What you will learn in this module
Meaning of business and types of business
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SESSION PLAN |
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Session 1 |
Definition & classification of business |
45 min |
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Session 2 |
Understand business through the MAIR model |
2 hours |
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Session 3 |
Indicators of successful women's cooperative businesses |
2 hours |
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Session 4 |
Understand women's cooperative businesses |
1 hour 30 min |
You can start this session by asking the participants if any of them have started or run a business. Are these businesses successful and currently operational? Invite some of them to share their experiences of successful and unsuccessful businesses. Ask them why they started these businesses, and to explain what is meant by a business.
As participants answer these questions, write key words like investment, profit, extra income, production, technology, wages, costs, etc. on the board. Some key words that participants may produce:
- Activity
- People
- Money
- Transfer
- Exchange
- Marketing
- Management
- Purchasing
- Large quantity
- Investment
- Income minus Expenses = Profit
Then, use the information handout on the concept of business to explain the meaning of business and types of business, using the given examples.
Handout 1: Definition and classification of business
A business involves making an investment or undertaking an activity (manufacturing and selling a product, providing service, etc.) with the aim of earning a profit. When the income is more than the expenditure, the business makes a profit. When the expenditure is greater than the income, it makes a loss. It is necessary to ensure that the cost or expenditure is less than the income i.e. sales money, for the business to be sustainable.
A business is classified into three types according to the nature of the activity:
Manufacturing: This involves the process of production. Examples: making baskets, woodcarvings, fish sauce, textile-weaving, etc.
Trading or selling: Trading businesses involve only selling. Examples: trading in clothes, readymade shirts, selling provisions, etc.
Service: This involves providing and charging users for services. Examples: a telephone booth, beauty parlour, traditional Thai massage, hairdresser, etc.
Group business: This involves one or more of the businesses classified above. Many groups are engaged in trading as well as manufacturing. Some groups make one product and trade in another. Example: a group making herbal sweets also sells items made from water hyacinth by another group.
Ask if any of the participants has started or run a business. Then ask these participants to list examples of successful and unsuccessful businesses on the board under "successful" and "unsuccessful" business.
Ask the participants giving the examples to list the factors in the success or failure of the business, noting key words and ideas on the board under each letter of the acronym MAIR. For instance, "had experience in the business" would be written under A (Ability and Experience). The chart below gives an idea of how this can be done. Don't explain the meaning of the acronym at this stage.
After listing a few examples under each element of the MAIR model, explain participants the meaning of MAIR.
The MAIR model
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M(otivation) |
A(bility/experience) |
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Willingness |
Prior experience |
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I(dea with market) |
R(esources) |
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Product is good |
Mone |
Labour |
To explain the concept, depict the four MAIR factors as the four pillars of a rice house. Explain that like the four walls of the house, all four MAIR pillars are important. Ask the participants to discuss if a business can be successful in the absence of one of the MAIR pillars.
Use the examples on the board to explain how a successful business must have all four MAIR elements while those that are unsuccessful have one or more elements missing.
Use a simple method to pair the participants into groups of four or five people. Select some successful and some unsuccessful businesses from among the examples listed on the board and ask the groups to analyse the success or failure of these businesses using the MAIR model. The key person in each group must know about the business being discussed by that group.
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Successful business: |
Unsuccessful business: |
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Successful business: |
Unsuccessful business: |
The analysis should ideally be carried out using the participants' business experience. In case the participants do not have this or if this is not suitable, then the sal paper manufacture case study in the information handout may be used as an example of a successful business and the sugar palm sweets case study as an example of an unsuccessful business.
Ask each group to develop a role-play on the business they have discussed and present the role-play to the plenary meeting of all the groups.
The role-play must reflect the strengths of the successful business and weaknesses of the unsuccessful business. For instance, an analysis of the case study on sal paper shows that:
- The business is successful with all four MAIR elements.
- The business group also has long-term strategies both at the management and production levels. The group has demonstrated its motivation through innovative methods of obtaining the raw material from different sources.
The analysis of the unsuccessful business (sugar palm sweets) reveals that:
- The women's business group had only two MAIR business elements: a marketable idea and the ability and experience to make the product; they neither had the motivation and determination nor enough raw material.
- Even though the women had the production ability and experience, they could not market their product by convincing their customers about the raw material they were using (sugar palm).
Handout 1: Elements of business
The following four basic elements are required for a business as described by the MAIR model:
The MAIR model can be depicted as a rice house with each pillar representing a particular business aspect
If any of the pillars were to break, the house would fall. Likewise, all the four aspects described above have to be carefully explored and understood before an idea can take shape into a business.
The MAIR model can be used by the entrepreneur to assess a business before starting it or at any stage thereafter, using the questions given below:
Motivation and determination
Ability and experience
Does any member of the group have previous experience of running a small business?
Does any member of the group have experience in the business they want to start?
Does any member have experience in managing a similar business? Can a person able to manage the business be hired locally?
Idea with market
What is the product or service that the group will sell?
Who are the customers?
What customer need does it meet?
Is the product developed, tested if necessary, and does it meet the specified standards? Is it ready for the customers?
What quantity of the product will be produced and sold?
Is it known if the customers will buy it? Has a market survey been conducted, even if informal?
Why will customers prefer this product/service to that supplied by competitors?
Resources needed and their availability
Physical requirements
What is the minimum scale of production for starting the business?
Will that production level ensure enough income for group members?
What resources are needed for this? For example, spell out the need for:
- Premises
- Machinery
- Equipment
- Stock of raw material
- Employees that the group may need
Does the group have any other special training needs and resources to pay for additional training on packaging or for design development?
Financial requirements
What are the cash needs for the first year?
The profit and balance sheet projections?
What will be the unit cost and how has it been calculated?
What targets/standards are built into the proposal?
Utilization of resources?
Efficiency?
Wastage?
Quality maintenance factors
The MAIR model of understanding business
The MAIR model must take into account two additional factors, namely organizational management and business planning, for the activity to be successful.
Organizational management
All legal and organizational requirements must be understood and addressed before starting a business. The following checklist will be useful:
Most grassroots women's groups are informal and unregistered. However in order to qualify for government (CPD) support, they have to become members of registered co-operatives.
Are there any other legal requirements to be met? Such as registrations, food quality marks, etc.
Will the business need an accountant?
What record keeping systems will be used?
Is insurance needed and has it been arranged?
Business planning
A business plan must be prepared at the initial stage of starting an enterprise. We do this in our day-to-day lives. For example, before buying a two-wheeler worth 20 000 Baht, one would plan in advance which model to buy, depending upon the budget or money available.
When large amounts of money are involved, and the success of a business is at stake, it is definitely worthwhile investing time in business planning. Preparing a business plan is the most important step before starting any enterprise.
Handout 2: Analysis of case studies using MAIR model
Case study 1: Sal paper manufacture
The Ban Chumpol Women's Cooperative Group, set up in 1999 in Phitsanulok province has 32 active members who are skilled in making sal paper items. Initially, the women sold only in local markets, but with assistance provided by the CPD, they were later able to market their production in Bangkok and other provinces.
They use raw material from the sal tree. However, in anticipation of greater demand in future, the women are exploring how to use raw material from the banana tree, which is available in abundance.
In the early stages, the group lacked management and accountancy skills, but acquired these after being trained by the CPD. Now, they manage business production and accounts competently, earning profits of about 120 000 Baht in 2002. As a long-term strategy, the group wants to grow the sal trees themselves in order to ensure a timely supply of raw material at competitive rates. The women also plan to use their profits to buy machinery to increase production and, thereby, their income.
One of their business strengths is that their production is made fully with environment-friendly sal. This has enabled the women's group to sell their products not only in Thailand but also to export to the United States, Philippines and Japan where such products are highly valued.
Analyse the case using the MAIR model and elaborate the reasons for its success/failure.
Case study 2: Sweets made with sugar palm
This women's cooperative group started with 100 members making black and white coloured sweets from sugar palm. They learnt the skill from their family members.
Initially, the women were able to sell whatever they produced in the local market. But later, customers were unwilling to pay the price charged because they thought the sweets were made with sugar cane and not with sugar palm. Lacking a quality certificate from the government, the group was unable to convince customers that they were making quality sweets with sugar palm. As a result, their sales fell, stocks piled up and the group found itself without any working capital.
The group now has only 19 members. Obtaining sugar palm is also a problem because of its seasonal availability and price fluctuation. Sugar palm is in great demand for making alcohol. Realizing that the business was not profitable, most members of the group lost interest and dropped out which, in turn, further reduced production and quality.
Analyse the reasons for failure.
Case study 3: Determination and motivation revive a failing business
Somjit Songchona is the leader of the 10-year old Nangao Co-operative Women's Group. At the time of its inception, the chairperson declared she would make a personal donation and obtain a grant from the government. This motivated the women to join.
Beginning with 30 women, the group had to start with a manufacturing activity in order to qualify for the grant. They chose to make fruit-based sweets using different fruits, especially mangoes. The business idea was selected because mangoes were available in bulk and quite cheap in season. The chairperson's donation of about 100 000 Baht was used to construct a work shed.
The group wanted to process the mangoes to add value and make a profit, but did not know how to do this. Moreover, the women had no business experience.
Trained by a government officer to make a delicacy, locally known as 'fruit in syrup', the women's group made a first lot of 80 kg of this sweet. The volume was small enough to be sold fully within their village and give the group a profit. This motivated them to put together more capital and produce a larger volume of about three tonnes.
However, failure in following the production process properly spoilt about three tonnes of the product during manufacture. The women lost a lot of money and also the motivation and interest to continue in the business. As a result, 20 women dropped out. The government officer who had trained the group could not find the reason for the product being spoiled.
The leader of the group then visited another group making the same product where she learned that the porcelain jars used by them should be replaced with plastic jars treated with chemicals. On her return, the leader replaced the thirty porcelain jars with plastic jars at an extra investment of 30 000 Baht at 3 000 Baht per jar. The leader had to make a personal investment in this because the members were not interested in spending any more in the business. She did this without informing her family members because she was scared they would not let her put more money in a losing business.
The business then slowly started recovering and showing profits. The group leader later had the opportunity to attend a seven-day training programme on making fruit sweets at the Agricultural University. This helped to improve the quality and packaging of the group's product. Gaining confidence about the quality of their product, the group were able to extend their sales both within and beyond the province. They have now become a model for other groups who visit them to learn production and marketing techniques.
When asked what made her try again and again and eventually be successful, the group leader replied that she personally felt committed to the activity and did not want to abandon it without trying to achieve positive results. She also felt obliged to make good use of the money donated by the chairperson because it was given with good intentions and expectations.
Analyse the case study and write down what you have learned.
Ask participants to name the businesses they belong to. Do they consider these to be successful or not?
Continue asking them questions to obtain more answers.
Write key words from their answers on the board, preferably in the six sets as given in the accompanying handout. For instance, list the factors related to business success in one set and those relating to group discipline in another.
Try and obtain from the participants some factors under all the six categories.
Participants may tell the stories of their groups as a process of identifying these factors. Encourage this as it gives practical examples of each indicator.
Initiate a discussion on the handout after several examples have been given.
Form smaller groups from among the participants for discussion. For example, if there are 20 participants, make them form groups of four to have five smaller groups. Then, working with groups, identify five businesses that can be discussed as successful and unsuccessful.
Each group discusses a business situation for about 15 minutes and then takes 30 minutes to analyse it on the basis of the success indicators. Participants can add more indicators if they feel the need.
Have each group present its analysis in the plenary session. A full group discussion can help them identify their weaknesses and these can be worked upon at a later stage.
Handout 1: Indicators of successful women's cooperative business
Business
A group's business success may be assessed using the following indicators:
- Volume of sales
- Regularity of sales
- Profit per member
- Quality of product
- Marketability of product
- Returns on investment
It is important to see if there has been growth in sales and profits over the past three to five years. Sustained growth is an important indicator of the success of a business. If the business has remained static and not grown in any way, there is a chance that it is losing out in the market and needs to be examined carefully.
Cooperative business management
The first and foremost indicator of a successful cooperative business is a common purpose. To asses this, it is important to check if group is able to clearly articulate its vision. These should include clear statements of product/service and the business strategy. It is useful to see whether the group has used the tool of business planning. If this has been used, then it is easy to carry out periodical monitoring and adjustments as necessary. Thus clear articulation of vision and use of business planning are important indicators for assessing a group's success.
In a women's cooperative group business, the nature of cooperation is the key to its success. It is important to maintain regularity of group procedures (meetings, attendance at meetings, compliance with rules and regulations).
It is even more important to see whether the following criteria are fulfilling or not:
- Cooperation among group members
- Sharing of work and responsibility
- Sharing of information
- Maintenance of books/accounts
- Sharing of accounts/information with members (transparency)
- Team spirit: interaction among group members with common purpose
- Business, group management and networking ability in leader
Social factors
Family and community support directly impact on the group's success. Many cooperative women's groups engage in social and religious ceremonies and celebrations. While this may bring recognition from the community, it can also be a drain on the group's finances. It is important for the group to give priority to the need for investing in business expansion.
Networking
A group that has good contacts with other women's groups, government officers and local business, finds it easier to sustain and enlarge its business. A group with the ability to form partnerships for marketing, product information, technologies etc. is in a better position to develop its business.
There is a big difference between an individual and group business. A group business in the cooperative sector is expected to run on cooperative principles.
Ask the participants to explain the differences between individual and group businesses. Write down key points on the board.
Ask them how their own groups were formed. Explain that many women's group businesses have been started through government initiatives. It may be useful to learn about the principles of cooperatives and the ground realities from a case study.
Divide the participants into groups. Give them the handouts on cooperative principles and the case study. Let them read both and discuss whether the case study shows an application of cooperative principles.
Handout 1: Definition, values and principles of cooperatives
Definition of a cooperative
A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.
Cooperative values
Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.
The principles of cooperatives
Voluntary and open membership
Cooperatives are voluntary organizations open to all persons, aiming at maximizing the participation of members in their services with a clear understanding about the responsibilities of its membership in cooperative development without gender, social, racial, political or religious discrimination.
Democratic member control
Cooperatives are democratic organizations controlled by their members who participate actively in setting policies and making decisions. The men and women who serve as elected representatives are accountable to the other members. In primary cooperatives, members have equal voting rights (one member, one vote). Cooperatives at other levels are also organized democratically.
Economic participation of members
Members contribute equitably to, and democratically control, the capital of their cooperative. They usually receive limited compensation, if any, on capital as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperatives, benefiting members in proportion to their transactions with the cooperative and supporting other activities approved by the membership.
Autonomy and independence
Cooperatives are autonomous self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
Education, training and information
Cooperatives provide education and training for their members, elected representatives, managers and employees, so they can contribute effectively to the development of their cooperative. They also inform the general public, particularly opinion leaders about the nature and benefits of cooperation.
Cooperation among cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
Concern for cooperatives
Cooperatives work for the sustainable development of their communities through policies approved by their members.
Source: FAO, 1998, A manual for trainers on agricultural cooperative development (pages. 5 & 6). Rome, Food and Agriculture Organization of the United Nations.
Handout 2: Case study of a women's cooperative business
The Khao Yoi Cooperative Women's Group in Petchburi makes rice noodles. It was registered with 25 other women by the wife of the chief district officer Mr Thor when she learned about a government scheme to provide 90 000 Baht to start-up cooperative women's groups.
Mrs Thor offered the group the use of a large, covered shed in the front of her house to make the noodles. The government grant was credited to the account of the group in the cooperative. Mrs. Thor spent 30 000 Baht to get a rice noodle machine and spent another 60 000 Baht to repair the roof of the shed so that the noodles would not get spoilt during packaging.
When a CPD officer visited the group, the machine was idle. Mrs. Thor informed the officer that there were no orders and that she called the women to make the noodles as and when she received orders. However, the orders are usually small and only seven to eight women are able to find work. The machine stays idle for many days at a time when there are no orders.
As the members of the cooperative group cannot find continuous employment, Mrs. Thor wishes to apply for another CPD grant to make banana chips. The government has offered to finance the purchase of a drier by the group, which Mrs Thor intends to place in her yard. She says that this will enable her to continue with her efforts to engage rural women in productive work.
Analyse the case study. Is this a good cooperative group business? What should this group do to improve its business? Is this group operated along cooperative lines?
Handout 3: Information on cooperative women's group businesses in the Thai context
Common activities of women's groups
When women come together to form a cooperative group business, they are able to provide many services to their members. Typically, a group provides the following services:
By working together in groups, women can not only collectively manage and gain from a business, they can also access several benefits and subsidies from government and other support agencies.
Group businesses are complex and often combine more than one of the activities listed below:
- savings
- credit
- purchase and sale of raw material
- sharing of machines for production
- storage of produce
- purchase and sale of finished product
- sharing of office space for stocking, marketing and administration
- sharing of skilled personnel for common support services, like accounting
Are these groups cooperative businesses?
These groups register themselves with cooperatives to get government assistance in the form of financial grants for buildings and equipment. They also get training and marketing support. However, they are still largely dependent on the government and need to grow into vibrant and independent group businesses. Often, the principles and practices of cooperatives are not understood in these groups to become viable cooperative businesses; nor do they acquire the characteristics of their parent cooperatives.
Therefore it is important to provide cooperative members education in combination with business planning and marketing to ensure that women's groups in the cooperative sector are well managed.
What you have learnt in this module
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[1] Source: Kevin Kane and
the staff of Tototo Home Industries, 1992 |
