COST204: COOPERATIVE ENTERPRISE DEVELOPMENT BUSINESS MODEL: rationale of how an organization

creates, delivers, and captures value.

REVIEW ON COOPERATIVES 1. Market Need
 What is a Cooperative? 2. Customer Segments
 Middle-Way Concept (pursuing balance 3. Unique Value Proposition
between social and economic goals) 4. Solution
5. Competition
ENTERPRISE DEVELOPMENT 6. Revenue Model
 What is Enterprise Development? 7. Cost Structure
 Cooperatives should aim for Sustainable 8. Key Metrics
Enterprise Development 9. Channel
o Economic Sustainability (Profit)
o Social Sustainability (People)  Steps in assessing Business Ideas:
o Ecological Sustainability (Planet) o Form a project committee
 Components of Coop Enterprise Development o Define a business idea
o Identifying Potential Business o Identify alternative business models
Concept/Idea o Initial informal assessment
o Formulating CEDP o Conduct formal investigation through
o Doing capacity-building activities feasibility studies
o Providing Asset and Physical
Infrastructures CHOOSING THE MOST SUSTAINABLE BUSINESS IDEA
o Establishing PPP  What is Sustainability? Should innovate, adopt
environmentally-friendly technologies, develop
COOPERATIVE ENTREPRENEURSHIP skills & HR, and enhance productivity to remain
 What is Entrepreneurship? competitive in national and international
o Process markets.
o Art  Five Characteristics of Sustainability
o Practice o Market/Economic
o Ability o Resource/Environmental
o Social
CONCEPTUAL FRAMEWORK FOR COOPERATIVE o Legal
ENTERPRISE o Technological
 Member-Level Analysis: Investors, Users,  Prioritization Matrix
Owners, Community Members o Steps:
 Cooperative Enterprise Analysis: must provide  Identify rating scale &
member value proposition (MVP); business criteria (1 highest, 3 lowest)
model exists  Establish criteria weight
o Purpose and MVP (=100%)
o Profit Formula  Create matrix
o Key Resources  Evaluate ideas based on
o Key Processes chosen criteria and weights
o Share Structure  Least total = viable
o Governance option
 System-Level (Macro-environment): interplay
among (1) government; (2) industry; (3) external COOPERATIVE ENTERPRISE DEVELOPMENT PLAN (CEDP):
environment; Coops need to build through: document that describes the enterprise and its strategies
o Participation Chain 1. Executive Summary: summary of each section of
the CEDP; 1st section but accomplished after
o Social Capital
completing all the components; short & concise.
o Identity & Commitment
2. Business Profile: vital info regarding the
o Sustainability
cooperative such as location, contact details,
 Free Rider Problem
size, purpose & objectives
 Horizon Problem
3. Strategic Plan: made to determine the
 Portfolio Problem
sustainable competitive advantage of the coop
 Control Problem
a. Industrial Organization (IO) View:
 Influence Cost Problem
business performance is a function of
industry forces.
 i.PESTEL Analysis (Political, 5. Operational Plan: preparatory steps before
Economic, Social, manufacturing, production, or start of
Technological, operations
Environmental, & Legal) a. Supply & Demand of Product
ii. Porter’s 5 forces model b. Physical Resources
(Threat of New Entrants, c. SIPOC (Suppliers, Inputs, Process,
Threat of Substitution, Buyer Outputs, Customers)
Power, Supplier Power, & 6. Management Plan: how the cooperative
Competitive Rivalry) business will be structured
iii. Porter’s generic strategies 7. Social Development Plan: a plan that focuses on
(Cost-leadership vs enhancing the quality of life; developed to avoid
Differentiation) negative social impacts
1. Stuck in the 8. Risk Management Plan: strategies to prevent or
Middle: the least at least minimize damages and risks (Economic,
profitable firms are Environment, Social, Legal, Technological Risks)
those with 9. Financial Plan
moderate market a. Production Cost before earning
share. WHY? income
Because firms with b. Break-even analysis
high market share c. Working Capital (WC) Requirement
is successful due to d. Start-up Costs
them pursuing e. Profit & Loss Statement
cost-leadership f. Balance Sheet
strategy while
firms with low-
market share
pursues
differentiation or
Niche Strategy
iv. Ansoff’s Growth Strategy
1. Market
Development (new
market, existing
product)
2. Market
Penetration
(existing market,
existing Product)
3. Diversification
(new market, new
product)
4. Product
Development
(existing market,
new product)
b. Resource-based View (RBV)
i. 4 criteria of sustainable
competitive advantage
(valuable, rare, costly/hard
to imitate, non-
substitutable)
ii. Value Chain Analysis
4. Marketing Plan
a. STP of Marketing (3-step framework
of building a marketing plan):
Segmenting, Targeting, Positioning
b. 4 P’s of Marketing Mix: Product, Price,
Promotion, Place