UCLA Anderson MBA students conduct Applied Management Research projects in lieu of a thesis. The nation’s first business school field study program, AMR partners students with top organizations to solve a key strategic problem. During Impact Week (April 17–21, 2017), whose theme is Purpose + Profit, we’re highlighting stories of AMRs supported by the Center for Global Management that took UCLA Anderson Class of 2017 teams overseas to collaborate with NGOs whose mission-driven work includes such global challenges as health care delivery, international labor standards and environmental conservation.
By Lizeth Chiprez (’17), Grace Luo (’17), Nishant Ranjan (’17), Makibi Takagi (’17), Randy Lee (’17)
Conservation International, the client for our Applied Management Research field study project, is an international nonprofit focused on efforts to promote environmentally sustainable development. CI has established 1,200 protected land, marine and coastal areas across 78 countries. In Ecuador, the location of our project, CI has been focused on conservation of mangrove habitats since 2001.
The fishermen who live in the areas near mangrove habitats are integral stakeholders in mangrove protection. However, many are struggling to make ends meets. Some of the fishermen have organized to create associations or formal cooperatives. To incentivize them to participate in conservation efforts, many of these associations have been granted a governmental concession that gives them exclusive rights to nearby mangrove resources, as long as they utilize them in a sustainable manner.
Our project’s goal was to find ways to improve profitability for members of associations that have been granted concessions, thereby creating an economic incentive for participation in conversation efforts. We are focused on associations in two fishing communities within the Gulf of Guayaquil, 6 de Julio and El Morro; and the value chains for two specific mangrove products, the red crab and black clam. Our team traveled to the Gulf of Guayaquil in Ecuador in December 2016 and January 2017 to conduct primary research.
These trips were crucial because they not only allowed us to gather information from the source, but also enabled us to understand the cultural subtext of the communities that would ultimately be implementing our proposals. As a result, we immediately eliminated some ideas that were good on paper but not practical from an implementation standpoint because they ignored cultural norms or organizational limitations.
We conducted 74 interviews during our first trip, meeting with fishermen associations, traders, crab meat extractors and Ministry of the Environment officials in 6 de Julio and El Morro to understand the cultural context, current practices and opportunities for improvement at a high level. We found a considerable difference in the level of maturity between the 6 de Julio and El Morro associations, in terms of established procedures and product margins.
Through our interviews with end consumers, owners of low- to mid-priced restaurants, and traders we were able to determine whether sustainable or free-trade products produced by 6 de Julio and El Morro could extract a price premium in the crab and clam market. We were also able to understand at a high level how the associations’ products make their way from the mangroves to the final consumers.
In general, we found that consumers and restaurants are price-sensitive and demand quality, but they were not as concerned with sustainability or free-trade products. Thus, we discovered that there is no easy market to leverage to extract a price premium. Meanwhile, extracting meat from the crabs to be sold as a canned or containerized product represents an opportunity for creating additional value from the red crab. But this opportunity comes with challenges around sanitation, storage and spoilage. These challenges are a substantial hurdle for the associations to overcome and require training, adoption of new practices and, often, investment in the construction of a specialized facility.
In January 2017, our team traveled to the Gulf of Guayaquil for a second time. We tested preliminary recommendations, refined our understanding of the value chain and further explored crab meat harvesting activities. We did a market analysis to better understand the high-end restaurant segment. We conducted 38 focused interviews that led us to understand how El Morro can best overcome problems in the value chain and how CI can leverage their relationships to help El Morro. We also identified a price arbitrage opportunity in both the black clams and red crab value chains, and built out a business plan that would allow associations to transact directly with restaurants rather than work through middle men who often take a large cut of the fishermen’s profits.
We also arrived at a proposal for a new business model for crab meat extraction for 6 de Julio. Our proposal involved installing women who had received prior training in the sanitary production of crab meat as supervisors of other women who had not received training. This would allow association members to uniformly produce restaurant-grade crab meat, and thus access a segment of the market with a higher willingness to pay.
Our trips were critical for creating implementable and practical recommendations for 6 de Julio and El Morro. The trips highlighted the importance of involving locals in conservation efforts, so that when an NGO ultimately leaves a community, conservation efforts continue sustainably, having become a part of the community’s practices. We heard many anecdotes about past efforts that had failed owing to the absence of local community outreach and involvement until years after conservation efforts had commenced. To avoid this pitfall, CI is making great efforts to understand and build relationships with the fishermen and families who live in the communities near mangroves. As NGOs continue to pursue conservation efforts around the world, we hope that the local people are seen as requisite stakeholders from day one.
The University of California and Vox have collaborated on Climate Lab, a new six-episode video series exploring global climate change and UC’s groundbreaking work to mitigate its effects. It is hosted by Conservation International EVP and senior scientist M. Sanjayan, a UCLA visiting researcher. The series features conversations with experts, including UCLA Anderson’s own Magali Delmas, about how everything from energy consumption to food to religion to smart phones affects the future of our planet.