IDFP Final Presentation Hua Dan April 2008

1. IDFP Final PresentationHua DanApril 2008 INSEAD Team: Xing Zhao Srikrishna Sridhar Murthy Alexandre Munhoz Emily Albert

2. Agenda • Project Background • Scope Definition • Work Plan • Findings • Recommendations

3. Client: Hua Dan Hua Dan is a China-based social enterprise that uses the unique power of participation in theatre and other creative arts as a tool for personal and social transformation. Hua Dan Mission Hua Dan enables personal, social and economic empowerment of China’s migrant workers through participation in and leadership of inspirational arts-based projects

4. Client: Hua Dan History: • Founded by Hong Kong-born Brit Caroline Watson in Autumn 2004 • Hua Dan is headquartered in Beijing Objective • to deliver inspirational workshops in partnership with community organizations and commercial enterprises to empower individuals from all classes of society with skills that improve their employability, social mobility and quality of life Activities • Hua Dan’s Travelling Theatre Troupe • Service industry project • Big sister, little sister • Beansprouts project • Train-the-trainer Workshops NEW Revenue Generation Area • Corporate training - using our skills to help companies develop the team-building, leadership skills and creative potential of their staff to financially sustain our charitable initiatives

5. Agenda • Project Background • Scope Definition • Work Plan • Findings • Recommendations

6. IDFP project ORIGINAL BRIEF • Business and financial planning for the next 1 - 3 years, particularly in relationship to research and consolidation of Hua Dan’s revenue model and it’s impact on our social change objectives. HUA DAN SITUATION ASSESSMENT • Hua Dan is presently funded mostly via donations. • An opportunity has been identified for Hua Dan to generate revenue by offering their training to corporate either at the executive level or in firm related factories. • Hua Dan wishes to move into a more sustainable social enterprise company hybrid model (using income-generating activities to support non-profit work) and is seeking to set up a China-based WFOE (Wholly Foreign Owned Enterprise) in the next 6 months. • Hua Dan wants to maintain its focus on assisting migrant workers. REVISED PROJECT OBJECTIVE • To provide Hua Dan with a thorough overview of the market potential and a plan to deliver Hua Dan training (product offering), focussing on opportunities in Beijing and Guangzhou over the next three years. The aim of this plan is to assist Hua Dan to move to a revenue generating model to fund its non-profit activities.

7. IDFP project Hua-Dan main goal What are the drivers for income generation? Project focus How to achieve the goal? How does the money come and from where? How to finance it? Market Analysis Funding Sales Client Segmentation Beijing and Guangzhou Greater China Non-profit trainings Pricing Hong Kong Corporate trainings Tax issues Income derived from profit activities Recommendation on first steps maximize # migrants impacted Shanghai Outside China Rural areas Cost Structure Profitable trainings Trainings in schools Individual trainings Other activities: translating books, etc. Funding cycle Project focus

8. Agenda • Project Background • Scope Definition • Work Plan • Findings • Recommendations

9. Hua Dan Work Plan P3&P4 break 16-17/04 04/02 24/03 07/04 11/01 11/02 28/01 4,5 w 1,5 w 2 w 1 w 1 w 2 w Define the problem Structure problem & prioritize issues Define issue analysis Conduct research and analysis Synthesize findings Recommendation Final product Activities • Renegotiating deliverables based on analysis conducted • Team discussions • Caroline, Kapil and Hans kick off • Extensively discussions within the group • Define clear data we need and sources to be explored • Researching • Calling clients and competitors • Brainstorming with the client • Site visiting • More team discussions • Working on final materials • More discussions… • Presenting to professors and client Deliverables • Problem Statement • Swot Analyses • Draft of issue tree • Final issue tree and the focus/priority branches • Work plan for the analysis with weekly milestones • Insights from discussions • Data base with all findings and analysis • Clear understanding of final direction • Structuring final deliverables • Market analysis • Client target and value proposition • Pricing analysis • Marketing kit • Recommendation on first steps

10. Agenda • Project Background • Scope Definition • Work Plan • Findings • Recommendations

11. Market Review: the Training industry is very fragmented, focused on specific segments and with limited product offering Who is the client? • Companies that consume training services can be segmented into: • State-owned companies • Private local companies • Factories and offices of multinational corporations Product offer • Focus on technical (hard skills) training • Few but crescent offers in soft skills given needs for leadership and creativity in the companies • Current providers of soft skills training focus on management/executive level staff • Factories demand strong value proposition Pricing • Pricing variation is huge, with no major method base • Low frequency of trainings makes clients less price sensitive • For value-based products, packaging is important. Market and competition environment • Driven by economic development, demand for training has increased • Very fragmented industry with no big players • Young market - established players have no more than 10-15 years of existence • Low barrier to enter: many small and new firms How are the clients reached? • Word-of-mouth plays an important role (networking) • Common practice is to invite managers from reputable firms to free-of-charge workshops, in order to create flow of information. • Training department is conservative - there is no incentive for innovative approach. Business managers are easier targets (more willing to take risks)

12. Training Industry has become sophisticated and clients now require specialized deliverables from the providers Activities of business training providers “Product” Development Marketing and Sales Engage within in specific client needs “In loco” Training Debrief / assessment and follow-up after new opportunities with client Capability / attribute required for building competitive advantage • Innovation • Experienced sales force • Business networking • In-depth HR disciplines knowledge (leadership, mentoring, etc.) • Multiple offer (hard and soft skills training) • Capable Instructors • Event skills • In-depth HR disciplines knowledge (leadership, mentoring, etc.) • Commercial acumen • Clients have shown a preference for full offer (hard + soft skills) and for tailored training which address their specific needs (ex. Nike) • Soft skills is a broad discipline and in the long-run might become a commodity: room for specialization

13. Market Segmentation: MNCs best match the proposition and product offering of Hua Dan Factories (blue-collar/ migrant workers) Offices (senior managers) Soft Skills • Hard Skills: • language • technology • Hard Skills: • regulation • marketing in China Companies active in CSR • Our research indicates a need for soft skills training both for factory and office workers. On top of typical soft skills training which includes leadership, team-building, presentation and communication skills, such firms also look for: • innovative and effective approaches / techniques in soft skills training • intercultural skills training, particularly in the relationship between workers (Chinese) and managers (typically foreign) • focus on enhancing creative thinking skills amongst the employees • link with Corporate Responsibility activities • value creation Hua Dan differentials

14. Agenda • Project Background • Scope Definition • Work Plan • Findings • Recommendations

15. Partnership Targets Value added Planning Marketing Our project has resulted in findings in four key areas

16. Partnerhsips Planning Marketing • Hua Dan • Connections • utilise expatriate network • utilise current contacts • build a testimonials base •  will benefit word-of-mouth • MNCs in China • with strong • CSR Programs • companies identified through AmCham initiatives and CSR Asia • Partnerships • leverage partner client-base • reduces need to rapidly build expertise in marketing/sales in-house Hua Dan should target clients through three channels, leveraging upon four identified un-meet needs Targets • Four Key Areas of Un-Met Needs to Target with Clients • soft skills • integration (local and expatriate workers) • team outings (Commune) • individual tailored consultations

17. Partnerships Targets Plann-ing Marketing Planning and next steps • What we achieved: • Focused objective into a short-term achievable project • Transformed ideas/passion into actionable steps • Prioritized areas for action • Identified marketing opportunities NEXT STEPS • Opportunities for further engagement: • Evaluate partnership options and define selection criteria • Finalize partnership arrangements and structures • Detailed cost analysis and implications for organizational structure • Organizational capacity analysis - staffing requirements • 5-year business plan