that give support last year secondary students,
characterized for their academic excellence and difficult socioeconomic condition, to study at a
university level, providing them the economical resources to do it. The have achived result of 507
beneficiaries since 1987 (124 women and 383 men), with a total investment of $18.388´909.045
colombian pesos. The average cost per beneficiary is around $ 36´270.038. By 2009 Ecopetrol
decided to increase the number of beneficiaries, including a gender policy and a monitoring and
scort program for the participants.
• NOEL: this Colombian cookies factory is nowadays one of the most important cookies producers
in Latin America. Its CSR work has been mainly focus in different programs, which have been
thought to tackle several issues such as digital inclusion, women support, hunger, education and
poverty (49).
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The programs are the following ones:
Orient@te, the world at just a click! is a program that furthers quality education by helping
teachers improve their computer skills, in order to take advantage of educational tools that aid
students in their learning processes.
FOOD delivery is program that is focused on donating Noel products and contributing with money to
provide relief to the neediest sectors. They support food banks and food delivery organizations in
the main cities as Medellín, Bogotá, Cali, Ibague, Pereira, Barranquilla and Bucaramanga.
School for grocers is a type of school that is promoted in all of the distribution agencies in
Colombia. The skills and knowledge imparted enable the grocer to make use of new commercial
practices in his store, bringing about results that can be seen in both administrative and commercial
aspects, and which have created a new business culture for the small retailer.
Support for mothers who are heads of family is a program wich consists in provide employment and
education options to women who are the main economic support of their families.
Entrepreneurship and generation of income is a program that provides training, know – how and
skills to social institutions and small and mediun enterprise to develop projects and managerial
skills in order to strength and improve the servicer thtat they offer to the community.
5.1.3.4.
Entrepreneurship in Colombia
In Colombia, the GEM study is carried out from 2006 through the initiative of the Universities of Los
Andes, Icesi, Javeriana Cali and Universidad del Norte (Northern University) institutions that make
the GEM Team Colombia.
The GEM Colombia Report (19) shows that the rate of entrepreneurial activity (TEA) during the year
2008 was 24.52%, a combination of new entrepreneurs (13.82%) and new entrepreneurs (11.73%).
Interestingly, in 2008 the proportion of new entrepreneurs was much higher than that of 2007 (when
it was 8.02%), while the proportion of new business was lower than in 2007 (15.53%). The GEM
research project has shown that Colombia is constantly in the first countries globally in terms of
entrepreneurial activity (TEA). In 2008, the country has the third index of TEA in the world, after
Peru and Bolivia. The results show that there is a strong entrepreneurial spirit that characterizes
the culture, which should be considered as an important asset for economic development.
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5.2. Identifying one city to focus FYL prototype
To be able to identify the city where the FYL Prototype could be tested, the main Cities of the
above mentioned countries were analyzed to identify the presence of the best combination of
fundamental ingredients that drive the success and impact of FYL. The studied cities were selected
based on their social context, the market it will involve and the opportunities they offer regarding
the quantity of Companies operating in them.
5.2.1. Venezuela
5.2.1.1. Caracas
Gran Caracas, as the capital of Venezuela is called nowadays, is composed of the Metropolitan
District of Caracas, the states Miranda and Vargas. The City of Caracas is the most populated in the
country and the biggest center of administrative, financial, commercial and cultural activities in the
nation. According to the INE (33), in the year 2008 was estimated a population of 5,348,744
inhabitants in Caracas, making it the 6th largest urban agglomeration in Latin America.
Percentage of poor population in Venezuela
( 2nd semester 2009)
City
Porcentaje of
Poverty
Percentage of Extreme
Poverty
Gran Caracas
16,25
3,56
Valencia
Maracaibo
23,30
22,10
4,30
4,90
Source: Instituto Nacional de Estadística, INE
Table 3: Poor Population in Venezuela (33)
Despite the evident signs of prosperity seen in some Caracas neighborhoods, its levels of poverty
remain very high. In the year 2009, the INE (33) registered that in the Gran Caracas 869.617 people
were living in poverty and 190.655 people (see Table 3) were living in extreme poverty. Currently in
Caracas, there are establish some of the largest barrios (shanty towns) of Latin America. The ‘barrio
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Petare’, on the edge of Caracas, is considered to be the second biggest in Latin America, with more
than one and a half million people living in it. As we may see in Table 4, the City recorded an
inequality distribution (Gini Coefficient) of 0, 38 by the year 2009.
Coefficient Gini in Venezuela
(Year 2009)
National GINI
0,3928
Capital District/ Gran Caracas
0,3886
Carabobo ( Valencia)
0,3806
Zulia (Maracaibo)
0,4019
Source: Instituto Nacional de Estadística, INE
Table 4: Coefficient rate in Venezuela (33)
• Malnutrition in Caracas
In studies made in the year 2009 by Cioccia A. and Gutiérrez M. (38), only 4% of school students
between 15 to 18 years old showed evidence of nutritional deficit. Apparently healthy problems in
these groups of students were related to overweight and obesity, with a total result of 29% of
students with this diagnosis (See Table 5).
Malnutrition in Caracas High Schools
(Percentage of teenagers)
Category
%
Deficit
4
Normal
Excess
67
Overweight
Obesity
17
12
Source: Cioccia A. and Gutiérrez M. Anales Venezolanos de Nutrición 2009
Table 5: Malnutrition in Caracas (38)
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5.2.1.2. Maracaibo
Maracaibo has a very dynamic economy as the capital of the most important economic region in the
nation, responsible for the proper functioning of the Venezuelan economy, as in the state of Zulia is
extracted, refined and exported a large proportion of Venezuela's oil. Maracaibo is the main port
and industrial center of the oil basin of Maracaibo.
The City has a population of over three million inhabitants. Despite the fact that the urban
population predominates, Maracaibo has an indigenous population of over 200,000 people. The
indigenous municipalities adds a significant percentage to the population living in very bad living
conditions and with indices of poverty and extreme poverty, that indicate 22.10% and 4.90%,
respectively (INE, 33). (See Table 3)
• Malnutrition in Maracaibo
Regarding the nutritional status of adolescents from the city of Maracaibo, the Regional
Coordination of Nutrition and Dietetics of Zulia State, conducted a study in 2009 evaluating children
under 15 years. With this studio was detected an important underweight and retard growth of
children, both 36.1% and 44.6% respectively. Likewise, it was found that 14.89% of Maracaibo´s
children suffer from severe malnutrition causing overweight (INE, 33).
5.2.1.3. Valencia
Valencia is located in one of the most industrialized states of Venezuela, Carabobo state. With a
population of nearly one and half million inhabitants, Valencia is considered the quintessential
industrial city. It is home to major assembly companies (General Motors, Ford and Chrysler),
transnational manufacturing companies and the largest industrial areas in the nation. Among its
industries can find important food producers, plating plants, industrial ceramics, spinning, textiles,
plastics, paints, tires, asphalt, paper, appliances, etc.
Even though is considered a rich city, Valencia has levels of poverty and extreme poverty higher
than Caracas and Maracaibo (23.30 and 4.30 respectively). However, Valencia has a Gini Coefficient
of 0.38, higher than Caracas´s (INE, 33). (See Table 4)
•
Malnutrition in Valencia
In December 2010, the National Statistics Institute (INE, 33), said the National Consumer Price Index
(INPC) reported that the Venezuelan cities more expensive and higher inflation were Valencia,
Caracas and Maracaibo. Assumptions about the relationship between the socioeconomic level and
the ability to purchase food and the influence on the quality and quantity of people´s diet, initiated
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statistical studies in Venezuela. One study was carried out by the University of Carabobo in
Valencia. The results reported by Acuña I. and L. Solano (39) indicate a deficit 36.6%, 54.8% normal
and 8.6% of overweight in children under 18 years of a parish of Valencia. As the study indicates the
prevalence of families living in extreme poverty and report on the occurrence of nutritional
deficiency in the population by 36.6%. These results provided an association between poverty and
malnutrition by observing a statistically connection among the number of families per home and the
diagnosis of malnutrition. (See Table 6)
Nutritional Diagnosis per family and number of people
(Percentage of children under 18)
Nº of people/
families per home
Deficit (%)
Less than 5 people
36,6
55,2
8,2
More than 5 people
38,3
52,5
9,2
2 family
More than 3 family
37,3
57,1
51
42,9
11,8
0
Normal (%)
Excess (%)
Source: Acuña I. and Solano L. Anales Venezolanos de Nutrición 2009
Table 6: Nutritional Diagnosis in Valencia, (39)
5.2.2. Dominican Republic
5.2.2.1. Santo Domingo
Santo Domingo, known officially as Santo Domingo de Guzmán, is the capital and largest city in the
Dominican Republic. Its metropolitan population was 2,084,852 in 2003, and estimated at 2,253,437
in 2006. The city is located on the Caribbean Sea, at the mouth of the Ozama River. (9)
The city is the center of economic activity in the Dominican Republic. Many national and
international firms have their headquarters or regional offices in Santo Domingo. The city attracts
many international firms and franchises due to its geographic location, stability, and vibrant
economy.
The infrastructure is adequate for most business operations; however, power outages continue to be
a problem in certain parts of the city. A key element that has helped the city thrive and compete
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globally is the telecommunications infrastructure. For many years the Dominican Republic has
enjoyed a modern and state of the art telecommunications system, due to its privatization and
integration with the US system. Santo Domingo contains a wide variety of incomes, ranging from the
extremely poor to the highly rich.
An interest fact is that according to a Dominican Republic Poverty Assessment by the World Bank,
although the DR is a small country, important differences in income poverty and inequality
indicators can be observed between and within regions, provinces and municipalities. A child born
in the provinces along the Haitian border faces more doomed income prospects than if he/she were
born in Santo Domingo. However, despite potentially better mobility opportunities, he/she may
face similar prospects in some localities of the National District.
5.2.2.2. Santiago de los Caballeros
The province of Santiago is located in the Cibao Valley, one of the most fertile in the world, is the
main supplier of food and agricultural products in the country, also found large mines of gold, iron,
nickel and other minerals. The region occupies the central part of the island and is considered the
geographic center of the Dominican nation. (10)
Santiago is the main country's largest province, after the National District. About 800 thousand
people live in this province, accounting for 10% of the 8 million people in the Dominican Republic
The current period, the economy of Santiago has acquired special significance and is the most
prosperous region of the country. Santiago is a square with international ramifications and their
businesses can find the application of management techniques and operational, in line with the
latest global developments.
•
Malnutrition in Santo Domingo and Santiago de los Caballeros
The largest numbers of malnourished children are found in areas with high population and high
population density: Santo Domingo and the cities of Santiago, La Romana, and San Cristóbal. The
21,634 malnourished children who are found in the province of Santo Domingo bring the share of
malnourished children in this one locality to 25.2 percent of the country total. (11) The map shows
the province with chronic malnutrition, Santo Domingo has a 9.97 to 17.34 while in Santiago de los
Caballeros the condition is less chronic.
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Figure 8: Malnutrition in Cities of Dominican Republic
5.2.3. Colombia
5.2.3.1. Bogotá
Bogotá is the capital of Colombia and has a population of 7.363.782 inhabitants. It is composed by
20 localities and is the political and administrative center of the country. Bogotá is also the most
populated and important city of the country; it is an important touristic, industrial and economic of
Colombia and one of the most important in Latin America (50).
Figure 9: Nutritional Facts in Colombia (50)
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• Malnutrition in Bogotá
Taking into account the relation established between weight and age, Bogotá, in its accountability
annual report (51), presents the following data for nutrition for 1’836.903 registered children
between 0 and 10 years old, of which 895638 of them were girls and 941265 were boys.
This graphics allows to conclude that almost 2,4% of the total child population has global
malnutrition and that 9% approximately has low weight, which could mean that 11,4% of the total
population (209.407 children) is not accomplish the level of minimum dietary energy consumption
per day.
Additionally, if we take into account other variables such as the relationship between weight and
height, the results are not much better because by 2009 the 4,5% of the children has acute
malnutrition. Also, for the relation established between height and age there is 3.1% of girls with
chronic malnutrition and 3,7% of boys in the same condition.
To solve the problem of hunger in Bogotá, the mayoralty of the city decided to establish in 2004 a
program called Bogotá Sin Hambre. This program is working at present and it is focused on the
reduction of the nutritional vulnerability and food security of the Bogota’s citizens, especially the
poorest ones. Nowadays 550.689 primary students are receiving from this program a daily snack and
123.480 students more are receiving a complete meal.
5.2.3.2. Medellín
Medellín is the second most important and populated city in Colombia. It has 2.636.101 inhabitants.
This city is characterized for its dynamism and because it is one of the most recognized financial,
industrial and commercial points of the country. It has several national and international
companies, especially enterprises in different sectors (telecommunications, food, textile,
electronic, energy and health) (52).
• Malnutrition in Medellín
In Medellín, according to the national survey about the nutritional situation in Colombia (ENSIN
2005) (44), there is a global malnutrition rate of 2.1% for the children below 5 years old, which is
one of the lowest rates around the country.
However, there are other statistics of 2005 that should be interesting to see:
• 11,6% of the children below 10 years old had delay in the growth.
• 11,6% of the children below 10 years old had weight deficiency.
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• 3.7% of the children below 10 years old had acute malnutrition.
• 4.9% of the children below 10 years old were obese.
To face this situation the local government has a budget of 91.522 million pesos to invest in food
security and nutritional programs such as Restaurantes Escolares, Vaso de Leche Escolar y Primera
infancia, which for 2011 are going to benefit 400.000 boys and girls according to the Citizens
Website of the city(53). In this point it is important to mention that Restaurantes Escolares and Vaso
de Leche provide food for free, and this helps to guarantee the access to the nutritional programs.
This means a lower school leaving rate, more continuance in the educational programs and a
significant saving for the benefited families.
Additionally, there are other programs as the following ones (53):
• Buen Comienzo: in 2011 is going to benefit 80.000 children between 0 and 5 years old with 27
million of food portions.
• Había una vez: in 2011 is going to benefit 9700 pregnant women and nursing mothers.
• Alliance between Maná, Instituto Colombiano de Bienestar Familiar and Medellín Mayoralty: it
benefits 30.000 girls and boys.
5.2.3.3. Cali
With 2,244,536 inhabitants Cali is the third most important and populated city in the country. Since
1930 the city has accelerated its development process and nowadays is one of the main economical
and industrial Colombian centers and the main one in the southwest of the country.
The
metropolitan area of the city counts with the presence of several national and international
industries, especially companies related with health, pharmaceutical and food sector (54).
• Malnutrition in Cali
According to the security food perception study developed in 2009 by the Cali’s Secretary of Health
(55), 8 of each 100 people can’t consume some food because of lack of money, and the consumption
of fruits and vegetables are below of the daily minimum level required.
In the last national survey about the nutritional situation in Colombia by 2005 (44), the numbers
showed that Cali’s global malnutrition rate is 3.4% for the metropolitan area,
which could be
consider a low rate if we taking into account that the national average is 7%.
At this point it is important to say that Cali does not have a nutritional report that monitors the
situation for the population below 5 years old. However during 2006 and 2007 an anthropometric
survey was developed in order to know the nutritional conditions of 86.074 primary students, who
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were mainly located in urban areas (85%, the other 15% corresponds to rural areas). This survey
showed that the sectors with the highest level of malnutrition are in the east-center of the city and
that there are more than 13 communes (of a total of 22) affected with acute malnutrition.
In order to face that issue the Secretary of Health has been working on developing a Sistema de
Vigilancia y Atención Nutricional (SISVAN) to identify risky groups and population zones taking into
account variables like socioeconomic conditions, the existence of community dining halls and weight
and height in schoolchildren. This has been doing with the intention to attack the problematic and
improve the nutritional state of the most affected zones.
5.3. Choosing Cali, Colombia to implement FYL prototype
The following section of the document presents the reasons of choosing Colombia and specifically
the city of Cali for the development and implementation of the FYL prototype. At the first level the
reader will find the reasons taking into account the current situation at national level and in the
second one the reasons associated to the existing local opportunities and conditions to launch an
initiative such as FYL in Cali.
5.3.1. Why Colombia?
Because of its political, economic and social characteristics and its strategic location, Colombia is
the chosen country to implement for first time the Feed Your Learning methodology. This country is
considered in the international arena as one of the emergent economies in Latin America and a
place with good business environment for the foreign investment, especially for big companies that
find in the country an opportunity to expand their capital and scope.
Since 2002, with Álvaro Uribe as president, Colombia started a period of political stability without
precedents. For instance the implementation of the Democratic Security Policy to improve the
security levels in the country and reduce the presence of the illegal groups in the territory had
many benefits for Colombia. It allowed the increase of the foreign investment (4.350 million dollars
in 2006) and contributed to the recovery of the Colombian economy, which has been having a
sustained growth of approximately 5% since 2002 (56).
Nowadays, with Juan Manuel Santos as president (2010-2014), the Democratic Security Policy keeps
going and the international relations with our neighbors (Venezuela and Ecuador) are even better,
especially if we take into account that the relations with Ecuador and Venezuela were not the best
during Uribe’s government. This new approach with our neighbor countries has increased the trust
in Colombia as a good place for developing new projects and investments.
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Additionally, FYL prototype has very good opportunities in Colombia because the current
government is more interested in the social issues of the country than the Uribe’s government. In
this case, it will be more able to support private or public initiatives oriented to tackle big problems
that are affecting the Colombian society such as malnutrition and poverty.
From a social perspective in spite of the high levels of poverty, Colombia is the second country with
more availability of human resources in Latin America and has higher levels of entrepreneurship
than Dominican Republic and Venezuela. In fact, in 2009, the rate of the Total Entrepreneurial
Activities (TEA) in Colombia was 24.5%. It means that this percentage of the Colombian population
was dedicated to initial entrepreneurial activities, which refers to recent entrepreneurs and new
business with less than 3.5 years of existence (57).
However, it is important to take into account that the most of the mentioned entrepreneurial
activities does not become in solid businesses because the entrepreneurs have insufficient training,
planning and business skills. This means for FYL a good marketplace to provide training, implement
a well planed business model, and generate incomes and better conditions for the beneficiaries of
the prototype.
From an economic perspective FYL has very good options to find support from the big companies
located (or not) in Colombia because this country is one of the most wanted markets in the
hemisphere: more than 44 million people represent a big market opportunity for multinational
companies. For instance, Colombia has in its territory international companies such as Coca Cola,
Nestlé, Parmalat, McDonalds, Kraft-Cadbury Adams; and national ones with huge importance such as
Postobón, Alpina, Incauca, Grupo Nacional de Chocolates (Noel is part of this group) and Ecopetrol.
The most of the mentioned companies are already doing some social contributions in Colombia,
which are not necessarily adapted to the core business of the companies and the real needs of the
population; especially because in Colombia the companies do not have clarity enough about the CSR
concept and the strategic perspective of it. In order to give some context about this, it is important
to say that the history of CSR in Colombia is relatively young, in comparison with Europe and USA,
where the CSR expression came up in the 50’s and 60’s.
It was just until the 80’s that in Colombia the Centro Colombiano de Relaciones Públicas talked
about the need of incorporating the CSR in the decision making processes of the companies in order
to achieve economic objectives taking into account all the ethical and social terms (47). However,
the real awareness about CSR in Colombia started in the 90’s when the National Constitution set out
the social principle of the private property, which means that the citizen has the right to the
private property but has also the commitment of serving the society with it.
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Regarding the previous two paragraphs, other reasons for choosing Colombia for the implementation
of the FYL prototype are that it is a country where the CSR has a supportive legal framework and
that the concept is gaining force decade after decade; even though there is not a clear meaning of
what it is and how it can contribute to the sustainable development of the society and local
communities.
5.3.2. Why Cali?
Cali is the capital of the Valle del Cauca state, one of the richest and most developed regions in
Colombia. As the other important cities in the country, Cali does not escape of the national trend
associated to the rapid growth of the urban areas and the decreasing of the rural ones. Nowadays
more than 60% of Valle del Cauca’s population inhabitants live in Cali and its metropolitan area
(54). This is very important for FYL prototype, especially because it wants to focus its actions on
populated urban areas and Cali offers it.
Additionally, Cali is associated to specific conditions related to poverty and malnutrition that fit
with the issues that FYL wants to tackle. At the present time (2011), according to the ICESI
University’s observatory of public policies (58), Cali has 32.6% of its populations living in poverty,
which means a reduction in the indicator if we take into account that in 2008 this percentage was
35.3%. Factors such as more coverage and quality in the public services, more subsidies for health
and education have contributed to this improvement.
According to Carlos Viáfara (58), a researcher of the Universidad del Valle, even though there has
been an improvement, there is still a significant number of families which cannot cover their basic
needs. This means that the children of these homes can go to the school, have the basis public
services but the incomes are not enough to satisfy the nutritional requirements. In this sense, FYL
prototype has a huge potential of implementation in Cali, mainly because it facilitates the access to
a productive employment and the generation of new incomes, therefore is also an opportunity to
satisfy the daily dietary energy consumption.
In addition, FYL as a CSR strategy needs the presence of big companies and people with
entrepreneurial spirit and skills in order to implement the initiative and Cali fulfills very well these
conditions. Firstly this city is geographically near big national companies such Postobón, Productos
Yupi, Maizena, Colombina, Aldor, Grupo Nutresa S.A. among others. Also, the city is near too
multinational companies as Cadbury Adams (which is now part f Kraft Foods), Nestlé, Coca Cola,
Baxter Laboratories, Johnson & Johnson, among others.
Secondly, according to the Entrepreneurship and Poverty Forum (59), the 90.64% of the Cali’s
population considered the entrepreneurial activity as a valid career option. This high percentage
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could be associated to the growing trend of entrepreneurship, which is being leaded by the most
recognized universities in the city –Universidad San Buenaventura, Universidad del Valle, ICESI,
Universidad Javeriana and Universidad Autónoma de Occidente-; and supported by the municipality,
which is interested in the promotion of entrepreneurial activities in the young people of public
educational institutions and has different programs to train and motivate people in general to start
their own economic activities.
5.3.3. Profile
A) Income distribution in Cali
As in the rest of Colombia, Cali’s society is marked by social disparities. These are reflected not
merely in the differences in the income earned by its inhabitants but also in their choice of
residential area within the city, their use of social and recreational facilities and their access to
social services such as health and education. Fortunately for our analysis, much of the recent social
and economic information on Cali is available at the level of the comuna (commune). These are the
geographical and administrative units in which Colombia’s largest cities are sub-divided. Throughout
much of the 1990s, the municipality of Cali proper (excluding the neighboring municipality of
Yumbo with which it forms a metropolitan area) comprised 20
comunas, though by late 1998
another one was added to reflect the city’s spillover onto nearby farmland.
One form of inequality in Cali’s society may be gleaned from the average earnings of different
occupations. Table 10 shows figures from one of a regular series of household surveys conducted by
the Colombian statistics office (DANE) in Cali and the neighboring municipality of Yumbo. Earnings
for male employers were on average twice as high as those for all male workers, whilst for women
employers the differential was close to 70 per cent. Earnings for domestic workers (who comprise
around 5 per cent of the working population and 95 per cent of whom are women) placed them at
the bottom of the scale, with less than half the average earnings for all female workers.
The lower average incomes for private sector workers compared to government workers mask the
larger size of the private workforce and the greater diversity found among workers in the private
sector, ranging from highly skilled manufacturing or white collar workers in large firms to poorly
paid workers in non-unionized informal (non-recorded) workshops. The share of government
employees dropped from 8.1 in 1990/91 to 6.5 per cent of the working population as a result of
government restructuring (83), 12 Yet another form of inequality is that between the earnings of
men and women in the working population.
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With the exception of unpaid family workers (whose remuneration in cash is negligible) and
domestic workers (an occupation dominated by women), men’s earnings were considerably higher
than women’s across all occupations. Differentials ranged from a low of 17 per cent among private
workers to a high of 76 per cent among employers. The differential among male and female
government workers reflects a disproportionate concentration of female workers in low-paid
administrative and maintenance jobs.
Other variables help build a picture of inequality in Cali’s society. One of these is provided by data
on socioeconomic strata, a composite indicator developed by the Colombian government to classify
city neighborhoods according to individual housing conditions (including quality of construction
materials), availability of services to individual dwellings and amenities available in the
neighborhood. Such indicators have been used, for example, to set rates for utilities and have been
instrumental in Colombian cities in supporting a policy of cross-subsidization of service costs from
richer to poorer areas of cities. Although not necessarily a reflection of inter-personal differences in
income, the strata provide a picture of spatial differences in living conditions.
B) Poverty in Cali
Up to the mid-1990s, virtually uninterrupted economic growth coupled with the joint efforts of the
city’s population, the local government and other local institutions were instrumental in
dramatically reducing poverty levels among Cali’s inhabitants. The first half of the 1990s was a
period of expansion of the economy, with employment in sectors such as commerce, transport and
financial services expanding at rates above the average for the city. By contrast, construction,
manufacturing industry and some services contracted in the period 1990-1998 (83). Although the
population in the metropolitan area continued to grow at a yearly rate of about 2.8 per cent, the
number of people living in extreme poverty and in poverty dropped in absolute terms by over 20 per
cent in the period 1990-94 (see Table 7).
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Tabla 7: Poverty in Cali (83)
However, these overall figures mask differences between areas of the city. Falls were concentrated
in 12 comunas and in Yumbo, while a number of comunas showed rises both in their relative share
of poverty and misery and in the absolute number of poor and extreme poor. The proportion of
households living in extreme poverty in comunas 1, 5, 14 and 20 increased significantly. Their joint
share of households in extreme poverty rose from 21 per cent of the metropolitan area to 34 per
cent.
Urrea (1997) has shown that there is a link between poverty and migration in Cali. Furthermore, in a
context where a significant proportion of the more recent migrants come from areas along the
Pacific coast and are African-Colombian, he argues that there is also a link between poverty and
skin color. Using information from a range of sources (though mostly household surveys), Urrea
argues that recent increases in poverty among the poorest strata of population in the Cali
metropolitan area and in the poorest areas of the city may be at least partly traced to a rapid influx
of low-income migrants. These migrants come to Cali from poor regions and cities in search of
opportunities, but at least for a while remain spatially and socially segregated from the rest of the
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city. In some cases, notably among black in-migrants, Urrea argues that they are spatially, socially
and culturally segregated by other Caleños.
C) Cali’s inhabitants
Between 1986 and 1994, the incidence of misery (extreme poverty) and poverty was higher among
recent migrants than among the more established population. For example, in 1984, over one-fifth
of all households whose head had arrived in the city in the previous year were classified as living in
extreme poverty and nearly two-thirds in poverty. By contrast, one in ten households headed by
native-born persons lived in extreme poverty and two-fifths in poverty. (83)
In line with improvements in social conditions during these years, the incidence of both misery and
poverty tended to fall within all groups between 1986 and 1994. But the drop in levels of both
misery and poverty tended to be faster among natives and long-term migrants than among more
recent arrivals. This suggests that newly arrived migrants are much poorer than established
migrants but the city offers them rapid opportunities to become assimilated and improve their living
conditions. The incidence of poverty among long-term migrants tends to be lower than among the
native-born.
The survey data for 1994 also show that the incidence of poverty and extreme poverty is higher
among female-headed households although extreme poverty was somewhat higher among the
households of migrant women than among natives, and the converse appeared to be true when
poverty levels were considered, in fact there was no significant difference between the two. (83)
5.3.4. Private sector in Cali
The development of the private industry in Cali and the metropolitan area has been initially related
with the sugar cane production, coffee threshing and food industries in general. This promote the
growth of the region but especially of Cali, which was benefited because of its strategic location
(near to a port),
the construction of road infrastructure and the commercial development
associated to goods and services.
During the first half of the XX century, the private sector, especially focus in agro industrial
products, dynamized the development process of the internal market. The industries of this time,
just manufactured goods and were located to the north of the city, from they could have easier
access to the markets in the north and the center of the country.
After 1930 the industrial sector incorporated new productive sectors which include cement, non
metallic minerals, paper, chemical and pharmaceutical products, construction, iron and steel
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industry, among others. The generation of the industrial employment, promoted by the private
sector, gave a major boost for the regional market and created the base for the development of a
diversified economy for the production of goods and services.
This trajectory of the private sector has made of Cali the third economy in the country and one of
the best Colombian cities to do business, and that is way the investment -national and foreign) and
the high participation of the private sector in the city and in the region is not a casualty.
In fact, at this time according to the Comisión Económica para América Latina y el Caribe
(CEPAL)(61), is that this region is one of the most competitive in Colombia, with high potential of
development and good business environment. This context has allowed the construction of a solid
and diversified economic structure characterized by the high levels of production, industrialization
and the presence of several clusters.
That is why, according to the Chamber of commerce in Cali(60), companies such as Unilever Andina,
during 2008, planned an investment of US$35 million distributed in the following way:
•
US$17 million in the construction of a distribution center with a high technological level
which can compete worldwide.
•
US$11 million in new production lines for home products.
•
UD$7 million in the food production plant.
According to Sigifredo Valle Courtade, Unilever President for the Andean Community and the
Caribbean (60), the decision to strength the operations in the region are obvious: “The Valle del
Cauca is our main center for exports and manufacture. From Colombia we are managing the Andean
Community and Central America, and in Cali we have the biggest and most modern production
plants in the region”.
Others a multinational company such as Cadbury has found in Cali a good place for operate. For
instance, the production plant of this company supplies the Colombian market and the markets of
43 countries around the world.
Additionally, by March of 2011, three new national companies (Acelflex, M&P Supplies and Services
e Integrated Control & Logistic Services); and two international ones (Winpack from Chile and
Kuehnet + Nagel from Germany) were installed in the central business district of the region
(62).
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5.4. Target Profiles
The section describes the profiles of our target: the CSR departments of national and international
companies that can be FYL clients, the type of entrepreneur that the franchise needs to work
properly and the kind of communities that are going to be beneficiaries of goods provided by the
social franchise.
5.4.1. CSR Departments
In this section the reader could find the characteristics that should have the CSR departments or its
equivalent in order to acquire FYL and implement this model as a CSR strategy for them. The profile
includes CSR departments for both national and international companies.
5.4.1.1. National companies
CSR departments in national companies or business groups that will be considered to acquire FYL as
a CSR program must fulfill the following requirements:
• Members with strong believes about that CSR practices are not just charity or philanthropy, they
are an investment for the companies due to the benefits they can get from it.
• A CSR planner with strong commitment about creating shared value through CSR programs.
• Have CSR initiatives currently running.
• CSR departments must be part of companies with business units related with the food and
beverages.
• CSR departments must be part of companies that are currently working on the consolidation of
markets and market development at national and international level.
• CSR departments must be part of companies with production plants near Cali or distribution
points strategically located to facilitate the products supply in the city.
• CSR departments must be part of companies with participation in the stock market.
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Figure 10: National Company Profile
E.g. of the profile Sustainable Development Department Grupo Nutresa:
Jorge Eusebio Arango López, Vice-president of Sustainable Development of Grupo Nutresa S.A.,
headquartered in Colombia, has been part of this company since 1991. Nowadays is the person
responsible of providing the strategic vision to address the sustainability challenges that the
business group is facing at economic, social and environmental level. His vision provides lines of
action to the 44 companies of the group, which has presence in 12 countries and export to 74
around the world (63).
The commitment of Jorge and his team with Nutresa and the sustainable development have allowed
the development of different projects of corporate social responsibility through the Foundation
Grupo Nutresa, wich is coordinated by Carlos Ignacio Gallego Palacio. These projects are part of
the sustainability management of the company and the strategic objectives of it, which are oriented
to generate value for the group and the community in a permanent way.
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The area of sustainable development is mainly focused in three lines of action:
•
Increasing value generation
•
For a better society
•
For our planet
The integrated work of the sustainability department at economic, social and environmental levels
has meant for the company an important recognition in the Sustainability Yearbook 2011 of
Sustainability Asset Management. This edition makes an exaltation of Nutresa as the first Colombian
company with highlighted sustainability rates in the food and beverage sector in emerging countries
(63).
5.4.1.2. International companies
CSR departments or its equivalent in international companies or business groups that will be
considered to acquire FYL as a CSR program must fulfill the requirements mentioned for the
national companies and the requirement listed below:
• Be internationally recognized as an important producer of goods for massive consumption.
Figure 11: Multinalional Company Profile
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E.g. of the profile Sustainability Department of UNILEVER:
“At Unilever we believe our business has a
responsibility not just to make profits for our
shareholders, but to innovate, to create a longterm sustainable business for our stakeholders.
When
we
talk
about
corporate
social
responsibility, we don’t see it as something we
‘do’ to society. It is inherent in everything we do.
Not just voluntary philanthropy or community
investment, important though that is, but the
impact of our operations and products as well as the interactions we have with the societies we
serve”. Niall Fitzgeral, Ex-Chairman of Unilever.
This statement was said in 2003 during a series of speeches in the London Business School (64) and it
reflects very well what the perception of Unilever about what CSR is; now Michael Treschow,
Chairman, and Paul Polman, Chief Executive Officer of Unilever keep working on CSR. This BritishDutch company -one of the top 10 worldwide producers of massive consumption products- has
operations in more than 90 countries covering in this way markets of Africa, America, Europe,
Middle East and Asia. In all these locations Unilever has developed different CSR programs in order
to impact positively the community and reduce the negative impacts associated to its operations.
Unilever’s Sustainability Department (65), which is
in charge of CSR activities and programs,
had
invested more than 91 million euros in sustaibability
projects worldwide by the end of 2010. This
projects are focus on three main lines of work:
improving
healtha
and
well
being,
reducing
environmental impacts and enhancing livelihoods.
At this time, Unilever Colombia has focused its
effort in working on increasing the levels of
nutrition in the child population in communities
that the company has identified with the help of local organizations such as Fundación Nutrir,
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Fundación Carvajal and Banco Arquidiocesano de Alimentos de Bogotá, with which have also
developed different programs to tackle that problem.
Unilever has also a production plant in Cali, which is the workplace for 562 people. It supplies the
Andean area and is able to compete at global level with other main plants.
5.4.2. Entrepreneur
In order to know how to select the citizens within the community who will become entrepreneurs,
FYL has created a profile with the characteristics needed to develop a successful business, in this
case more specifically in Cali, Colombia.
The Entrepreneur in order to acquire FYL must fulfill the following requirements and fit the profile
established: (see figure 12)
•
Member of the Community where the project is going to be implemented.
•
The entrepreneur must be 18 years or above.
•
Must have an educational background with knowledge in aspects such as writing and
reading.
•
Have entrepreneurial motivation to start a business.
•
Aspirations to have a better quality of life.
•
Leader skills within the community.
•
Socially oriented.
•
Involved in didactic activities in the community.
•
Burning need of improving life within the community.
•
Intrinsic motivation to develop themselves.
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Figure 12: Entrepreneur Profile
The Entrepreneur: Aura Elena Plaza
FYL wished to create the kind of services that best fit and serve the potential entrepreneur who will
be the protagonist. FOr this reason we have decided to analyze a specific individual, visualizing a
real person as the potential candidate. Thus being able to truly focus on the specific characteristics
of these entrepreneurs .
FYL has selected a possible candidate to become entrepreneur in Cali (see Figure 13). The purpose
intended in this part is to create, in a visual manner, a more tangible profile with the description of
his/ her characteristics in terms of personal and professional life.
Figure 13: Aura Elena Plaza
Personal Information: Her name is Aura Plaza; she is 44 years old and lives in Cali, Colombia. She is
married and has 3 children.
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Aura as a role model for the community: Aura is a community leader and is always involve in
activities such as fund raising for old people, part of the comity for the preparation of dances and
activities in the community, role plays with the children of the community and more.
Aura’s motivation: Aura is currently studying psychology after years of working as a domestic house
keeper, but her motivation to have a better quality of life and the constant search for opportunities
to grow leads her to begin a career. When the crew of FYL presented her the project, she
immediately affirms that as she said: “This is what my community needs, and I’ve always wanted an
opportunity like this”. She is a motivated woman, who wants to improve the quality of life not only
for her family but also all the community and therefore Colombia.
5.4.3. The Community
The final target of the first FYL prototype is the Community where the social franchise is going to
be applied. This community lives in the poor the neighbourhoods of Cali. This target is mainly
characterized by:
- Large and low income families.
- Malnourished and lack of correct dietetic habits
- Lack of education related to dietetics habits
5.4.3.1. Primary and Secondary Community target
The Community, as a final beneficiary, is a vast amount of people with different age levels and
different needs. Considering the issues that the prototype aims to tackle- malnutrition, lack of
nutrition education; low income; the community target is dived in two parts: primary Community
target and secondary Community target.
So, the primary Community Target is constituted by children. The average age of this target will be
between 5-15 years old, defined as the school age.
The considered secondary Community target is all the people living in the surrounded live hoods of
impacted schools: teachers, schools employees, and the entire neighbourhood were the school is
located, such as the children families, employees from companies, etc.
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Despite the division above of the Community target, there is this common issue to the all
Community: it lacks access to a good and healthy diet mostly because of the difficulties related to a
low income situation and a non educational background, regarding the issue in question.
Furthermore, it becomes quiet challenging to the project the fact that this target is subjected to
advertising and commercials on fast foods, which represent an competitive threat regarding the
affordable prices of it.
FYL role is to educate people on their eating habits and this factor
represents an add value to FYL products and to his final consumers.
Continuing focusing the challenge part, is also important to mention the motivation and openness
that Communities show when tools are provided. In other words, as seen in the others examples of
projects above, the possibility of choosing is given, and since the educational background is
provided, the consequences of maintaining certain eating habits is seen with more concern.
Non healthy
development and
growth, not
performing well
academically
Figure 14: Community Primary Profile
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Lack of access to nutritional
information, malnourished
diseases
Figure 15: Community Secondary Profile
Commune 3 profile: According to the Cali Mayoralty (80), the commune 3 is the oldest nucleus of
Cali, it is located in the northwest of the city and is composed by 17 neighborhoods. Its historical
value and the presence of governmental institutions make it a representative zone. Here takes
place the development of numerous educational, commercial and industrial activities and services.
This commune has a population of more than 63.000 inhabitants, which belong to different
socioeconomic strata (from 2 to five, being 5 the best one) although there are predominance of low
and medium-low strata because 14 of the 17 neighborhoods correspond to that categories.
The population active at the economic level overpasses the 28.000 people, which are responsible
for the maintenance of more than 33.000 people remaining.
Regarding the education services, the commune 3 has more than 50 educational institutions for
kindergarten, primary and secondary students. As an important data, 13 of the mentioned
institutions are state-owned schools. Also, according to the Administrative Department of Municipal
Planning, there are more than 16.700 students enrolled in both private and public schools. (80).
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5.4.3.2. Real Target examples
As already explained on the other targets above, the projects presents a real target, in a visual
manner. In this case, is presented a child from one of the schools of the chosen community, as
primary target example, and also, an adult from the school’s neighborhood of the chosen
community, as an example of secondary target. Here are presented characteristics and habits that
elegy these two persons as perfect examples of the intended target to impact.
•
Primary Community Target- Daniel Lopez
Daniel as 13 years old and lives in Cali, in commune “3”,
and goes to “Colegio Santa Librada”. Daniel’s Family
description is three brothers and one sister, all aging
between 5-13 years old. Daniel’s mother is a house keeper
and Daniel’s father is a taxi driver in Cali’s city. The
monthly income of the house is $600, depending on the
quantity of work of Daniel’s father.
Figure 16: Daniel López
The variety and quality of this family meals is very restrict, mainly due to the low income fact. Most
of the family meals are constituted by local and cheapest products with a lack of protein support.
In Daniel’s case, his eating habits aren’t sufficiently to provide an healthy diet, vital for his
development and growth.
According to Daniel’s mother, the responsible one for family’s meals, the low income family doesn’t
provide them any other option.
•
Secondary Community Target- Ana Maria Dominguez
Personal Information: Ana Maria represents the secondary
Community target intended to be impacted. Ana Maria is 25
years old and works in a store on the Commune 3, located in
the neighbourhood of the “Colegio Santa Librada” school.
Figure 17: Ana María Dominguez
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Maria, despites already independent, lives with her parents. Her salary corresponds to the national
minimum salary, US$252 approximately. She works mostly to contribute to pay bills at home.
Ana Maria’s profile is similar to Daniel’s family in a sense that her eating habits are also restricted,
mainly due to low income issues. Her everyday’s diet is mostly based on fast food, as justified by
her, is the cheapest option to eat outside home.
During conversation, Maria assumes the fact that healthy and affordable options to eat good in her
working neighbourhood are impossible to find. Otherwise, certainly she would opt for better quality
and variety on her meals. Although, when asked about the consequences of mal nutrition, Maria
assumed no clear ideas about the topic
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6. FYL Operational Structure
In this chapter the authors of the project define the structure and operation. This segment includes,
firstly, the stakeholders’ definition and their role in the project. Then you will find the service and
product description that explains the phases of FYL implementation. This segment details the FYL
methodology.
Also, this chapter focuses on the legal framework which helps the reader to understand better the
boundaries and the operational issues of the project. In this segment the legal obligations of which
one of the parts involved is presented.
To conclude, this chapter includes the FYL’s Marketing Plan. This chapter allows the reader to have
a market perspective of the project. Here are explained the competitors and trends of the sector,
as well the analysis of the strategy to be followed. Furthermore, it is highlighted the important
issues to obtain a competitive advantage position, as the product itself and benefits related, and to
elevate FYL’s as a successful business model.
6.1. Stakeholders
Listening and responding to stakeholders, all the people who are affected by Feed Your Learning or
who affect the performance of it, are a core part of the sustainability of the Social Franchise Model.
Their feedback and involvement helps understand and prioritize issues for an effective and
sustainable strategy. FYL´s Model engages two types of stakeholders (as seen in Figure 18)
• Direct stakeholders: Feed Your Learning Team, Company (Contractor), Entrepreneur and
Consumers.
• Indirect stakeholders: Other Companies (suppliers), NGOs, Scholar Institutions, Community,
Media and Government.
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Feed Your
Learning Team
Media
Company
Consumers
Feed Your Learning
Model
Entrepreneurs
Community
NGOs
Client
Other Companies
(suppliers)
Scholar Institutions
Figure 18: FYL Stakeholders
6.2. Creation of Partnerships
Working with partnership is indispensable for FYL´s development. The “ENTRE PARCES” CART needs
a strong supply support and it cannot be only from UNILEVER. Strategic alliances with different
Companies will give the advantage needed for the Social Franchise to have a successful expansion
and that in the long term could become an independent business. Not only the knowledge transfer
between the FYL/UNILEVER and the entrepreneur is an important element of this process. Helping
build network between the entrepreneur and the market is a main objective.
FYL´s team creates partnerships with all its indirect stakeholders: other companies or suppliers,
NGOs, scholar institutions, community, media and government. These stakeholders have an
important influence in the “ENTRE PARCES” CART. As we mentioned before, the partnership with
other companies or suppliers make possible the easy flow in the supply chain of the CART.
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F4D will enable partnerships between “ENTRE PARCES” CART and Companies in Cali that produce
dairies, eggs and service materials which are the main ingredients for the production of the
buñuelos and milshakes. FYL has also established partnerships and has achieved the necessary
permits in the hall town of Cali. The Scholar zones of Comuna “3” in Cali have accepted the
placement of the CARTS inside their infrastructures.
6.3. Service Description
This session of the project explains the concept and the methodology involved in the FYL Social
Franchise Model. The first step will be the creation of a Portfolio of Companies interested in FYL´s
Model. As stated above, FYL will be offered to Companies interested in developing new
entrepreneurs with a Social Franchise program, while creating a social impact in communities by
addressing nutritional and educational issues. The establishment of FYL´s Portfolio will be
supported by a Communication and Marketing plan, as outline bellow.
6.3.1. Implementation Phases of a FYL Model
To integrate FYL´s Model into any national and multinational company´s CSR strategy; it
must undergo a series of phases. A previous analysis of the company´s CRS Strategy and Core
Business will lead FLYs team to the final proposal, customizing FYL according to the needs and
added values existing in each case. Right after this previous step, the FYL´s phases begin. See
Figure 19. This is why, in order to explain each FYL´s phase, this project choose to implement a
Prototype in UNILEVER, Cali-Colombia.
Figure 19: Model´s Phases
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A) Phase 1: Franchise Agreement with UNILEVER
The arrangements between FYL and the Company (UNILEVER) will be based on establishing the
FYL´s Social Franchise Model as part of the CSR strategy of the Company. The Company, in this case
UNILIEVER, represents for FYL an essential partner in providing the financial support to the Social
cause of creating entrepreneurs. UNILEVER have also lot of professional experience and an
extensive network that the Entrepreneurs´ business could draw on.
FYL´s team will serve as Consultants for the Company in creating the project. FYL will give support
integrating the model in to their CSR strategy and helping engage the different departments
(employees) in the process of creating UNILEVER´s Social Franchise. As part of this assistance, FYL
commits to serve the franchise as Master Franchisors (operational team).
In return, UNILEVER commits to give financial support, train the entrepreneurs in specific subjects
and provide supply logistics. The commitment will be to finance the cost of the infrastructure of the
Social Franchise as a loan to the entrepreneur, who will commit to pay fees to FYL´s Team as
reimbursement to UNILEVER. Also UNILEVER will support part of the supply chain of the business
with those products produced by the company.
B) Phase 2: Analyze Company and Customize UNILEVER/ FYL Operating Manual
The analysis of the Company UNILEVER located in Cali, FYL´s team and the Companies team
acknowledged the opportunity of creating a Social Franchise specialized in serving healthy food as
BUÑUELOS and Milkshake drinks to scholar students of Comuna “3” in Cali. As it is shown by Figure
20 the Buñuelos are common Latin America´s muffins based of cornstarch and eggs. Figure 21 shows
the Milkshake drinks which are cold drinks also made of cornstarch and have different flavor as
fruits, chocolate or vanilla. The opportunity of offering these foods in the Social Franchise is that
many of the raw materials (Cornstarch) needed to cook them are produce by UNILEVER. By this, the
company will give an added value to the entrepreneurs by supporting them as suppliers, nutritional
guides, and by positioning their business with a well-known brand.
Figure 20: Buñuelos
Figure 21: MilkShakes
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Maizena is the UNILEVER's Brand which produces the cornstarch. The brand have the Buñuelo Mix
(figure 22) and the Maizena Milkshake Mix (figure 23), both ingredients to prepare the Buñuelos and
the Milkshake drinks. The Nutritional information of the Maizena (cornstarch) indicates it contains a
mixture of vitamins and minerals that has been formulated to meet the needs of the population in
vitamins and essential nutrients for growth and development of children. Maizena provides about
15% of the daily requirement of vitamins A, B1, B3, B6, B12, C and folic acid also contain minerals
such as iron and zinc.
Figure 22: Buñuelo Mix
Figure 23: Milkshake Mix
Right after having indentified the product to be sale by the “ENTRE PARCES” cart (Unilever´s Social
Franchise), the customization of the Franchise Manual begins. Unilever FYL´s Manual contains stepby-step the instructions for the entrepreneur to implement and run the business. This is what
enables the standardization of franchises; therefore it contains the description and guidelines of the
entire processes to operate the “ENTRE PARCES” cart. This manual includes the course of action for
preparing the Buñuelos and the Milkshake Drink. It describes the ingredients, the instruction and the
timing necessary for the cooking. It specifies how serving the beneficiary should be done and the
obligations the Entrepreneurs have on guaranteeing an excellent product and service in their
“ENTRE PARCES” cart. For this case, the UNILEVER manual also includes binding guidelines not
detailed in the Entrepreneur Contract.
C) Phase 3: Customize the infrastructure, equipment and image of the Social Franchise
This phase contemplates all diligences regarding the customization of the image of the Social
Franchise for each Company. Any the company would like to have its own image, the infrastructure
adapted to the products/services the Social Franchise will offer and the customization of all the
equipment that it´s going to be use by the entrepreneur.
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The client company, in this case UNILEVER, will have the option to use its own publicity agency
who already knows the Image Protocol that the Company uses. If not, F4D will suggest its own
agency and suppliers. All the image use for the carts must be approved by both Company and FYL´s
team. In the following picture it is shown an example of a possible “ENTRE PARCES” cart, designed
by FYL (see Figure 25).
Figure 25: “ENTRE PARCES” Cart
D) Phase 4: Entrepreneur Profile and Recruitment
A good Manual is not enough to ensure a high-quality performance of the Social Franchise. The role
of the entrepreneur plays now an important key to the success. This is why indentifying a profile
needed for each FYL´s Social Franchise is essential.
In the Target Session the General Entrepreneur´s Profile was defined but there are some
characteristics that will make the difference for the UNILEVER “ENTRE PARCES” cart. In this case
these characteristics will be based on the personal interests of the entrepreneur about cooking,
nutrition, serving children/teenagers, etc. Having clearly defined the profile of the UNILEVER´s
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entrepreneur makes easier to find the right franchisee.
The process of recruiting entrepreneurs will be a shared-task between FYL and UNILEVER.
UNILEVER´s Human Resources team could implement their employee´s recruitment process and be
supported by the knowledge and experience of FYL´s team regarding Franchise. The limit of
entrepreneurs recruited will depend of the interest and financial capacity of the company.
D) Phase 5: FYL/Company agreement with the Entrepreneurs
After having selected the entrepreneur(s), FYL and UNILEVER grants the entrepreneur (franchisee)
the right to operate one. The settlements between the entrepreneur with FYL and UNILEVER are
detailed in a contractual franchise agreement which specifies all rights and duties of the three
parties.
The franchise contract imposes rights and obligations on the social franchising partners. Even
though this contract does not eliminate all the risk in the relationship, it might limit the
entrepreneur´s performance and provide grounds for termination of the contract in the event of
unethical behavior.
D) Phase 6: Entrepreneurs’ training
After having signed the contract with FYL and UNILEVER the entrepreneurs will be enrolled on the
FYL´s Induction Training Course. In this course they will receive an intensive on-site preparation in
how to bring quality and excellence to the operation of the “ENTRE PARCES” cart. The main
purpose of this training is giving the opportunity to any person interested in the Social Franchise to
acquire the sufficient capacity to become an “ENTRE PARCES” cart ´s entrepreneur.
These Induction Training Courses will begin by evaluating the capacity and skills that each
entrepreneur already have. Since various managerial skills will be required to run the Social
Franchise, these areas will be covered by any entrepreneur. As a franchisee, the entrepreneur will
be expected to carry out the business according to the standards set in FYL´s Manual. If the
standards are not achieved, the entrepreneur will go into a stage of Re- training in which he/she is
obligated to attend to courses of leveling.
With UNILEVER´s support, the Training Course will be hosted in the Conference Rooms of the
Company. The courses will be given by employees of UNILEVER, FLY´s partners and team of experts
in each area. By this, the engagement of all stakeholders will be a key element of strength.
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F) Phase 7: Establishing the Social Franchise
In this phase, FYL analyze the location where the Social Franchise is place. The location depends on
the conveniences for the entrepreneur and the locations available with partnerships (Scholar
institutions/ Hall town). After having selected the location, FYL´s team will join the entrepreneur
on the launch day. This day is to join with UNILEVER and the media to promote the new
entrepreneur and his new -UNILEVER´s “ENTRE PARCES” cart - Social Franchise. The following
marketing campaigns may be launch by the entrepreneurs but with FYL`s and UNILEVER´s support.
G) Phase 8: Supply the Entrepreneur
For the launch day, the entrepreneur has all the necessary supplies for the first half of the month.
Follow to this first half month, the entrepreneur should submit the supply formats to FYL´s Team
who will coordinate the delivery of the necessary products for the next month or half month. The
demand of supplies will depend on the entrepreneur and the sales achieved month by month. The
entrepreneur will be given the Manual instructions for the supply process, indicating the period of
request given by the suppliers and the schedules managed by FYL. (See Figure 26)
Feed Your Learning
Send
Supply´s forms
Request supply
of products
Social
Entrepreneurs
Franchisor:
Company (UNILEVER)
Perform logistic according
to their distribution
mechanism
Suppliers:
Other Companies
Deliver products to
Social Franchise
Figure 26: Supply´s logistic
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H) Phase 9: Monitor Entrepreneur
For the success of the Social Franchise, FYL monitors and supervise all entrepreneurs’ performance.
This phase will base itself in quality audits and certification of the Model. Control is often perceived
as a limitation of autonomy and thus reduces franchisee motivation, but as the philosophy of FYL is
to achieve the independence of the entrepreneurs, the control is more focused on Capacity
Building. The first month of business FYL perform on-site visits once a month. These visits depend
on the evolution and independence that each entrepreneur shows month by month, and then the
visits are every two month. If a Social Franchise is not being run by FYL´s Model, the supervisor
demands the entrepreneur to assist to the specific Training Course. All thought the monitor visits
are scheduled; the entrepreneur will have assistance at any time. The entrepreneur can ask for
refreshment of the skills to run the franchise (for all procedures, logistics, finance etc).
I) Phase 10: Report Company
Through the monitoring sessions, FYL gathers the information necessary to account the impact that
FYL´s Model is having in the entrepreneurs and also in the beneficiaries. Monitoring the
entrepreneurs also helps to collect important information that could indicate possible
restructuration to the “ENTRE PARCES” CART. These changes could be the result of changes in
consumer preferences, problems with some suppliers, among others. As we explain in following
sessions of this project, the measurement of the impact of the Social Franchise will be done by
different mechanisms as surveys, interviews and the same feedback of the monitoring phase.
All the information collected is reported to UNILEVER in order for them to have control on the
impacts of their CRS project and to comply with their internal needs of Sustainable Reports.
6.3.2. FYL´s Operational Manual
FYL´s Operational Manual main purpose is to support the operations of each franchise and facilitate
the performance of the entrepreneurs through the transfer of know-how. The manual will set the
required quality standards and provide a clear framework to ensure uniformity across all of FYL´s
franchisees (entrepreneurs). It also will include the Responsibilities of the Entrepreneur in carrying
out and maintaining those quality standards, as the main responsibilities of the FYL´s Team (F4D)
and the support that will be provided in relation to the main needs to run the Social Franchise.
The standardization of the key components is an important element of FYL´s Social Franchise Model
and the manual´s objective is to define and describe the core elements of the project procedures,
so that it can be implemented and operated successfully by any trainable entrepreneur. The Manual
will consist of three main parts: Introduction, Overview of FYL and Operating Guidelines. All three
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parts will be written in a practical and comprehensive way to be able to address to any person, not
matter their educational level or current skills.
The Introduction will include the explanation of what the manual entails and its purpose and a
provision of what is expected between the franchiser and franchisee. The Overview includes the
description of FYL´s Model, explaining how it is set up and how the various components function. In
this part is where the responsibilities, rights and duties of the three parties (Entrepreneur, FYL and
the Company- UNILEVER) are included. The last part, the Operating Guidelines, will address all the
instructions on how to best run the business. All the issues regarding: the products, nutrition,
customer service, pricing, purchasing supplies, accounting principles and payment of franchise fees,
among others. The instructions will be mostly given using drawings and examples (see figure 24), as
this assist the comprehension of each step of the process by the developing entrepreneur.
4 cm
Prepared the
buñuelo mix as it
is shown in
process 1.1
Leave the
balls cook for
7 min and
take them out
with the
spatula.
Wrap the
Buñuelo as
shown in
process 2.1
Make balls of
4 cm of
diameter with
the buñuelo
mix.
Place and
cook each ball
in the
Buñuelos Iron
Serve to the
customers
Figure 24: How to cook Buñuelos.
Since the manual will be the instructions that set the standards and procedures for the Social
Franchise, the best people to write it will be the Founders of FYL (writers of this project). This
team is who really know FYL´s business operations inside and out. Apart from them, the process of
Drafting of the Manual will also include the help of contracted experts in franchise with
entrepreneurial skills, whom will bring value to the creation of easy to read and use manual.
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6.3.3. FYL´s Training Courses
The main reason why FYL provides training programs to entrepreneurs is to ensure that all
franchises are operated in a standard way according to the system that has already demonstrated
its success through its track record. It ensures uniform operations and helps entrepreneurs with
different skills learn to perform tasks in a consistent manner.
FYL´s Training Courses will have different levels, going from Induction Training Course to Retraining Course for levelling the needed entrepreneurs (as we mention above). They will all be very
comprehensive and easy to follow, structured according to the skills of the targeted entrepreneurs.
The initial training will allow the entrepreneur to learn the operations of the business quickly and
easily and then continue helping him/her self with FYL´s Operation Manual. Aiming to give the
opportunity of being an entrepreneur to any person, the Induction Training Course (ITC) will include
everything that a franchisee needs to know about the business, the product and the service. The
first step of the ITC will be providing the Operations Manual as the textbook that should be use by
entrepreneurs in every occasion. The first days of training will be given at the location provided by
the Company (UNILEVER). To facilitate these days of training, FYL will have the support of its
partners: NGO´s with knowledge in Social areas such as Nutrition, the different Departments of the
Company such as Finance, Marketing, Supply management and Sales among others. A mixture of
training formats such as videos; lectures; discussion; hands-on work and test, will be prepared for
the training courses.
After a week of indoor training, a formal in-situs training session will be arranged. The Onsite
Training will be more focused on helping the entrepreneur to get comfortable with the day-to-day
operation of the franchise before the day of the launch. This training will be given by FYL´s Team
according to a pre-arranged agenda.
The Re-training Courses are meant to be ongoing assistance to the entrepreneurs’ empowerment.
The Courses will be given to those entrepreneurs who might fail the monitoring session or to any
voluntary entrepreneur who feels to need it. The program of the Course will include refreshment in
any area given during the Induction Training Course. These might be about any specific subject or in
general. FYL´s team will coordinate the Course by groups of entrepreneurs and the needed
facilitator for any case. These courses will last between a day and three days, depending on the
subject.
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7. Legal Obligations
As we seen before, franchising business model is a replication strategy which from its legal
framework can be considered as less flexible and loosely controlled and more restrictive and tightly
controlled. In case of social franchising model its demanded a larger degree of involvement and
control from the parent organization, however some flexibility should exist.
The figure below (Figure 27), developed by LKM Consulting 1 (78), helps to understand various types
of replication businesses models and how an enterprise benefits from each one of the models
approach, regarding more flexibility or more control.
Figure 27: Replication Strategies (78)
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By analyzing the scheme above its easy to understand the reason why a social franchising model is,
as well, from a legal perspective, a more adequate strategy then some other types of replications
models. This exercise also identifies a risk issue which is a very important factor in a legal
framework of a franchise model. In FYL case, a social enterprise, which works with wide range
target, at-risk groups, individuals with income problems or other disadvantaged parts of society, it
may well be that mistakes would have major, damaging consequences. This can make the higher
levels of control (and associated performance management and quality assurance) available in
franchising attractive.
By taking into account the boundaries of a franchise model in terms of control and flexibility, there
are some points that need to be followed, according to the Social Enterprise Coalition and the Big
Lottery who founded a manual (79) as part of a wider project on growing the social enterprise
movement through franchising, those points are:
- A legal agreement between franchisor and franchisee
- Ongoing obligations between franchisor and franchisee
- The entire business format being duplicated, including the same brand
- The franchisee being granted a particular territory to operate the business
- Fee payments from franchisee to franchisor
7.1. Franchise Legal Agreement
Considering all types of replication business models, only in franchising model it exists an
economically and legally independency, where partners operate at different levels and cooperate
under one roof in such a close relationship that the mutual exchange of information and services by
far exceeds the usual business relationship. The franchise contract imposes rights and obligations on
the franchising partners and is thus the cornerstone of this relationship. While contracts do not
completely remove the risk of opportunistic behavior, they limit franchise discretion and provide
grounds for termination of the contract in the event of opportunism. Franchise contracts differ
between branches, products and services. However, any well-drafted franchise contract should
include a number of core elements in a precise and structured manner (79). In this project, we
present these elements purely for reference:
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- Organizations / parties involved - nature and extent of rights /license granted - length of term
(and renewal)
- Geographical territory (and exclusivity)
- Obligations of franchisor (support and services)
- Obligations of franchisee (financial, performance data, etc)
- Fees (initial and ongoing)
- Brand rights / usage (logos, trademarks, domain names etc) - reference to other relevant
documents (e.g., operations manual)
- Ownership of intellectual property of new innovations / developments - exit / intervention/breach
/ termination clauses
Franchise agreements are often complex and extensive legal documents. For these reasons, the
project authors are aware of the fact that getting professional (ideally specialist) legal advice on
the agreement is needed, particularly to FYL, the franchisor.
In most of the cases, in legal terms, franchising contracts are not regulated explicitly. In FYL
project it will be followed an evolving contract model instead of a contract arrangement which
covers all eventualities of dynamic scenarios, but also may scare off potential contract partners.
Evolving contracts are an important criterion of franchising networks, meaning that franchisors
learn from experience and might therefore adapt and improve their contract when working with
further franchisees. Since FYL social franchise it aims to be a growing and global phenomenon,
franchisors could even adjust the terms of their contracts to local environments as they accumulate
experience. Although FYL takes in consideration the fact that the administrative cost of changing
contracts may increase through such measures, by customizing contracts, franchisors may ensure
fair conditions. Also, franchise contracts do not generally have the primary goal of ensuring
franchisees and franchisor performance, because it is simply not possible to specify the desired
behavior in full detail within a legally enforce able document. However, by using precise
contractual language, specific contract elements can specify certain performance standards and
ensure that both parties do not deceive one another, for example, by refusing to disclose strategic
know-how. Likewise, FYL, franchise contract stipulates the duties of the franchisor, e.g.: know-how
transfer, management assistance, advertisement expenditures. Specifications of such performance
issues are difficultly perfect, because the measures are rather complex. Therefore, “mutual
commitment” should be at the heart of every franchise contract. The rights and duties of both
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partners should be put together in a performance catalogue, to which franchisors and franchisee
may refer (79).
7.2. Organizations/parties involved
In practice the FYL legal framework will established franchise a contract between the three
involved entities: FYL, Company, Individual or Representative Entrepreneur.
•
Company: multinational or national large company. In the prototype the company with be
Unilever.
•
FYL: social enterprise
•
Individual or Representative Entrepreneur: individual person or a group (associated persons).
7.3. Ongoing obligations
In this chapter the authors of the project detailed the agreements between the different parties,
based on the Social Enterprise Coalition and the Big Lottery “Social Franchise Manual” mentioned
above (79). For example: nature and extent of rights, license granted, length of term (and renewal)
are some of the points covered. This exercise will help, in some extent, the reader to understand
some operational issues:
CONTRACT/ MUTUAL COMMITMENT
Figure 28: Commitment between Parties
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Parties
• FYL
• Company
• Individuals or Representative Entrepreneur
A) Definitions
Sale and training of a Social Franchising business model to incorporate a Company CSR strategy.
B) Rights Granted
FYL grants the Company a right to:
• Use the social franchise model as a CSR strategy
• Use the trade names, trademarks, etc
• Use the benefit of the FYL accounting management and marketing knowledge and experience
FYL grants the Entrepreneur a right to:
• Use the knowledge acquired
• Use the material provided by the Company to operate the business
C) Franchise
The Company will pay an initial fee on execution of this Agreement, to FYL.
D) Term
The term of the agreement is 5 years from the date of this Agreement, between the three parties
F) Rights of Renewal
• The identities may renew the Agreement for a further term unless it has been committed a
material breach or it has not been substantially performed the terms of the Agreement.
• Prior to renewal the Company may be required to enter into the then current form of the
agreement and may have to renew some materials.
G) FYL Initial Obligations
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• Train Company employees
• Selection process of entrepreneurs
• A PR launch
• Advice on finding material to operate the franchising
• A copy on loan of the Operations Manual
H) FYL Continuing Obligations
• Provide the Company with knowhow, advice and guidance related to the Business Model
• Supply stationery when required
• At cost, train the Company personnel
• Organize an annual conference for Identities involved
• Monitor and audit the franchising impacts and results
• Select and Certify Entrepreneurs
I) Company Obligations
• Be responsible, including economically, for all the necessary material to operate the franchising
• Only use stationery, invoices and products which are supplied by the FYL and Partners
• Operate the Business in accordance with the Operations Manual provided by FYL
• Use only signs and packaging in connection with the Business that as have been approved by the
FYL
• Maintain the Material used to operate the Franchising to the highest standards and not carry out
any alterations without FYL consent
• Organize quarterly meetings with all the entrepreneurs and a FYL representative
• Use the best efforts to promote and extend the Business
• Not include in the business/ not employee any person who has not completed FYL’s training
course and been selected and approved by FYL
• At the request of FYL provide information as reasonably requested
J) Individual or Representative Entrepreneur
• Be responsible, including economically, for the necessary material to operate the franchising
• Only use stationery, invoices and products which are supplied by the Company and its Partners
• Operate the Business in accordance with the train acquired from the Company
• Use only signs and packaging in connection with the Business that as have been approved by the
Company
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• Maintain all the Material to the highest standards and not carry out any alterations without the
Company consent
• Attend quarterly Company’s meetings
• Use his best efforts to promote and extend the Business
• Operate the Business during hours specified by the Company
• Ensure cleanness and politeness
• To frequent the training course of the Company and be certified by FYL
• At the request of the Company provide information as reasonably requested
• Use only material provided and approved by the Company or FYL
K) Training
FYL will provide training for the:
• Company employees
The Company will provide training for the:
• Entrepreneurs
L) Management Charge
• The entrepreneur shall pay a Management Charge of gross turnover on monthly sales to FYL
• The Management Charge is to be paid within two weeks of the end of every month with interest
of 10% per annum on late payments
M) Accounting Records
The Entrepreneur shall:
• Maintain records of gross turnover and submit a statement of gross turnover with the
Management Charge in the form specified in the Operations Manual
• Maintain all records needed to verify the gross turnover for not less than an agreed quantity
• Allow representatives of the FYL to monitor and audit Entrepreneur records
• Supply and be transparent to the Company with all the necessary information
N) Advertising
• The Company shall spend a minimum budget per year on advertising in the franchising territory
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• All advertising is to be approved by FYL and by the Company
• FYL shall spend not less than a minimum budget per year on national advertising
O) Insurance
• The Company shall take out with a reputable insurance company all such insurance cover
relating to the Franchise Business as the FYL shall reasonably require
P) Sale of the Business
• The Entrepreneur shall have no right to transfer the franchise without the Company or FYL
consent
• The Company and FYL shall consent to a transfer provided that:
− The Entrepreneur meets the Company minimum standards
− Payment of the costs of selection and training are made
− There are no subsisting infractions of this Agreement
Q) Non-Competition
Neither the Company nor the entrepreneurs will during the term of the franchise:
• Carry on any other social franchising business
• Use or disclose confidential information for any purpose other than a purpose set out in the
Agreement
R) Termination
FYL may terminate this Agreement if the Company:
• Fails to commence business within three months of execution of the Agreement
• Is in violation of the terms of the Agreement
• Defaults in payment of any amount due to FYL
• Is found to have supplied materially false or misleading information in or supporting the
Entrepreneur application
• Goes into liquidation/bankruptcy or is insolvent
S) Consequences of Termination
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The Company:
• Must cease use of FYL trade name and trade marks and must not thereafter hold itself out as
being part of FYL.
• Shall return to the FYL all manuals literature promotional material letterheads invoices or
anything else which bears the trade name or indicates any association with FYL
• Shall not make use of or disclose any confidential information relating to the system or the
model business
• Shall not compete with FYL
The Entrepreneur:
• Must cease use of FYL and Company trade name and trademarks and must not thereafter hold it
out as being part of FYL or of the Company.
• Shall return to the Company all manuals literature promotional material letterheads invoices or
anything else which bears the trade name or indicates any association with the Company
• Shall not make use of or disclose any confidential information relating to the system or the
model business
• Shall not compete with FYL
T) Entrepreneurs and Companies Guarantee
Company shall indemnify FYL against any violations of the Agreement by the Entrepreneur.
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8. Marketing plan
This segment provides data about market trends and statistics, these last ones are especially
related with CSR in Colombia, the country where FYL prototype is going to be implemented as a CSR
program. Also, this part of the document presents the FYL competitors which includes a briefly
description of them and the characteristics that can be meaningful for FYL.
In addition, there is a SWOT analysis, which presents the strengths, weaknesses, opportunities and
threats for FYL as a new product in the Colombian market. The section also incorporates a
description of FYL as a product and the benefits of the model, the marketing objectives and the
strategies for brand equity and brand access.
Finally, this segment will present information regarding the marketing mix and the calendar of
activities for the 3 year marketing plan of FYL.
8.1. Market trends
Nowadays the CSR has been gaining importance in the political and public spheres around the world.
Regional, national and local governments and international organizations are looking for a planet
with people and companies committed with the sustainability at the economic, social and
environmental levels.
From this perspective the private sector is at this time a relevant actor in the society because of
the new responsibilities acquired thanks to the new socioeconomic and political order. This has its
origins in different facts such as the reformulation of the state and the citizenship and the new
flows of the markets. It means that the state reduces its actions capacity and coverage, and the
companies are called to help the state to fulfill with its obligations related with the satisfaction of
the citizens’ basic needs and primary rights.
Regarding the new flows of the markets, the capitalism as predominant economic system has made
of the big companies and corporations a powerful conglomerate capable of influencing the decision
making processes that guide the dynamic of the economic, political, social and cultural fields.
It is under this scenario that the concept of corporate social responsibility (CSR) gains importance,
because in a deeper way it talks about the role of the companies in the societies and the capability
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of them to respond to the economic, environmental and social needs by making strategic decisions
and execute strategic actions.
That is why the CSR has become in a trend associated to the companies’ strategies, but also it is
interpreted as a fashion thing, which could be one of the causes related to the mistakes of the
companies at the moment to understand what CSR is and what its implications are. In this line it is
possible to think that there is a huge abyss between what a socially responsible company is and
practices of social responsibility, especially because the last ones most of the times are associated
to philanthropy and charity actions, programs or economic investments that are not sustainable and
do not correspond with the logic of the businesses that are supporting that kind of actions.
However, independently of the understanding of the CSR concept, the market state, the exposure
and the global visibility have influenced the companies driving them to the CSR road. This has
impacted them generating more conscious about the necessity of doing social contracts able to
balance economic, social and environmental expectations associated to the stakeholders, which
started to be more demanding about the performance of the companies and the way that these
contribute to the development of the societies.
From this perspective “corporations, if they will remain successful in the marketplace, must adopt
and make congruent and contiguous with their strategies, the well-being of the societies within
which they operate. Thus, previously governmental concerns of sustainable development,
education, environmental protection, and public health, are the concerns of business as well for
this is market-building at its most essential and the assurance of ongoing consumption, competitive
advantage, and profitability”.
8.1.1 CSR market trends in Latin America
According to Wayne Visser (82) the CSR in Latin America is the least covered of the developing
country regions, with the focus mainly on Argentina, Brazil, México, Nicaragua and Venezuela.
Additionally, it has been influenced by the socio-economic and political conditions, which have
impacted the way that CSR practices are being conceptualized and implemented in the region.
For the Latin American context the CSR is a very good opportunity to face the challenges associated
to poverty, corruption, environmental issues, malnutrition, economic stagnation and gender
equality, among others.
However, most of CSR activities and programs do not promote
sustainability and are more considered an expense than an investment. In spite of that the CSR
trend is increasing in the region and by 2004 there were more than 1000 Latin American companies
associated to EMPRESA (a CSR network which covers this geographical area), 300 were members of
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the World Business Council for Sustainable Development and 118 signed up the United Nations
Global Compact.
In addition, Araya’s (81) survey of CSR reporting among the top 250 companies in Latin America also
gives some indication of practices in the region. Overall, 34% of the top companies publish
sustainability information in a separate report, the anual report, or both, mostly from the energy
and natural resources sectors. The anual report is the more common format (27%, versus 16% using
separate reports), with Brazilian companies being the most likely to report (43% disclose
sustainability information in annual reports and 22%in sustainability reports), as compared with
Mexico (33% and 25%) and Chile (22% and 16%).
8.1.2. CSR market trends in Colombia
Nowadays in Colombia, the development of activities related to CSR is increasing, especially due to
the presence of international companies and the strengthening and expansion of the national ones –
inside the country and abroad-.
Also, the major boost of the CSR industry has been stronger in the last decade. Several marketing
studies, consultancies, international finance, congresses among other activities have had a
significant impact by creating awareness about the topic in the private sector. Additionally, the
presence of the CSR in the mass media regarding the social commitment of the companies has been
promoting and increasing the consciousness in the general public about the role of the companies in
the society. Headlines such as “Experiencias de responsabilidad social son discutidas en Cartagena”
and “Primer Foro Internacional Colombia Responsable sobre Responsabilidad social y Desarrollo
empresarial” are examples of the presence of the CSR in the national media.
In addition, it is important to mention the effort of different business associations –such as
Asociación Nacional de Empresarios de Colombia (ANDI) (66) and ACOPI- and chambers of commerce
to identify what are the benefits of CSR for the companies and the economic impact of CSR
implementation.
Likewise, it is relevant to mention that the most of CSR initiatives and programs just present
quantitative data and a balance sheet of the economic investment, for example number of schools
built, donations, scholarships awarded and infrastructure’s costs, among others. But this does not
provide, necessarily, enough information to know how the company’s performance was and if it was
successful according to the objectives established and stakeholder’s expectations.
In fact, the Colombian companies which have CSR initiatives show little development in the
capability for disclosure information. It means that the interventions done by the companies do not
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notify properly the impacts of the actions implemented and if they transformed the issues that
wanted to resolve. Also, the companies usually do not report if the conditions that generate the
problems were changed or modified in some way by the mentioned actions.
Furthermore, there are not reported data related to the sustainability of the activities, which
makes difficult to identify the feasibility (in the long term) of the initiatives and if they satisfy the
sustainability criteria and have the resources required to achieve the expected social
transformation. This makes sense, starting from the principle that the CSR goes beyond of a simple
philanthropic collaboration and hopes to impact positively a community at different levels.
But in order to be clearer about the type of initiatives, CSR investments and impacts in the
business, would be interesting to see more in detail the statistics provided by the Asociación
Nacional de Empresarios de Colombia (ANDI) (66), which is the organization responsible for the CSR
Survey 2009-2010 that covered 242 companies - with incomes of COL $102.8 billion- of all sectors
and regions in Colombia.
•
•
67% of the polled companies have a CSR policy and the 60% of them has a specific position
responsible for CSR issues.
In 2009 the companies invested in CSR 2,5% of their sales.
Figure 29: Barriers for CSR Development
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Figure 30: Main CSR impacts in the companies
Figure 31:Percentage of activities developed by stakeholders
8.2. FYL’s competitors
After the market research, we identified some companies that can be considered as direct
competitors for FYL. These companies address specifically CSR and sustainability issues; all of them
operate as consultants –with multidisciplinary teams- and some of them as projects operators. A
briefly description of the companies will be presented in the Figure 32, which has information about
what they do and their main focus.
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Figure 32: Description of the Companies´services
Regarding the chart, it is important to mention that one of the most distinguished is AxisRSE who is
covering CSR issues of very well recognized companies at national and international level from
different sectors -food and beverage, banking, pharma, education, energy, among others-. The
other companies already have been developing projects with Colombian companies but do not have
the same visibility and coverage as AxisRSE. Regarding this company, the competitive advantage or
FYL is related with the innovation of the social franchise as a high quality CSR program and the
penetration price, which is relatively lower than the competitors’ ones.
Following AxisRSE, we found ComprometeRSE. This program of the Colombian Confederation of
Chambers of Commerce and the Interamerican Development Bank is more focused in working with
small and medium enterprises, which are not our main target. However, ComprometeRSE is already
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FYL’s competitor in the sense that they already are implementing CSR models in Colombia and could
be seen as a good substitute CSR service supplier for big national companies and international ones.
Regarding Symbiosis and Enlaza, these two companies might be are those who can offer a service
very similar to FYL. Both are focused on CSR projects or programs oriented to promote local
development in a sustainable way. However, these companies are still young in the market and are
not covering a significant part of the sector as AxisRSE.
8.3. SWOT Analysis
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Figure 33: Swot Analysis
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8.4. Product
Name: Feed Your Learning
Description:
Figure 34: Product Description
8.5. Benefits of the product
Feed Your Learning is a franchise model for CSR departments that goes beyond charity and helps the
company to assume its role of corporate citizenship because:
• FYL contributes to strength social fabric.
• FYL does not create economic dependency.
• It is a sustainable program.
• FYL is related with the core business of the company.
• FYL establishes agreements that guarantee that your company is going to supply the franchises
you are paying for.
• FYL contribute to achieve the goals related with your CSR strategy.
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• You, as a company, can help your stakeholders (in this case the community) and generate more
engagement.
• The company improves reputation and status in the market.
• The company has not to be worried about to run the social franchise. FYL is responsible for doing
it.
• The company is contributing to achieve the Millennium Development Goals because FYL is a
social franchise model that tackles issues such as poverty, hunger and education.
•
The company is promoting community development.
• The company is going to have tangible and measurable results which can be included in the
annual sustainability reports.
8.6. Objectives and strategies
8.6.1. Objectives
• By the end of the first year of operations be recognized by our potential clients and CSR
community as an option for CSR investment.
• Make incursion in the Colombian market selling the franchise to 9 companies by the third year of
operations.
• Implement FYL model in at least 3 cities (Cali, Medellín and Bogotá) by the third year of
operations.
8.6.2. Strategies
Brand equity
Brand access/go to market
• Create brand image as one of the best
options for CSR investment through the
promotion and strategic presentation of FYL.
• Develop the marketing channels in order to
promote de product, generate options to sell
it and position it in the market.
• Get 4% of the market share (of the 242
companies polled by the ANDI) through the
elements of the marketing mix associated to
price strategy and promotion.
• Visible FYL through a program of
permanent merchandising in the CSR
profession.
Figure 35: Marketing Strategies
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8.7. FYL Marketing Mix
The following chart presents the way that the tools of the company have been organized in order to
influence in the market with the FYL model.
In the chart the reader will can identify the tools that apply to a specific sales product, the
mechanisms to distribute it to the customers, the promotional activities and the way that the price
is going to be set for penetrating the market.
Figure 36: Marketing Mix
8.8. Calendar of marketing activities
In the following diagram will be presented the activities of the three year FYL’s marketing plan.
This chart also includes the estimated budget for each activity and the expected time when they
should be developed.
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Figure37: Calendar of Activities
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9. Social Impacts
In this section the social impacts of FYL will be defined and explained. Before establishing the
objectives and indicators and the goals of the project it is important to define what is a social
impact. The first dispute faced when establishing the results of a social franchise is what impact
really means and moreover what is the difference between social impacts and outcomes. In some
projects you may see outcomes when referring to social impacts and vice versa, but there are
differences between both terms.
Social Impacts relates to: “broader or longer term effects which can be planned and positive and to
which the organization has ‘directly or indirectly’ contributed”, mean while outcome is define as:
“changes, benefits, learning and other effects that result from what the project or organization
makes, offers or provides”. (12)
It is also very important when defining the social impacts to understand what the benefits of
establishing them are:
• Faster and more uncomplicated expansion of projects, because of better coordination and more
resources.
• Consistent appearance of the system and of individual units facilitates the creation of
reputation, trust and system awareness.
• Network benefits, such as public support due to backup of large network, systematic know-how
transfer among partners and benefits through economies of scale and scope.
• Better control of agents and their quality.
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9.1. Objectives and Goals
As professor Muhammad Yunus said in his book “Creating a World without Poverty - Social Business
and the Future of Capitalism”: “Business objective will be to overcome poverty or one or more
problems (such as education, health, technology access, and environment) which threaten people
and society; not profit maximization”. (13)
It is important to understand that objective is an end that can be reasonably achieved within an
expected timeframe and with available resources. Setting clear objectives can be seen as a tool to
assist the planning and strategic activities of an organization. They serve as the basis for policy and
performance appraisals. (3)
FYL has developed and define a main objective and a series of goals that are align with the core
purpose of our social franchise
Main Objective:
• To enable community members to become entrepreneurs, through the social franchise, providing
an efficient and high quality service, not only allowing them to become economically sustainable by
themselves but most importantly helping the community to develop.
Improve indicators of education within the community.
Develop better standards of nutrition among children, youth and old in Cali, Colombia.
Improve education rate.
Generate higher rates of income for the community.
Create an atmosphere of prosperity among inhabitants of the community.
To tackle other communities in a previous established period of time.
To go from local to global, and start a “social trend”.
To developed and efficient model, providing good results to the client (companies) and
beneficiaries.
Mobilize the private sector towards social activities, increasing the number of social franchises.
To develop a rapid expansion, making FYL an attractive mechanism to deliver services and
products in developing zones.
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9.2. Tools and Indicators
According to the DAC Glossary of Key Terms in Evaluation 2002 (14): an indicator is “A quantitative
or qualitative factor or variable that provides a simple and reliable means to measure achievement,
to reflect changes connected to an intervention, or to help assess the performance of a
development actor”. It is important while developing FYL, to come up with a series of indicators
and tools as shown in Figure 38 to determine the results obtain when the project is already
implemented.
Figure 38: Tools and Indicators
• Social Impacts Indicators
% of entrepreneurs trained
10 entrepreneurs trained and working, by project implemented, in this case with Unilever in
a period of 3 years.
Monthly income the entrepreneurs gain
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number of educational courses offered
% of products sold in a month
70 combos by month sell by the entrepreneur
% of the community benefiting from the program
Number of activities the community has planned since implemented FYL
Average of nutritional facts
Number of other communities that recognize FYL even though it’s not implemented in theirs.
A satisfaction survey every 6 months to the community
A survey every 6 months to the companies involucrate
A yearly interview to the entrepreneur
9.3. Limitations
When going through the process of establishing goals and objectives and defining the social impact
indicators, a series of limitations are encountered.
A) Social Franchise is not a common denomination. Even though there is an increasing trend
towards social business, social franchises are not yet very well known. To might lead to companies
or beneficiaries to misunderstand the concept and therefore lead to reluctance towards using this
business tool.
B) Sometimes Franchisee’s goals might differ from the ones pursued by the franchisor. Franchisees
might have an opportunistically behaviour rather than intrinsic motivation. Therefore, when
choosing the possible entrepreneur, FYL must deeply analyze all the options and be attach to the
previous established profile.
C) Punctual difficulties in monitoring and evaluating, again because quantitative data in poor
communities of developing countries it’s not always available.
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10. Franchise for Development (F4D)
In this chapter the author’s project will provide the reader a description of Franchise For
Development (F4D), the Company operating FYL Social Franchise Model.
F4D is a master social franchise with an ownership shared between 4 found members: Sofia Alves Da
Silva, Laura Maria Pichardo, Carolina Sanabria and Jholany Avila. The four women combine their
different experience, capabilities acquired in different sectors and business functions, with an
extensive research on the most successful social franchise models and similar, to turn F4D the most
high performance Master social franchise in the world.
F4D head quarters are currently located in Cali. The benefits of its location are, as it has been
understood by the found members, the proximity between F4D headquarters with first’s franchises
locations.
F4D is a very recent project; it was created in March 2011, by women that shared a life objectiveto do business while tackling societal problems. F4D products and services are focused in social
concerns of our society, as presented before, such as the FYL focus: malnutrition and education. To
build a better society represents the main objective of why F4D was created. That’s why, the high
performance business strategy of F4D will always be built in sustainable value for everyone
involved.
F4D expected situation is, by the next year, 2012, work with a two portfolio companies. After that,
future perspectives are positive. F4D collaborators aim to, by 2014, triplicate the number of
companies working with, as well, to impact very positively all the involved people, meaning
entrepreneurs, community and suppliers. Also, the perspectives for the future are focused on
worldwide expansion. F4D owners believe that the success model of the social franchising of the
company will improve life quality of many now and much more in the future.
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10.1. Mission and Vision of F4D Company
FYL was constituted with a clear mission and a vision from the beginning and will always work
towards it. These are the foundation of our project.
Figure 39: Mision and Vision of F4D
10.2. F4D Organization Structure
Figure 40: F4D Organizational Structure
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10.3. Team Members
LAURA PICHARDO GARCÍA- Logistics Director
Background
Graduate of Business Administration. Studying for the past 3 years about social
issues, social entrepreneurship and sustainable development. Have worked in
Dominican Republic for several years in the area of communication with Europe
and in the development of different Summits towards International Causes. Also,
100% involucrate in the Summit “Reconstrucción por Haití” in 2010.
Current Positions
Trying to focus on her passion to help developing societies to become self sufficient, have started
F4D with other members in Cali, Colombia and developing a successful Social Franchise model to
replicate in other cities of Colombia and other Countries such as Venezuela and Dominican Republic.
Passion
Passionate about Sustainable Responsibility and Development and always motivated to come up with
innovative solutions for poor people in developing countries. Advocate to create conscious among
citizens in her country on the subject of sustainability not only in social terms but also
environmentally speaking. With a burning need of inspire others into achieve a better world,
promoting social business as a vehicle to help fill the gap between develop and developing
countries.
Current Activities
In her work as the logistics director of F4D, she has organized and manages the sales of the
Franchise, do the agreements and coordinate the supply to every entrepreneur making sure all
products are available. Established strong relations with the parties involved in the purchase of the
Franchise and always managing all the operations since the acquisition of the franchise to supply
chain, possible sales and all operations once the partnership is build. She likes you give lectures,
with the other members of FYL, to others and make them understand what a social franchise is and
what benefits you can take from them.
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CAROLINA SANABRIA BENITEZ- Administrative Director
Background
Carolina starts her education with a degree in Business Administration and a
specialization in Management and Marketing. Working for over three years in
the areas of Social Responsibility and Sustainable Development, focused on
Strategic Alliances, Project Coordination, Mapping and leveraging of funds,
among others functions. After that experience she aspires for an International
Master in Sustainable Development and Corporate Responsibility at EOI Business
School in Madrid.
Current Position
Nowadays Carolina is living in Cali, Colombia developing a Social Master Franchise Operator
Enterprise. Her current position is Administrative Director in F4D. She is 100% dedicated to this
social project believing it could be replicated in her Country of origin, Venezuela.
Current Activities
As Administrative Director she is in charge of all Human Resources and Financial Affairs. She directs
the internal and external legal affairs with the help of Outsource Consultant. She helps to the
establishment of each Social Franchise and the engagement with F4D Stakeholders.
Passion
Her professional interest is directed toward the area of Social Responsibility and Sustainable
Development, witch as is her concern the choices we take and the impact we have in the future
growth and human development. FYL´s project represent for her a great ambition. Her vision about
F4D is developing the Model with a scope that will cover all Latino America, building a network
between her partners that will impact as many communities as possible. Creating hundreds of Social
entrepreneurs everywhere F4D´s Model achieves to go.
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SOFIA ALVES DA SILVA- Project Director
Background
Sofia graduated in Marketing and Enterprise Communication with and
specialization in Brand Management. Working for two years in a Communication
Design Department, coordinating and managing brands projects mostly
franchised brands, as a project manager. In 2010, Sofia join’s the International
Master in Sustainable Development and Corporate Sustainability at EOI- Madrid.
Passion
Her passion goes directly with the Corporate Social Responsibility area and the integration issue of
inclusion sustainability in society, specifically through brands products, services and consumer
awareness. Consumers and brands are an extreme force of change and with a lot of potential to be
used regarding the area in focus. To Sofia F4D represents everything mentioned before. The
potential power of creating partnerships to empower disadvantage groups of our society, by joining
already existing successful brands and potential local resources that work together on different
ways of doing business.
Current Position
Project Director at F4D.
Current Activities
Insitus representative, responsible for all entrepreneurs involved on the project and related
matters. Also, covering the entire monitor and control process, as well the measuring impact
process and the reporting stage.
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JHOLANY PAOLA ÁVILA BLANCO- Corporate Affairs Director
Background
Jholany has a degree in Communication and Journalism. She had worked
as communications coordinator and project manager of social and
commercial projects.
After this experienced she joined to the
International Master International Master in Sustainable Development and
Corporate Sustainability at EOI- Madrid
Current positions
Since she started working in Colombia has been institutional journalist of the International Center of
Tropical Agriculture; Communications Coordinator of Human City Foundation; Content Coordinator
of Nexura and Southeast Regional Coordinator of the project Social Appropriation of ICT at the
Autónoma de Occidente University.
Passion
Passionate about connecting people and involving them in collaborative processes to tackle social
issues, promoting the importance of communication at different levels to contribute to achieve
common goals and create strong feelings of social responsibility, compromise and solidarity.
Current activities
At the present time Jholany is working in F4D, where she has been developing a social franchise
model called FYL. This model represents for her a real opportunity to create social value and
promote the engagement of the private sector to help to solve social issues and contribute to the
human sustainable development.
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11. Financial Plan
The Financial Plan defines all of the various types of expenses that a project will incur (labor,
equipment, materials and administration costs) along with an estimation of the value of each
expense. The Financial Plan also summarizes the total expense to be incurred across the project
and this total expense becomes the project budget. As part of the Financial Planning exercise, a
schedule is provided which states the amount of money needed during each stage of the project.
11.1. Financial Aspects
11.1.1. Capital of the Enterprise
F4D has been constituted with an Initial Capital of 100.000 US$. This amount has been given by its 4
founders and owner, in equal shares. Setting the value of a share of the company in 400 US$, each
of the Directors own 250 shares of the company.
11.1.2. Assets
The operation of F4D does not require the acquisition of many assets in the first three years. The
team buys a scanner/printer the first year and then acquires laptops the second year and 2
computer the third year.
11.1.3. Incomes
A) Forecasted Sales of FYL
The sales forecast in the following table is based on conservative estimates on the number of FYL
Models that can be sold to the Companies in Colombia. Sales are projected to rise from two (2) in
2012 to five (5) in 2014. (See Table 8)
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2012
Companies buying FYL Model
Entrepreneurs adquiring Social Franchise
Variation
%
2013
Variation
%
2014
2
1,5
3
1,7
5
20
1,5
30
1,7
50
Table 8: Forecasted Sales of FYL
B) Prices of the FYL Model and the Social Franchise operational service
The price pay by a company interested in FYL´s Model is divided in to the acquisition of the Model
and then an annual fee for the operational management of the Social Franchise Program of the
Company. As strategy during the first 3 years of operations, the price of the FYL´s Model stays the
same in 30.000 US$ but the annual fee will raise from 10.000 US$ the year 2012 to 10.404 US$ the
year 2014. This last raise will be given by the forecasted annual inflation of 0,2%, taking into
account that this fee is for the service. The cost of the Manual and the first year fee are paid when
singing the contract. All the Social Franchise Carts that the Company requires to open are paid in
advance in order for F4D to coordinate with the suppliers.
Regarding the Entrepreneur, he/she pays also a fee for the operational management service of the
Franchise and the costs associated to the Franchise Cart (Infrastructure, supplies, maintenance and
capacity building). This fee is $ 270 per month for a period of three years, being affected by the
same inflation of the Country. The entrepreneurs have a term of 30 days to pay the supplies
required per month.
11.1.4. Costs/ Expenditures
A) Fixed costs
The fixes costs associated to the operation of F4D are integrated by the rent of a small office lease
the first year and then a contract from 2013-2015 for a bigger office of 700 US$ per month. In the
fixed costs are also included the needed services and other expenses related to the business
operation of F4D. As it is shown in Table 9, the total of fixed costs have increased 3,21 times from
year 2012 to 2014.
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2012
Office´s Rent
2013
2014
$1.800,00
$8.400,00
$8.400,00
Lighting service
$720,00
$960,00
$1.080,00
Water service
$720,00
$840,00
$960,00
Communication service
$600,00
$840,00
$960,00
Office expenses
$240,00
$720,00
$1.200,00
Torso expenses
$600,00
$1.200,00
$2.400,00
$4.680,00
$12.960,00
$15.000,00
Fixed Costs Total
3,21
Table 9: Fixed Costs of operations
B) Variable costs
The following table (Table 10) describes each cost of this aspect. These costs include all of those
expenses related to the service given to the Entrepreneur´s Franchise. They include the expenses to
build the Cart, the food supplies, the maintenance of the Cart and all other supplies needed in the
Franchise as they are the cloth for the entrepreneur, the kitchen tools, etc. F4D follows a payment
of 50%: 15 days after the delivery and 50% 30 days after the delivery. This politic may be negotiable
according the politics of the supplier.
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EntreParces Franchise Costs
Supply/ Supplier
Description
Cost
Food Cart
Local Enterprise
Cart production
Local Transport
Transfer of Crane Platform type
Agency
Design menu lay-out
Agency
Full color vinyl printing and instalacion
Local GAS Company
Gas instalation
1.385,54
421,69
22,27
135,19
42,17
Total cost of building the Cart
Start Up KIT Tools
2.006,86
Extinguishers, knives, funnels, food display,
cutting board, tupperwares, timer, gas
cylinder, napkin holder, wastebaskets,
cleaning equipment, plastic chair
581,93
Jackets, Aprons, cloths
354,03
Uniforms (Agency)
Starup Legal,finantial and operational Services
Brand Registration
Consultants
Monitoring and Trainning
792,9
602,41
Legal permits
250,00
Contable services (3 year equivalent)
280,00
Nutritional services (3 year equivalent)
140,00
Total cost of start-up services
2.065,31
Food Products
Unilever
15.75 Kgr Maizena Doughnuts/Buñuelos Mix
45,00
Alqueria (Local Company)
11.84 Kgr White Cheese
29,60
Postobon (Local Company)
11.84 Lt Water
Unilever
5.4 Kgr Maizena Milkshake
36,00
Alqueria (Local Company)
18.24 Kgr Powder Milk
48,00
Postobon (Local Company)
60 Ice Bags units
Total cost of food products
TOTAL COST OF CART´S START-UP
4,26
30,00
192,86
5.200,99
Table 10: Variable Costs for FYL
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C) Salaries and wages
•
Remuneration: F4D will pay it staff by a systematic band model in which the personnel are paid
according to its position. The Table xxx shows the base salary the enterprise pays the year 2012.
These salaries will be adjusted through the years by inflation.
Directors
$18.360,00 $238.680,00
Sales Assistants
$600,00
$7.800,00
Maintenance/ support
$300,00
$3.600,00
$1.400,00
Per contract
Consultants
Table 11: Salaries and Wages
•
Personnel Plan for the Enterprise: Expecting FYL´s business to grow in sales and to expand
during the period 2012 and 2014, the Human Resources of the Enterprise have forecasted a needed
growth in the staff from 6 Office Staff to 10 by the end of the year 2014. The following personnel
plan details HHRR´s plan. (See table 12)
Personnel Planning
Human Resources
2012
2013
2014
Administrative Director
1
1
1
Logistics Director
1
1
1
Project Director
1
1
1
Corporate Affairs Directors
1
1
1
Sales Assistant
1
2
5
Maintenance/support
1
2
3
Total Office Staff
6
8
11
Legal Consultant
1
1
1
Nutritionist Consultant
1
1
1
Total outsourcing
2
2
2
Table 12: Personnel Planning
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C) Other Costs
Regarding other costs, it is shown in table 13 all contemplated expenses that the constitution,
design, establishment and positioning of FYL´s model requires for the first three years of
operations.
2012
Web Page
2013
2014
$1.000,00
$300,00
$300,00
$400,00
$0,00
$0,00
Execution of Marketing Plan
$2.500,00
$1.000,00
$1.000,00
Software
$1.000,00
$0,00
$0,00
$200,00
$0,00
$0,00
$7.112,00
$3.313,00
$3.314,00
Corporate Image Design
Legal Constitution
Costs Total
Table 13: Other Costs
11.2. Statements of the Enterprise
As it is shown in the next tables (table 14 and 15), F4D starts with sales and deduct cost of goods
sold to arrive at gross profit of 11.839 US$ to enjoy a gross profit margin 6,25 percent the first year.
This margin is expected to grow year by year and place itself at 15,56% by the end of 2014. The
tables show relatively heavy expenses incurred in salaries and variable costs, which as we show
above are mainly base on the start-up of each Social Franchise.
In the Balance sheet is shown that F4D´s operations relay in a high amount of Current Assets and by
the third year have not increase its Current Liabilities by obtaining loans. It is expected that by the
4th year of operations, the enterprise will consider getting new Liabilities.
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FYL
Income Statement Data
(In US dollars)
2012
2013
2014
$104.160
$157.565
$211.888
$84.781
$226.367
$396.884
$188.941
$383.931
$608.773
$4.680
$12.960
$15.000
Incomes
Incomes for FYL model
Operation incomes
Total incomes
Costs/ Expenditures
Fixed costs
Salaries and wages
$71.200
$86.496
$125.760
Variable costs
$86.447
$179.475
$296.020
Other (sell costs, etc.)
Total costs
Profits before taxes
Depreciation and amortization
$5.100
$1.300
$1.300
$167.427
$280.231
$438.079
$21.514
$103.700
$170.693
-$12
-$453
-$1.501
Operating profits
$21.526
$104.153
$172.194
Net profits
$21.526
$104.153
$172.194
ISR- Taxes (35%)
$7.534
$36.454
$60.268
PTU- Worker Utilities (10%)
$2.153
$10.415
$17.219
Gross profit
$11.839
$57.284
$94.707
6,27%
14,92%
15,56%
Net profits margin:
Table 14: Income Statement
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FYL
Balance Sheet
(In US dollars)
2012
2013
2014
Cash and Banks
$95.906
$132.382
$196.361
Clients
$15.745
$31.994
$50.731
$111.651
$164.376
$247.092
Current Assets
Total Current Assets
Fixed Assets
Scanner/Printer
Computers and Laptops
Accumulated Depreciation
$200
$200
$200
$0
$5.000
$6.200
-$12
-$453
-$1.501
Fixed Assets
$188
$4.747
$4.899
Total Assets
$111.839
$169.123
$251.991
$0
$0
$0
$0
$0
$0
$100.000
$100.000
$100.000
$0
$11.839
$57.284
$11.839
$57.284
$94.707
Total Capital Stock
$111.839
$169.123
$251.991
Liabilities + Capital
$111.839
$169.123
$251.991
Current Liabilities
Long term Liabilities
Total Liabilities
Shareholders Equity
Capital
Last year Operating results
Operating Results
Table 15: Balance Sheet
11.2.1 Financial Analysis
A) Return On Assets – ROA
The ROA ratio offers to analyze the project regarding the efficiency of F4D´s management of its
total assets to generate earnings. Since F4D is a Social Enterprise, the return on investment is
expected to be in a long term so the earnings obtain will be invested the next year, at least for the
first 5 years. The ROA of F4D operations are shown in table 16.
B) Return On Equity - ROE
Measuring the rate of return on the ownership common stocks and as F4D efficiency at generating
profits from net assets, the results show a well the enterprise may use the investment funds to
generate earnings growth in the next three years. With a ROE of 19,25% the first year and rising to
68,33% by 2014. These results are explained by the self-funding operational business created by
http://www.eoi.es
115
F4D, by not requiring additional debt or equity investments. This is why the leverage ratio is 1 all
three years.
ROA
19,25%
61,58%
68,33%
ROE
19,25%
61,58%
68,33%
1,00
1,00
1,00
Leverage
Table 16: Financial Ratios
http://www.eoi.es
116
12. Conclusions
After the development of this project and the pertinent research to support it, we have reached the
following conclusions associated to the social franchise model as a potential replicable solution to
tackle social issues at local levels worldwide:
•
We conclude that there exist specific regions around the world in urgent need to find effective
solutions to the current problems affecting them. (Latin America and Colombia)
•
After developed all the steps to formulate FYL model, we identified that the social franchise
has the potential to become a successful strategy because of its systematic replication concept
and the flexibility to adjust or customized to the local needs in any community.
•
Social franchise is a tried and tested model that can be embedded in CSR strategies of any
company resulting in the empowerment of individuals.
•
The authors of the project have identified through the research that frequently social solutions
are not focused on transforming individuals in the community into actors of change.
•
FYL, as a social franchise model, guarantees that the companies are not doing philanthropy or
charity; they are demonstrating commitment and promoting sustainability.
•
FYL’s differentiation factor is that brings the power of the private sector and disadvantage
people to work together in order to include them as an active participants in local economies.
•
The supply chain structure of the social franchise model has been designed in order that client
companies become suppliers. In the long term the success of FYL will be associated to the
complementarity of the companies in supplying social franchises. This complementation will
bring cost reductions and efficiency to the Supply Chain concluding on better results, through
mutual cooperation.
•
Another success factor of FYL is the fact that the model is backed up by an organizational
structure that guarantees the synergy of all the actors involved.
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117
•
Because of the Company Structure, the project manager works in ground where the project is
implemented, therefore the phase of monitoring and controlling allows a constant input of
valuable information and feedback on the improvement in the indicators of social impacts.
•
Monitoring not only brings success to the model by verifying the quality of the products offered
and the performance of the entrepreneur, but if the results don’t comply with the established
standards, measures are taken.
•
From the marketing point of view, FYL gives the client companies a huge opportunity to reach
market share, because through the social franchise the companies will have permanent
presence in 17 neighbourhoods that cover different socioeconomic strata, especially low and
medium-low ones.
•
The increasing number of companies interested in CSR activities in the Colombian market
creates a good environment for the development of social franchises as CSR programs.
•
The social franchise model offers risk reduction associated to work with disadvantage people,
by having a legal framework that guarantees the commitment between all parties involved.
•
The financial system of FYL model has been structured to be economically sustainable and also
to ensure the independence of the franchisee.
As it has been presented in the previous statements the FYL model brings solutions to social
problems creating mainstreaming in companies, capacity building and stakeholder engagement.
As Muhammad Yunus (13) says “we have created a society that does not allow opportunities to those
people to take care of themselves because we have denied them those opportunities”. FYL is an
effective solution to break the cycle and makes society understand the value of inclusiveness.
http://www.eoi.es
118
Figures
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
Figure
1: Dimensions and Indicators of the MPI (40)
2: Gapminder world 2007 (70)
3: FYL scheme
4: FYL a tool of information and replication
5: Venezuela’s food basket (36)
6: Illiteracy in Dominican Republic (4)
7: Mapping malnutrition in Colombia (45)
8: Malnutrition in cities of Dominican Republic (11)
9: Nutritional facts in Colombia (50)
10: National Company Profile
11: Multinational Company Profile
12: Entrepreneur Profile
13: Aura Elena
14: Community Primary Profile
15: Community Secondary Profile
16: Daniel Lopez
17: Ana María Dominguez
18: FYL Stakeholders
19: Model’s Phases
20: Milkshakes
21: Buñuelos
22: Buñuelo Mix
23: Milkshake Mix
24: How to cook buñuelos
25: “Entre Parces” Cart
26: Supply’s Logistic
27: Replication Strategies
28: Commitment between parties
29: Barriers for CSR Development
30: Main CSR Development
31: Percentage of activities developed by Stakeholders
32: Description of the Companie’s services
33: SWOT analysis
34: Product Description
35: Marketing Strategies
36: Marketing Mix
37: Calendar of activities
38: Tools and Indicators
39: Mission and Vision of F4D
40: F4D Organization structure
http://www.eoi.es
119
Tables
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
1: National information of the products
2: Minimum dietary consumption per age
3: Poor population in Venezuela (33)
4: Coeficient rate in Venezuela (33)
5: Malnutrition in Caracas (38)
6: Nutritional Diagnosis in Valencia (39)
7: Poverty in Cali
8: Forecasted sales
9: Fixed costs of operations
10: Variable costs of FYL
11: Salaries and wages
12: Personnel planning
13: Other costs
14: Income statement
15: Balance sheet
16: Financial ratios
http://www.eoi.es
120
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